DappRadar Report Shows Signs of Recovery in Crypto Markets After Tough Q3
A third-quarter industry report from DappRadar citing on-chain metrics suggests cryptocurrency markets are showing signs of recovery from ongoing bear market conditions.
A number of factors contributed to a busy third quarter of 2022, including Ethereum’s Merge, which marked a successful shift to proof-of-stake, greatly influencing layer-2 activity prior to the event. The report highlights a slight recovery in overall cryptocurrency market capitalization, which still sits below the $1 trillion mark.
According to the report, third-quarter data reflected an 8.5% increase in the total crypto market cap from July to the end of September 2022. The decentralized finance space also showed signs of consolidation, with the total value locked (TVL) in the space increasing by 2.9% in the third quarter to $69 billion. Notably, Ethereum continues to account for the bulk of TVL, with $48 billion locked in smart contracts.
DappRadar also reported a 12% increase in unique active wallets across the cryptocurrency ecosystem quarter-on-quarter, totaling 1.8 million. The blockchain gaming sector contributed significantly, with unique wallet addresses increasing by 8% from August to September.
ImmutableX saw its unique active wallets grow by 30% during the same time period and recorded an 87% growth in nonfungible token (NFT) trading volume from the previous quarter. Polygon followed a similar trajectory, seeing its unique active wallets increase by 17% to 148,000.
The overall number of NFT trades increased by 11% from the second quarter of 2022, although Ethereum’s NFT trading volume diminished significantly, down by 76%. The total NFT trading volume hit $2.71 billion during the third quarter, marking a substantial 67% drop from Q2 2022.
Yuga Labs-owned NFT projects dominated the market in September, with Otherside, Bored Ape Yacht Club, Mutant Ape Yacht Club and CryptoPunks accounting for 46.21% of the entire NFT market cap.
The theft of cryptocurrency assets was also noted, with blockchain bridges remaining enticing targets. DappRadar listed the $190 million Nomad exploit in August as a major contributor to the $461 million worth of crypto assets stolen in Q3. Additionally, algorithmic market maker Wintermute succumbed to a $160 million exploit during the same period.
The DappRadar report also remarked on the impact of wider macroeconomic factors on the global economy. As central banks strive to manage inflation and avoid recessionary effects by raising interest rates, the report indicated:
“Current macroeconomic conditions significantly influence the crypto market, making it impossible to foresee a worldwide expansion of cryptocurrencies without a general recovery in conventional financial markets.”
Despite a somewhat gloomy outlook, several positive developments occurred during the third quarter of 2022. The European Union’s approval of the Markets in Crypto-Assets regulatory plan suggests that governments are looking to carefully manage the industry.
Moreover, the White House released the “First-Ever Comprehensive Framework for Responsible Development of Digital Assets” in September 2022, aimed at investor protection, reinforcing the notion that cryptocurrencies have become a fully established industry.
