Three months on and the crypto terrain looks different as the industry trudges forward, bearing the battle scars of the Terra implosion.
In May, Terra collapsed, wiping out nearly $50 billion of investors’ funds. The domino effect of the catastrophe cascaded as the contagion spread to large firms with exposure to Terra, like Three Arrows Capital, BlockFi, and Celsius.
For the wider markets, the result was a grim crypto winter, with market capitalization falling below $1 trillion and a host of crypto exchanges halting withdrawals.
Research from DappRadar revealed that DeFi bore the brunt of the collapse, recording a steady month-over-month decline. The data pointed out that the Total Value Locked (TVL) has fallen by an average of 68% across all blockchains, and reports of hacks have exacerbated the declining figures.
Regulations incoming after Terra collapse
Experts have warned of an incoming wave of regulations for the industry in both the U.S. and European markets. Several bills on stablecoin regulation are in play in both jurisdictions to prevent a repeat of the events in May.
The Financial Stability Board (FSB) is pushing for a concerted, global effort and will present a comprehensive regulatory proposal in Oct to G20 nations.
Agencies are also ramping efforts to rein in the virtual currency industry, with the Securities and Exchanges Commission (SEC) leading the way by doubling the number of staff working in crypto-related fields.
Developer activity in blockchain has also taken a major hit. DappRadar notes that the number of new decentralized applications (dApps) released across all chains had declined by a staggering 35% in the months following Terra’s collapse.
Blockchain gaming the biggest winner
Blockchain gaming appears to be insulated from the collapse, recording increased levels of consumer activity. Gaming non-fungible token (NFT) transactions have defied the market trends with a 19% increase year-on-year while capital from institutional investors flowed in.
Solana and WAX were the blockchains that recorded significant gaming activity, notes DappRadar. Splinterland, Farmers World, and Alien Worlds came out on top after notching minimal losses to their in-game activity.
In terms of demographics, the report put the United States as the largest audience for digital assets, with India and Russia coming in second and third place respectively.
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