Three months later 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 disaster’s domino effect fell as the contagion spread to large firms with exposure to Terra, such as Three Arrows Capital, BlockFi and Celsius.
For the broader markets, the result was a bleak crypto winter, with market capitalization falling below $1 trillion and a number of crypto exchanges halting withdrawals.
Research by DappRadar revealed that DeFi bore the brunt of the collapse, registering a steady month-on-month decline. The data pointed out that Total Value Locked (TVL) has fallen by an average of 68% across all blockchains, and reports of hacks have compounded the declining numbers.
Regulations that come after the collapse of Terra
Experts have warned of a coming wave of regulations for the industry in both the US and European markets. Several bills on stablecoin regulation are in play in both jurisdictions to prevent a repeat of the events of May.
The Financial Stability Board (FSB) is pushing for a joint, global effort and will present a comprehensive regulatory proposal in October to the G20 countries.
Agencies are also stepping up efforts to rein in the virtual currency industry, with the Securities and Exchanges Commission (SEC) leading the way by doubling the number of employees working in crypto-related fields.
Developer activity within blockchain has also taken a big hit. DappRadar notes that the number of new decentralized applications (dApps) released across all chains had dropped by a staggering 35% in the months following Terra’s collapse.
Blockchain game the biggest winner
Blockchain games appear to be insulated from the collapse, registering increased levels of consumer activity. Gaming non-fungible token (NFT) transactions have defied market trends with a 19% year-over-year increase as capital from institutional investors poured in.
Solana and WAX were the blockchains that saw significant gaming activity, DappRadar notes. Splinterland, Farmers World and Alien Worlds came out on top after noting 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 in second and third place, respectively.
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