6 Charts Reviewing the Performance of the Cryptocurrency Market in the Second Quarter of 2023

Original author: Sara Gherghelas, Dappradar

Translated by: PANews

In the second quarter of 2023, despite regulatory pressures and market fluctuations, the cryptocurrency industry has remained resilient, demonstrating strong market adaptability and endurance. This article will analyze the evolving industry landscape through an in-depth study of six chart data.

1. Overview of the Dapp industry in Q2 2023

In the second quarter of 2023, the daily average of unique active wallets (dUAW) interacting with on-chain Dapps increased by 7.97% compared to the first quarter. This growth can be interpreted as an encouraging sign of market recovery. Despite widespread regulatory turbulence, the digital asset market continues to thrive, as reflected in the growing market participation.

Above chart: Distribution of daily average unique active wallets in the Dapp ecosystem from Q3 2022 to Q2 2023

Games continue to dominate the Dapp field, with a market share of 37%, but this is a decrease compared to the previous quarter's 45% market dominance. It is worth noting that with the frenzy of Memecoins and the push of L2 airdrops, DeFi is experiencing a revival, with its market share increasing from 23% to 32%, showing signs of a rebound. In addition, the market share of social Dapps is gradually rising, accounting for approximately 13% in the second quarter, an increase of 1% compared to the previous quarter. In contrast, the growth trajectory of the NFT industry seems to be slowing down, with its dominance decreasing to 7%, which is the same level as the fourth quarter of 2022.

II. Overview of DeFi Total Value Locked (TVL) in Q2 2023

In the second quarter of 2023, the total value locked (TVL) in DeFi decreased by 7.1% compared to the previous quarter, reaching approximately $77.6 billion. This decrease in locked value seems somewhat unexpected compared to the expected growth trajectory of the DeFi market.

Above Image: Quarterly data on total value locked in DeFi

From the total lock-up volume of the head blockchain, Ethereum is still the leader in the DeFi field, although the total lock-up volume of DeFi on the Ethereum blockchain has slightly decreased by 2% compared to the previous quarter. On the other hand, in early June, the U.S. Securities and Exchange Commission sued Binance and claimed that Polygon (MATIC) is a security, which has had a significant impact on BNB and Polygon, the two major blockchains. The total lock-up volume on the BNB chain has dropped significantly by 19%, which is the most severe contraction among all the surveyed blockchains. Meanwhile, the total lock-up volume on the Polygon chain has dropped by about 8%, further proving the significant impact of U.S. regulatory agencies.

Above: Total lock-up volume data of the top blockchains in the second quarter of 2023

III. Overview of the NFT Market in the Second Quarter of 2023

The recent trend in the NFT market is also reflected in the data. This quarter has seen a significant decline with a 38% decrease in trading volume, reaching approximately $2.9 billion. In addition, the data also shows that the NFT sales volume in the second quarter of 2023 is about 18.6 million, a decrease of 9.2% compared to the first quarter. It is important to note that there is not a strong correlation between transaction volume and market excitement. A decrease in transaction volume does not necessarily indicate a decrease in market interest or activity.

Blur still maintains a dominant position in the NFT market, largely due to the incentives provided by past BLUR airdrops. However, the trading volume of this trading aggregation platform in the second quarter has still decreased by 34% compared to the previous quarter. In contrast, the second largest NFT market, OpenSea, has been hit harder with a sharp decline in trading volume of over 56%. Additionally, the trading volume of CryptoPunks has also declined by 47%. Surprisingly, the NFT markets of Immutable X Marketplace and JPG Store have defied the trend and experienced a growth in trading volume of 37% and 64% respectively. This demonstrates that despite the challenging market environment, some platforms still have optimistic prospects.

Image above: Comparison of NFT trading volume and sales volume from Q2 2022 to Q2 2023

IV. Overview of Bitcoin Ordinals in Q2 2023

In the first half of 2023, Bitcoin Ordinals witnessed a significant increase in popularity, as evidenced by a substantial increase in trading volume. The NFT sales volume of the Ordinals protocol skyrocketed from $7.18 million in Q1 2023 to $210.7 million in Q2 2023, representing an astonishing quarterly growth rate of 2834%. Furthermore, the historical trading volume and the number of independent traders for Bitcoin Ordinals reached 554,215 transactions and 150,969 individuals respectively, highlighting the expanding coverage of this NFT protocol and the increasing interest of new traders in Bitcoin blockchain-based digital assets.

Above picture: Trading volume of Bitcoin Ordinals protocol NFT in the first and second quarters of 2023

V. Overview of Hacking Attacks and Vulnerability Exploitations in the Second Quarter of 2023

In terms of hacking attacks and vulnerability exploitations in the encryption market, there has been some improvement in the second quarter of 2023. The losses in the Dapp industry decreased from 373 million US dollars in the first quarter of 2023 to 206 million US dollars in the second quarter, a decrease of about 45%. The most significant security vulnerability occurred on June 4th and June 28th of 2023.

• On June 4th, Atomic Wallet was hacked, resulting in a loss of up to 35 million US dollars.

• On June 28th, Ackerman Ponzi scheme was exposed, causing victims to lose over 33 million US dollars.

Above: Scale of hacker vulnerabilities and hacker attacks losses for the entire year of 2022, as well as the first and second quarters of 2023

Summary

Data from the second quarter of 2023 paints an interesting picture of the industry - the blockchain and encrypted market are undergoing transformation amidst regulatory pressure and volatility, but also demonstrating great resilience under pressure.

In the past quarter, there has been more interaction between independent wallets and blockchain applications, with the average daily active independent wallets (dUAW) increasing by 7.97% compared to the first quarter, indicating that users are still actively participating and adopting Dapps, with the gaming industry maintaining a dominant position in the Dapp market. On the other hand, regulatory actions by the U.S. Securities and Exchange Commission have had a significant impact on the amount of locked funds on the BNB and Polygon chains. In the meantime, although the trading volume in the NFT industry has decreased by 38%, the decrease in transaction volume is not significant (only 9.2%), indicating that market interest and trading activity continue to exist, and the rapid rise of the Bitcoin NFT protocol, Original, suggests a growing interest from users in new types of digital assets. Encouragingly, the losses caused by exploit of vulnerabilities in the cryptocurrency industry has significantly decreased in the second quarter, indicating a growing confidence in the security mechanisms of the cryptocurrency ecosystem.

In summary, the data from the second quarter of 2023 in the encrypted market indicates a vibrant industry that is accepting and adapting to new challenges.