The Failure of Terra, Celsius, 3ac Highlights The Importance of Self-Custody: Dappradar - Daily Bitcoin news

The Failure of Terra, Celsius, 3ac Highlights The Importance of Self-Custody: Dappradar



DappRadar published the latest edition of its quarterly report, focusing on how the fall of Terra, Celsius, and 3AC have changed the blockchain landscape as the liquidity crisis deepened, impacting major CeFi players. In addition, the document dives into the fierce competition among NFT marketplaces, stating that OpenSea’s dominance continued to shrink in Q2.

CeFi Under the Spotlight

According to the Q2 industry report shared with Cryptopotato, The Oonging Market Crash Has Drasticlly Reduced Users’ Enthusiasm for Defi Activities. The number of daily Unique Active Wallets (UAW) interacting with blockchain apps only reached 2.11 million on average in Q2, 11% down from Q1 2022, but still recorded a 62% growth YoY.

MOREOVER, PLUMMETED CRYPTO PRICES WERE EVEN EXACERBATED BY THE Terra debacle and the liquidity issues occurring to the CeFi players such as BlockFi, Celsius, Voyager, and 3AC. In the wake of Terra’s collapse, the crypto market cap has dropped 34%, falling below the $1 trillion mark at a level not seen since Q4 2020.

The fact that troubled firms are concentrated on the CeFi space raises a red flag on centralized entities taking custody of users’ crypto assets. As demonstrated in the collapse of Celsius and Voyagers, exchanges lent out users’ funds to generate high yields that are only possible through exposure to risky DeFi projects. Amid a heightened liquidity crisis, users’ funds were at risk when exchanges suddenly suspended withdrawals to safeguard the draining liquidity.

In addition, the report highlights the security concern clouding the industry, with a total of $676 million being stolen in crypto assets in Q2. The notable example came from the hack On Harmony’s Bridge in June, Causing A Loss of $ 100 Million in Eth. Elrond’s dapps Arda and Maiar were exploited by $127 million and $113 million respectively in the same month, according to DappRadar.

Rising Competition Among NFT Marketplaces

It’s worth noting that, despite the downward pressure imposed by the broader crypto market, NFTs performed steadily in the quarter, resulting partly from blue-chip collections’ recovered losses in June. In a way, it ares their status as a Potential Store of Value.

Given the circumstance of increasing NFT marketplaces competing for market shares, OpenSea witnessed a drop in trading activities and revenue. The report explained:

“The decline in trading can be attributed to the drop in the market value of cryptocurrencies and rising competition in the NFT trading landscape. However, while the marketplace’s volume measured in USD has fallen around 70% since May, the volume in ETH is down by 55% in the same timespan.”

DappRadar named Solana-based Magic Eden, Ebay’s KnownOrigin, and Uniswap’s newly acquired NFT aggregator platform Genie as OpenSea’s predominant competitors. Also, with relatively low gas fees and barriers to entry, Solana – as opposed to Ethereum – has grown to be a viable alternative for up-and-coming NFT projects.

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