Market Action: Terra a Bright Spot in Worst Slump Since October Peak

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The crypto market is still in the doldrums. 

That’s the upshot of the last seven days. The combined capitalization of the DeFi sector slid to its lowest level since all-time highs in early October.

Since the Nov. 12 peak, DeFi assets have lost almost a quarter of their value, dropping to $135B, according to CoinGecko.

There is one exception to the trend: Terra. Even though it declined 14.3% in the last seven days, its token LUNA is the top DeFi asset with a capitalization of $22.2B,  or 16.5% of the DeFi sector’s market cap, in early morning trading New York time. And it’s overtaken mighty Solana. Terra ranks third with nearly $12.4B in TVL. Terra’s top projects by TVL are Anchor with nearly $6B, Lido with 3.90B, and Terraswap with 1.06B.

Solana sits at fourth with $11.5B in TVL, led by Raydium with $1.60B, Serum with $1.31B, and Marinade Finance with $1.28B. A margin of just 4% now separates Solana and Avalanche, with Avalanche ranking fifth with $11.1B. Avalanche’s leading protocols are Aave with $2.88B, Trader Joe with $1.90B, and Benqi with $1.52B.

Double-Digit Growth in GameFi

After recently posting meteoric gains followed by a violent pull-back, volatility in the GameFi and Play-to-Earn segments has calmed, with the sector posting respective weekly losses of 5.7% and 6.4%.

Despite the decline, three GameFi assets posted double-digit growth for the week: Gods Unchained (GODS) was up 47.3%, Bluezelle (BLZ) gained 16.2%, and Gala (GALA) bounced up 13.1%.

TVL Trends

The total value locked (TVL) of the DeFi sector slid roughly 1% to sit at $246.3B, according to DeFi Llama. The past week also saw DeFi’s TVL sink to its lowest level since late October, slipping to almost $243.7B on Dec. 11.

The top three DeFi protocols by cross-chain TVL have not moved this week, with Curve taking the top slot with $21.4B, followed by MakerDAO with $18.1B, and Convex Finance with $16%.

Ethereum is the top network by DeFi TVL with $163.3B, or two-thirds of the sector’s total, with Curve, MakerDAO, and Convex topping its rankings.

While Binance Smart Chain (BSC) has held in second-place $16.2B, the ecosystem’s TVL suffered a sudden flash crash early in the week that saw BSC’s total value locked briefly fall to roughly $11.1B. PancakeSwap is BSC’s top protocol with a $5.37B TVL, followed by Venus with $2.16B, and Tranchess with $1.13B.

Tron is the sixth-largest network with a DeFi TVL of almost $5.8B, followed by Polygon with 4.8B, and Fantom with $4.51B.

Chainlink (LINK) ranks as the No. 2 non-stablecoin asset with a market cap of $8.92B or a DeFi dominance of 6.6%, followed by Uniswap (UNI) with $6.98B or 5.2%.

Layer 2 Action

The growth of Ethereum’s layer-2 ecosystem stagnated this week, with leading network Arbitrum’s TVL slightly increasing to $1.91B from $1.86B. L2Beat ranks dYdX second with $976M, followed by Optimism with $300M. 

While L2Beat notes that Optimism’s overall TVL of $419M is almost half that of rival Boba Network’s $769M, DeFi Llama estimates that Boba’s DeFi TVL has fallen to $188B from $530M in two weeks.

Burn Rate

Ethereum’s burn rate has continued to fall in recent weeks, currently sitting at 51,262 ETH in seven days at a rate of 5.09 ETH per minute. By contrast, Ethereum’s weekly burn rate was roughly 8 ETH per minute as of Nov. 22. 

ETH transfers were the single-largest source of burnt Ether, destroying 5,036.6 ETH this past week. Unsiwap v2 ranked second with 4,222.5 ETH, followed by OpenSea with 4,105.5 ETH, and Tether with 2,461 ETH.

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