THE WEB3 PULSE CHECK

An Overview ReporT
2022

The crypto landscape is constantly changing. The leapfrog team looked at all of the big narratives and trends in crypto, and prepared a comprehensive report.

This report isn't an in-depth analysis, but rather a pulse check on what the data is saying about adoption (as of September 2022).

Number of weekly active users per category

The total number of unique active wallet addresses interacting with the smart contracts per category in the specified period.

Source: DappRadar

Time horizon:

20 Sep 2021 to 19 Sep 2022

Change in weekly active number of users:

Category

2021

2022

Games

6.8M

6.25M

DeFi

4.6M

2.8M

Exchange

750k

392k

Marketplaces

590k

1.4M

Others

380k

804k

Social

101k

75k

Collectibles

314k

91k

High risks

121k

885k

Gambling

345k

569k

Total

14M

13.2M

Total percentage change:

- 3.5%

Number of weekly transactions per category

The total number of transactions sent to the smart contracts per category in the specified period.

Source: DappRadar

Time horizon:

20 Sep 2021 and 12 Sep 2022

Change in number of weekly transactions:

Category

2021

2022

Games

135M

147.7M

DeFi

21.7M

7.5M

Exchange

3.6M

6.25M

Marketplaces

4.3M

10.5M

Others

3.25M

8.2M

Social

441k

540k

Collectibles

941.3k

325k

High risks

1.5M

1.2M

Gambling

1.2M

3.7M

Total

172M

186M

Total percentage change:

8.13%

Weekly volume per category

Total amount of incoming value (tokens included, where available) to the smart contracts

Source: DappRadar

Time horizon:

25 Oct 2021 and 12 Sep 2022

Change in weekly volume:

Category

2021

2022

Games

$112.5M

$2.5M

DeFi

$13B

$1.6B

Exchange

$4.5B

$768M

Marketplaces

$433M

$254M

Others

$309M

$87M

Collectibles

$122M

$13M

Gambling

$11M

$5.3M

Total

$18.5B

$2.7B

Total percentage change:

- 85.5%

Layer 1s Overview

Below you’ll find some data that we were able to gather about activity on L1 blockchains.

The big picture highlights:

Time horizon:

22 Sep 2021 to 22 Sep 2022

TVL of different protocols:

Protocols

22 Sep, 2021

22 Sep, 2022

TVL in Layer 1s

$135 B

$57.2 B

Ethereum

$91 B

$34 B

BNB Chain

$12.3 B

$5.7 B

Solana

$6.3 B

$1.5 B

Avalanche

$3.2 B

$2.5 B

Tron

$3.5 B

$5.3 B

Polygon

$5.7 B

$1.4 B

Terra

$5.5 B

$89 M

Change in total TVL:

57.6%

Daily contract deployment of different protocols:

Protocols

22 Sep, 2021

22 Sep, 2022

Ethereum

11130

6755

BNB Chain

1070

1029

Solana

41

186

Avalanche

300

317

NEAR

58

65

Polygon

220

228

Weekly github commits of different protocols:

Protocols

22 Sep, 2021

Ethereum

5890

BNB Chain

881

Solana

675

Avalanche

173

NEAR

1358

Polygon

122

Weekly active devs on different protocols:

Protocols

22 Sep, 2021

Ethereum

1124

BNB Chain

79

Solana

146

Avalanche

30

NEAR

91

Polygon

44

Daily active addresses

The number of unique wallet addresses sending an on-chain transaction in a rolling 24 hour period

Source: Etherscan

Time horizon:

23 Sep 2021 and 22 Sep 2022

Change in active addresses:

Protocols

22 Sep, 2021

22 Sep, 2022

Ethereum

488k

449k

BNB Chain

1.2M

932k

Solana

962k

730k

Avalanche

31k

38k

NEAR

12k

111k

Polygon

277k

295k

Daily transaction count

The number of unique wallet addresses sending an on-chain transaction in a rolling 24 hour period

Source: Etherscan

Time horizon:

23 Sep 2021 and 22 Sep 2022

Daily transaction count of different protocols:

Protocols

22 Sep, 2021

22 Sep, 2022

Ethereum

1.18 M

1.19M

BNB Chain

5.6 M

3.3 M

Solana

23 M

27.5 M

Avalanche

155 k

2.7 M

NEAR

280k

700k

Polygon

5.9 M

2.7 M

Ethereum Overview

As we mentioned in the L1 updates, Ethereum is still very much the dominant blockchain. Here are the TLDR stats for the Ethereum network:

The number of unique addresses that were active in the network either as a sender or receiver. Only addresses that were active in successful transactions are counted. Chart uses 7-day moving average.

Time horizon:

30 Aug 2021 to 30 Aug 2022

Change in active addresses:

453k to 454k

Percentage change:

0.22%

Ethereum unique addresses

The total distinct numbers of address on the Ethereum blockchain and the increase in the number of address daily.

Source: Etherscan

Time horizon:

30 Aug 2021 to 30 Aug 2022

Change in unique addresses:

167 M to 205 M

Percentage change:

22.7%

Ethereum dominance(7 DMA)

Ethereum market cap as a percentage of global cryptocurrency market cap.

Time horizon:

30 Aug 2021 to 29 Aug 2022

Change in dominance:

19.5% to 20%

Change in market cap:

$379 billion to $180 billion

Adjusted transaction volume is a measure of the economic throughput of ETH on the Ethereum blockchain. The adjustment attempts to remove spam transactions, such as users moving ETH back-and-forth between their own accounts.

Time horizon:

30 Aug 2021 to 30 Aug 2022

On-chain settled volume:

2.5 Trillion

Layer 2s Overview

At this point, it seems clear that rollups will be the winning L2 solution and now it’s just a matter of seeing which ones dominate the market.

Protocols

TVL

Market share

Technology

Arbitrum

2.3B

51%

Optimistic rollup

Optimism

1.4B

30%

Optimistic rollup

StarkEx

488M

10.5%

ZK rollup

Metis

113M

2.46%

Optimistic rollup

zkSync

89 M

1.9%

ZK rollup

Boba network

27.1M

0.6%

ZK rollup

Aztec connect

5.8M

0.13%

ZK rollup

Loopring

138M

3%

ZK rollup

Source: L2 Beat

Bitcoin Overview

Bitcoin’s price drives the market. When it comes to the fundamentals, weekly active addresses and BTC dominance are 2 metrics we look at closely.

Not much has changed here for BTC in the last year.

Number of weekly active addresses

The number of unique addresses that were active in the network either as a sender or receiver. Only addresses that were active in successful transactions are counted.

Source: Glassnode

Time horizon:

30 Aug 2021 to 29 Aug 2022

Change in weekly active addresses:

4.8 M to 4.6 M

Percentage change:

- 4.16%

Bitcoin weekly dominance

Bitcoin market cap as a percentage of global cryptocurrency market cap.

Time horizon:

30 Aug 2021 to 29 Aug 2022

Change in weekly dominance:

41% to 40%

Change in marketcap:

$1 trillion to $375 billion

Stablecoins Overview

Stablecoins are among the first instances of tokenized real-world assets on-chain and are currently one of the most important utilities of Crypto.

Decentralized and algorithmic stablecoins are still trying to capture market share from centralized ones, some have been successful like DAI with ~5% market share, and some have failed – but as with everything in crypto, the experiment is still ongoing.

Total stablecoin supply

Source: The Block

Time horizon:

1 Aug 2021 to 31 Aug 2022

Change in stablecoin supply:

116 billion to 142 billion

Percentage change:

22.4%

Share of total stablecoin supply

Source: The Block

Time horizon:

1 Aug 2021 to 31 Aug 2022

Percentage share of stablecoin supply:

Protocols

2021

2022

$USDT

55%

47%

$USDC

23%

23%

$BUSD

10.5%

13.5%

$DAI

4.8%

4.8%

$MIM

0.8%

1.3%

Others

5.4%

3%

Stablecoins which have lost their peg:

$UST, $USDN

DeFi Overview

If you’re new to DeFi, watch our overview video

In 2021, the TVL of the DeFi market grew to ~$180 billion, but much of this TVL was built on top of leverage, inflationary rewards and ponzinomics.

A lot of the unsustainable fluff has been wiped out since, and the TVL has now dropped to $55 billion.

Total value locked in smart contract platforms

Source: DeFillama

Time horizon:

30 Aug 2021 to 29 Aug 2022

DeFi TVL:

120 billion to 58 billion

Percentage change:

- 51.6%

DeFi market cap as a percentage of global cryptocurrency market cap.

Time horizon:

30 Aug 2021 to 31 Aug 2022

Change in DeFi dominance:

2.3% to 1%

Percentage change:

- 56.5%

Lending/Borrowing Overview

The TVL in the DeFi lending market also saw tremendous growth in 2021, at their peak protocols like AAVE and MakerDAO had more than $15 billion of value locked with Compound and others not far behind.

  • AAVE token holders were making $6M+ in monthly revenue in October 2021. Now, only $1.5M per month. (-75%).
  • In the last 12 months, AAVE has made $31.5M, Maker has made $72M in protocol revenue, and Compound has made $18.7M.

    The borrowing volume has also fallen since the end of 2021.
  • For Compound, it has gone from $8.3 billion to $1 billion.
  • For AAVE, it has gone from $8.3 billion to $3.9 billion.

But while the TVL for OG DeFi protocols like Aave have fallen, RWA-based lending platform GoldFinch has seen great growth – its TVL has grown more than 3 fold!

Total value locked

TVL: average value of funds locked into the protocol’s smart contracts.

Source: TokenTerminal

Time horizon:

2 Sep 2021 and 31 Aug 2022

TVL

Protocols

2021

2022

AAVE

$16 billion

$6.3 billion

MakerDAO

$13.7 billion

$8 billion

Compound

$20 billion

$3.7 billion

Borrowing volume:

Protocols

2021

2022

AAVE

$8.3 billion

$3.9 billion

Compound

$8.3 billion

$1 billion

Protocol revenue

Protocol revenue: share of interest that goes to the protocol (Token holders).

Source: TokenTerminal

Time horizon:

1 Sep 2021 to 31 Aug 2022

Protocol revenue in the 12 months:

Protocols

Revenue

AAVE

$31.5 million

MakerDAO

$72 million

Compound

$18.7 million

Daily active users:

Protocols

% Change

AAVE

550%

Compound

- 75%

Time horizon:

2 Sep 2021 to 1 Sep 2022

Change in TVL:

$20.5 million to $100 million

Active loans:

$5.7 million to $100 million

DEX Overview

  • In the last 12 months, DEXs have done a combine spot volume of more than $1.5 Trillion.
  • The ratio of DEX/CEX spot volume is roughly the same as this time last year.
  • In 2021, 90% of DEXes were using Automated Market Makers but now only around 81% are using AMMs, with the rest using order books or hybrid models.
  • Hybrid models are gaining popularity due to their benefits over AMMs.
  • Uniswap has maintained a dominant market share in the DEX market by monthly volume (65%). Curve owns around 5% of the monthly volume due to its superior stable swap.

    Check out our video about Curve to understand why it’s such a significant protocol

Time horizon:

1 Sep 2021 to 15 SEP 2022

DEX volume:

$1.5 Trillion

Time horizon:

Sep 2021 and Aug 2022

Share of monthly DEX volume:

DEXs

2021

2022

Uniswap

60%

65%

Pancakeswap

25.7%

12.1%

Curve

2.15%

4.4%

Volume share in DEX category:

Category

2021

2022

AMM

90%

81%

Hybrid

7.8%

17.7%

Order book

1.6%

1.2%

Monthly decentralized exchange volume divided by centralized exchange volume (as a percentage). Includes largest exchanges with trustworthy reporting of exchange volume metrics.

Time horizon:

1 Sep 2021 to 15 Sep 2022

DEX to CEX spot ratio:

11.2% to 12%

NFTs Overview

After seeing a period of astonishing growth between 2021 and 22, reality has caught up to the NFT market as well.

NFT marketcap

Source: NFTGo

Time horizon:

4 Sep 2021 to 4 Sep 2022

Change in NFT market cap:

$4.6 billion to $22.5 billion

Percentage change:

390%

Category Market cap

Source: NFTGo

As of:

4 Sep 2022

Category Market cap:

Category

2022

PFP

$13.2 billion

Collectibles

$3 billion

Game

$1.8 billion

Art

$1.75 billion

Land

$1.6 billion

Metaverse

$550 million

IP

$250 million

Sports

$100 million

Music

$100 million

Domain name

$86 million

Photography

$21 million

Daily number of sales

Source: NonFungible

Time horizon:

21 Sep 2021 and 21 Sep 2022

Change in number of sales:

Metrics

2021

2022

Number of sales

151k

26k

Sales in USD

74M

14M

The weekly trade volume of NFTs by chain.

Time horizon:

18 Sep 2021 and 11 Sep 2022

Weekly NFT trade volume by chain:

Protocols

18 Sep 2021

11 Sep 2022

Ethereum

$374M

$79M

Solana

$43.7M

$26M

Total

$545M

$121M

Change in different metrics:

Metrics

% Change

Number of sales

-81.9%

Sales USD

-79.5%

Average USD

13.7%

Active market wallets

-73.3%

Unique buyers

-76.6%

Unique sellers

-73.8%

Hacks Overview

In the last 12 months, Hackers have made billions exploiting Crypto protocols, centralized exchanges, and individual wallets.

Among these, DeFi protocols and bridges are among the favorites for hackers to exploit due to the large amounts of funds locked in their smart contracts.

The value stolen from DeFi protocols has been trending up since 2021, reaching its highest level in Q1 2022.

According to the Chainalysis as of May 1, DeFi protocols account for 97% of the $1.68 billion worth of cryptocurrency stolen in 2022.

Much of of this stolen crypto is suspected to have gone to hacking groups associated with the North Korean government, especially in 2022. Here is an excellent Twitter thread from The DeFi Edge on how these North Koreans hacker groups are trained: here

Most of these hacks were targeted towards cross-chain crypto bridges because of large amounts of funds locked in their contracts combined with the fundamental limits to the security of bridges.

  • Aug 2, 2022: The cross-chain Nomad bridge was exploited for $200 million.
  • June 24, 2022: The Horizon bridge on the Harmony was exploited for $100 million.
  • March 29, 2022 – Ronin network was exploited for $625 million
  • Feb 3, 2022 – The cross-chain bridge Wormhole was exploited for $326 million

    +++

Watch our video on Crypto Bridges to learn more about them and why cross-chain bridges are such a popular target for hackers.

Value stolen from DeFi protocols, Q1 2020–Q2 2022

Source: Chainalysis

Cryptocurrency value stolen by victim platform type, Q1 2019–Q2 2022

Source: Chainalysis

Attacks on team wallets aren’t unheard of either – Wintermute’s hot wallet was compromised for $160 million due to a bug.

But theft isn’t limited to big hacks. There are also a lot of scams and attacks on personal wallets – here’s a list of common scams which you should watch out for.

In 2021, over $14 billion of crypto was stolen by scammers. You can also watch this video to learn more about various scams in Crypto.

Interoperability

Different blockchains have different limitations and it isn't possible to optimize a single blockchain for every use case. So it’s reasonable to assume that the future will be multichain.

If blockchains are isolated from the outside world, it doesn’t do much good for the ecosystem.

Similar to countries, blockchains need to be able to interact and trade outside their own ecosystem in order to prosper.

So it’s a pretty reasonable assumption that the future will be multichain. Here’s an explanation of what such a multichain world of the future looks like.

Cosmos is known as the internet of Blockchains, It is a decentralized network of independent, scalable, and interoperable blockchains which are built using Cosmos SDK a developer toolkit to spin up new customizable chains within a few minutes.

There's no cost or fees in deploying a new chain using the Cosmos SDK. And some of the major chains built using the Cosmos SDK that includes Juno, Secret Network, Crypto.com, Terra, BNB Chain etc

You can read our overview of Cosmos

As of 24 Sep 2022, there are 1769 weekly commits on Github and 46 chains are connected through IBC (known as inter blockchain communication that is a communication protocol native to Cosmos).

Cosmos also recently announced their 2.0 version - Route2Fi wrote a nice summary thread about this.

More info: Mintscan

Polkadot is a blockchain with a core network — the relay chain, where other blockchains (called parachains) connect and communicate with each other. By hosting blockchains, the relay chain also handles their security and transactions, allowing cross-chain interoperability.

As of now Polkadot supports 100 parachains, and to be able to connect to the relay chain the parachains have to participate in auction to reserve a slot, where they have to lock $DOT token to get a slot.

As of 24 Sep 2022, there are 2904 wekly commits on Github and 26 parachains have secured their slots in the auction by locking 131 million+ $DOT tokens and are connected to the relay chain.

More info: Parachains

Infrastructure Overview

Decentralized infrastructure is still seeing growth in spite of the bear market.

We explored the surface-level metrics for 3 sample protocols: Arweave, Chainlink, and Filecoin.

Arweave is a protocol that allows you to store data permanently, sustainably, with a single upfront fee.

In terms of usage Arweave has gained significant amount of adoption as compared to few years ago, the monthly data uploaded on Arweave has increased from 0.7 TiB in August 2021 to 4.7 TiB in August 2022 that is an increase of more than 570% and the weave size has increased from 11 TiB from 31 Aug 2021 to 88 TiB on 31 Aug 2022.


More stats: Arweave explorer

Filecoin is a peer-to-peer decentralized protocol which enables anyone to rent out spare storage space on their computer.

According to a report from Messari on 12 July 2022, active deals in Filecoin ecosystem grew 128% Q2 and the network storage capacity grew 7% Q2, and the number of project building on Filecoin grew 32% in Q2.

More details: Messari report

Oracles are one of the most important protocols in the blockchain world – they enable blockchains to securely interact with and access the external world data.

As of 24 Sep 2022, there is more than $20 billion dollars of value secured by Chainlink oracles and more than 1470+ projects are using Chainlink in one way or another in their product.

More details: Chainlink data feeds, Chainlink markets

    DAOs Overview

    Our friends at DAOLens prepared a comprehensive report about the state of DAOs in 2022 - check it out here!

      Regulations around the globe

      Regulation is an important part of what’s happening in the world of crypto.

      We are too far from being experts on regulation, so we curated some information from dappradar about the latest crypto regulations in various major countries.

      You can find dappradar’s full post here.

      United States

      • 16 Sep, 2022: The U.S government released its first new Crypto regulatory framework. With a clear focus on seizing the advantages of crypto while addressing its risks and with a potential CBDC on the horizon.

      • July 26, 2022 – US senators Pat Toomey and Kyrsten Sinema introduced a new bipartisan bill, “Virtual Currency Tax Fairness Act,” to simplify the use of digital assets for everyday purchases. It proposes tax exemptions for personal crypto transactions that give a capital gain of less than $50 or that are under $50 as well. This bill has the support of the senators who introduced the previous $200 bill.
      • July 9, 2022 – The United States Treasury delivered president Biden a framework, as directed in Executive Order, for the US and its foreign allies (G7 and G20 countries) to collaborate to create international standards for crypto regulation.
      • June 8th, 2022 – New York legislators issue a guideline for stablecoins indicating that all stablecoins must be fully backed. All stablecoin issuers must have clear redemption and backing of dollar-pegged stablecoins.
      • June 7th, 2022 – Senators Lummis and Gillibrand introduced the “Responsible Financial Innovation Act” seeking to act as a new federal law for stablecoins exempting these digital assets from taxes for small-scale payments under $200. Stablecoins play an essential role in the DeFi ecosystem.
      • June 3rd, 2022 – New York legislators passed a bill addressing environmental concerns and banning crypto mining that is carbon-based. Bitcoin uses Proof Of Work; an energy-demanding software algorithm that requires computational power.

      United Kingdom

      • July 28, 2022 – UK’s law commission published proposals to reform laws relating to digital assets, NFTs and other digital tokens, to maximize their potential in the country.    

      • May 31, 2022- The HM Treasury has opened a consultation on managing the failure of systemic digital settlement asset firms, including stablecoin firms. The month of May marks the official bear market this year after Terra’s stablecoin (UST) fell apart, prompting many regulators worldwide to take a closer look at crypto.
      • January 18, 2022 – The UK government and the FCA publish complementary reform proposals to bring financial promotions for some “qualifying crypto-assets” into HM Treasury’s financial promotions regime and the FCA financial promotions rules.
      • June 28, 2021- The FCA bans Binance from operating in the U.K.

        The U.K aims to become a crypto hub by having clear regulations in place and preventing potential criminal activity while simultaneously promoting innovation.

      China

      • July 10, 2022 – Changes to Hong Kong’s Anti-Money Laundering (AML) law adapts licensing regime regulation for crypto service providers. Virtual asset service providers (VASPs) are now expected to be regulated to the same standard as institutional clients.

      • January 20, 2022 – The Hong Kong Monetary Authority (HKMA) issued two papers: one on stablecoins and another on crypto-related exchange-traded funds. Bitcoin is defined as a virtual commodity and not a legal tender. There are no capital gains taxes and AML/CFT laws apply to every individual or business in Hong Kong.
      • April 13, 2022 –  China’s banking, securities, internet, and financial associations determined that NFTs must not be used for securitization or transacted in cryptocurrencies. The legislation makes it harder to trade NFTs.

      European Union

      • June 30, 2022 –  A provisional new deal has been struck between Parliament and Council seeking consumer protection, and a uniform legal framework for crypto in the EU. MiCA (Markets in Crypto Assets) will cover crypto-assets that are not regulated by the existing financial services legislation. ESMA (European Securities and Markets Authority) will provide guidelines in this respect.

        The new regulations will subject stablecoins to strict operating rules, with restrictions on whether they are widely used as payment and a cap of €200 million in transactions per day.

      India

      • 19 July 2022 – India’s finance minister Nirmala Sitharaman has informed parliament that the Central Bank wants cryptocurrencies to be prohibited in the country. She also added that cryptos “require international collaboration to prevent regulatory arbitrage.”

      • 1 Feb 2022: Indian regulators announce a 30% tax on any income derived from crypto transactions and another tax of 1% at source on all transactions (TDS). Moreover, the government also announces plans on creating its digital rupee controlled by the Indian Central bank before April 2023.

      Russia

      • July 27, 2022: Authorities in Russia are preparing legislative amendments that will regulate NFTs, legally defining transactions with digital collectibles.

      • July 15, 2022: Russian President Vladimir Putin signed a new law that prohibits payments with digital assets in the country.
      • June 16, 2022 – Elvira Nabiullina, Russia´s central bank governor hints at the idea of cryptocurrencies as payments but only internationally and not inside of the country.
      • June 15, 2022 – The Russian government has created a separate tax procedure for digital assets to remain competitive and outweigh the sanctions imposed by the West after the Ukraine invasion. The sale of digital assets is exempt from value-added tax (VAT) in the Russian Federation.
      • June 15, 2022 –  A bill swiftly passed the lower Chamber of Russian Parliament. The bill seeks to prohibit using “digital financial actives” (DFAs) to pay for goods or services.
      • February 21, 2022 – The Ministry of Finance formally introduces a draft of the federal law “On digital currency” to the government. The proposed law is more crypto-friendly than the formal stance of the Central Bank.

        It aims to set a licensing regime for exchanges and requires risk management, data privacy, and reporting measures that such operators would have to comply with. Purchasing and selling crypto legally would only be possible via a bank account, and it is proposed that both crypto platforms and banks introduce Know Your Client procedures (KYC).

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