Shockwaves were felt across the cryptocurrency markets, Web3, and the dapp industry with the sudden demise of the FTX exchange and all of its associated entities. From business as usual to bankruptcies and fraud probes took less than a week. The whole Web 3.0 sector saw the effects of this happening.
The Web3 sector was taken aback by the precipitous fall of FTX and its related coins, which had a value of $32 billion at one point. A bank run on their stored assets, a withdrawal freeze, a potential takeover proposal from Binance (quickly withdrawn), investigations by the SEC, suspicious transfers of a large number of FTX tokens, the hack, and a global bankruptcy declaration for FTX and all affiliated parties all occurred in the span of a week in November 2022.
In this report, DappRadar explains how the FTX fall affected the dapp market as a whole.
- FTX and Alameda Research had $1.7 billion and $177.3 million on November 8th respectively. At the time of this writing, there has been a 94% and 69% decline in the total value of the two wallets.
- DeFi activity reached its high on November 9 and 10, hitting approximately 500,000 UAW on both days. DeFi activity has now returned to previous month’s levels (400K dUAW).
- There doesn’t seem to be much of an impact from the FTX breakdown on gaming dapps and gaming chains like EOS, Hive, Wax, Ronin, and IMX, where gaming UAW peaked on November 10 at almost 900,000.
- The DeFi TVL is down $20.60% since November 1st, falling from $83b to $65b.
- Solana dropped its dUAW by 6.53% (46K) and the transactions count by 10.42% (1.5M) since October 31; its activity peaked on November 8 with 65K UAW. TVL in Solana fell by 18% in SOL terms and by 66% in TVL in USD terms.
- Solana’s NFT trading volume has grown by 380% since November 1, and the number of NFT sales has grown by 396%. The floor price of DeGods fell by 24.01% in SOL and by 69.11% in USD, while the number of listed NFTs rose by 58.04%.
- On November 13, rumors circulated that Crypto.com would be going bankrupt, and since then, on November 20, Cronos has seen 15,000 dUAW in activity and 25,000 in transactions. The TVL is down 19% in US dollars but up 45% in CRO.
- Since November 1st, NFT trading volume as a whole has declined by 68.60%, while the number of sales has fallen by 24.50%. The value of blue-chips collections has been stable, falling by just 9.78% in ETH terms on average and only 30% in USD terms.
To sum up, cryptocurrency exchanges provide a far higher level of risk to investors and depositors than do more conventional financial institutions and markets. To complete a transaction, cryptocurrency exchange customers must first transfer ownership of their assets (meaning they are no longer depositors, but creditors).
Traders in cryptocurrencies should thus not keep their funds on a centralized exchange. If the price of a cryptocurrency decreases significantly, investors may be unable to sell their holdings on an exchange due to the high volatility of the cryptocurrency market. Clients may have a harder time regaining access to their digital currency if this occurs.
Despite FTX’s demise, blockchain technology is alive and well, serving as the backbone for numerous novel initiatives that will forever revolutionize our financial system and economies. Without flinching, the technology continued to serve all users and facilitate the transfer of assets between them.