DeFi’s Gradual Recovery
Despite a rocky few months, decentralized finance (DeFi) dapps are showing a slight sign of life. For the first time since May, daily unique active wallets (UAWs) experienced a modest uptick of 3.7% on a month-over-month basis. This unexpected renaissance was brought to you by, surprise surprise, the Flow protocol, which saw a whopping 577% increase in UAWs, largely thanks to a little help from Instagram’s newfound NFT love and the launch of the game, Solitaire Blitz. Who knew a retro card game could help save the day?
Struggles of Solana
On the flip side, Solana had a month to forget, with its UAWs shrinking by 53% compared to the previous month. Ouch! And to add insult to injury, transactions carried out on Solana declined by a staggering 68%. But don’t worry, in the world of crypto, there’s always a new meme waiting to bounce back.
Statistically Speaking
The numbers don’t lie, and they aren’t looking great overall. In August, there were about 1.67 million unique wallets connecting to blockchain dapps. That’s a 3.52% decrease from last month and a much more serious 14.73% plunge since August 2021. It sounds like someone’s been holding a bit too tightly to their crypto and not enough on the dapps.
Gaming vs. NFTs: The Battle for Attention
In the battle of industries, gaming reigns supreme, accounting for over 50% of the activity with 847,230 daily UAWs. Sadly, this figure marked an 11% decline, and the revenue from transactions dropped to a not-so-impressive $698 million—a 12.7% drop month-over-month. Meanwhile, the NFT scene is hardly shining, either, with UAWs falling by 16.7% to a jaw-dropping low of 114,542. June 2021 must be rolling in its grave.
The Dark Clouds of Regulatory Troubles
Much of this market turbulence can be attributed to what has been termed the “Tornado Cash crisis.” In August, the industry’s total value locked (TVL) took a hit, plummeting by 10.47%, representing a loss of $8.7 billion. The U.S. Treasury’s accusations against Tornado Cash for allegedly laundering over $7 billion (including assets nabbed by North Korean hackers) sent shockwaves through the ecosystem. As a result, Tornado Cash (TORN) suffered a 45% price drop in just two days. Yikes!
Ethereum Holds the Majority
Even with the current struggles, the Ethereum chain dominates the DeFi TVL, controlling about 69% of it with $51.47 billion. However, it’s worth noting that even Ethereum faced an 11% drop last month, down 56.63% since August 2021. Ironically, hope shines through Layer-2 solutions, which appear to be on the rise, buoyed by anticipation of the upcoming Ethereum Merge. Protocols like Optimism and Arbitrum are showing promise, rising respectively by 57.61% and 14.36% in August.
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