The DeFi market collapsed in the second quarter, but users do not lose hope
According to CoinGecko, despite a 74.6% decrease in the market capitalization of the decentralized finance (DeFi) market in the second quarter, and a slowdown in overall on-chain activity, the DeFi industry managed to retain most of its daily active users.
Cryptocurrency and token data aggregator CoinGecko reported in a recent publication that DeFi's total market capitalization dropped from $142 million to $36 million in the second quarter, mainly due to the collapse of Terra and its TerraUSD Classic (USTC) stable coin in May.
CoinGecko also noted the growth of DeFi exploits in the quarter, which also contributed to the market decline, including Inverse Finance and Rari, which suffered $1.2 million and $11 million hacking, respectively.
"These attacks have negatively affected token prices, as investors are losing faith in hacked protocols," the publication says.
However, CoinGecko also noted that although online activity has slowed down overall, the DeFi industry has managed to retain most of its daily active users.
The number of daily active users in DeFi decreased by only 34.5% from 50,000 to 30,000 in the second quarter. Moreover, there were several cases that caused a surge in DeFi activity.
The first surge was observed in May after the collapse of Terra, which led to users massively using the Curve Finance (CRV) and Uniswap (UNI) platforms in order to sell their falling Terra (LUNA) and USTC.
Similarly, according to CoinGecko, there was another surge in DeFi user activity in June when the Celsius (CEL) crypto lending platform imposed restrictions on withdrawals, citing financial difficulties. Celsius filed for bankruptcy on Wednesday.
"In both cases, when centralized facilities failed, users flocked to the network to take advantage of the unlimited nature of DeFi," notes CoinGecko.
NFT Trading Volume fell
The report also indicates that the trading volume of non-exchangeable tokens (NFT) fell by 26.2% compared to the peak value in June 2021 to $7.6 billion for the quarter, mainly due to a decrease in the volume of NFT trading offered on the Ethereum network.
June 2022 also saw the lowest NFT trading volumes in 12 months. They barely reached $830 million, which coincided with a drop in the minimum price of NFT.
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