DeFi Market Cap Dumped 75% in Q2, But User Activity Fared Better: Report

Crypto investors had a rough first half of 2022. The crypto market is still in turmoil and investors are resentful at the loss of 74% of DeFi’s market cap in the second quarter, CoinGecko reports.

Terra’s Ripple Effect in DeFi

The Q2 2022 Cryptocurrency Report was published by the crypto data aggregator. It revealed that Terra’s cataclysmic collapse caused the DeFi sector to fall off the edge.

Terra’s interoperability and partnerships with other protocols caused a huge chain reaction that affected all projects that used its native digital assets.

Terra’s $60Billion implosion had a significant impact on the entire crypto market. DeFi’s market capital dropped from $142 Million to $36M in just three months.

DeFi Hacks Cause Market Downturn

CoinGecko highlighted the fact that investors are less confident in native protocols due to the recent spike in DeFi-related hacks.

According to the report, the Ethereum-based DeFi lending platform Inverse Finance was attacked twice in three months. The attackers stole $17 million in digital assets. The report also mentions the May attack on Rari Capital, a DeFi lender that was hacked for $80 million.

CoinGecko stated that these attacks have adversely affected token prices because investors lose faith and trust in the hacked protocols.

DeFi Market Keeps User Activity

Despite the significant decrease in DeFi on-chain activity the report recognized that the sector still retains most of its users.

The total daily active users dropped by more than 34% to close to 50,000 users. However, there were some instances when DeFi activity experienced a huge spike. CoinGecko identified these two.

The Terra collapse in May brought about the first. DeFi users flocked in droves to exchanges like Curve Finance or Uniswap to trade their LUNA/UST. However, several centralized exchanges (CEXs), had sporadicly halted trading of these assets. These DEXs saw a huge increase in trading volume.

The second occurred in June when Celsius, a crypto lending platform, placed withdrawal restrictions on its users. DeFi protocols was used by traders to perform permissionless transactions. This caused DeFi protocols’ daily active users to increase by 24%.

Uniswap Didminated 60% of DEX Spot Volume Q2

The report highlighted that Uniswap, the leading decentralized exchange, maintained its position in the last quarter as the largest DEX worldwide. It amassed more than half the spot volume across the top 10.

Uniswap held about 60% of all market shares, despite DEX spot volume falling to $274 billion Q2 from $446 billion Q1.

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Marla Brooks

Marla Brooks – Financial Analysis My name is Marla Brooks, and I am the mainstream behind the”observednews.com”  for the powerful and most delicate insights into the latest activities in the financial analysis category. I started my journey as an independent financial consultant. I had approximately nine years of experience in this field. I am free soul so; my passion for exploring the world has taken me to the nations across the globe and given me the chance to report for a portion of the best news associations. Currently, I am a full-time editor as experienced in finance and started to use my abilities.

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