Market Dispatch: Metaverse and GameFi Sectors Drop 30% in Crypto Selloff

In a stretch when the crypto market suffered a heavy selloff, the GameFi, metaverse, and Play-to-Earn categories were among the hardest hit, with each shedding more than 30% of their value amid heavy drawdowns from widely-held names such as Axie Infinity, The Sandbox, and Decentraland.

The nine-largest metaverse tokens all suffered losses ranging between 20% and 56%, with only three of 58 tokens posting gains for the week. Similarly, only eight of 201 tokens classified under GameFi posted gains, while 12 of 122 Play-to-Earn were up for the week.

The downturn in metaverse names came amid the broader carnage in the market. The combined capitalization of DeFi assets has shed nearly 11% in the last seven days as the broader crypto markets swooned, according to CoinGecko.

According to the data aggregator, the market cap of DeFi tokens fell to $139.2B from $156B in the past seven days. The sector has lost one-fifth of its value since its Nov. 12 all-time high (ATH) of $173.7B.

DeFi Market Cap since Jan 2020: CoinGecko

Of the top 100 DeFi assets by capitalization, only five non-stablecoin assets posted gains for the week. By contrast, 16 assets suffered drawdowns of 30% or higher, while 48 tokens declined by at least 20%.

Terra (LUNA) is the top DeFi token by market cap with $24.8B and a dominance of 17.8%, followed by Chainlink (LINK) with $8.8B or 6.3%, and Uniswap with $7.3B or 5.2%.

Top Gainers
Among the top 100 DeFi assets by market cap, just Terra and Anchor posted double-digit gains from the DeFi sector this week.

Terra (LUNA) + 28.5%

Anchor Protocol (ANC) + 12.2%

Tribe (TRIBE) + 9.0%

Gnosis (GNO) + 3.5%

Anyswap (ANY) + 2.45

Biggest Losers
Three of the 12 biggest weekly drawdowns among top DeFi tokens were posted by projects ranked among the 20 largest decentralized finance assets.

DerivaDAO (DDX) – 50.2%

Badger DAO (BADGER – 41.7%

STP Network (STPT) – 36.3%

Dodo (DODO) – 36.1%

Ren (REN) – 35.3%

Total Value Locked

The combined total value locked (TVL) in the DeFi sector has also retraced by roughly 10% this week, pulling back from a retest of previous all-time highs at $276B to now sit at $250.6B according to DeFi Llama.

Curve is the largest protocol by cross-chain TVL with $20.2B or a dominance of 8.1%, with MakerDAO (MKR) ranking second with $18.5B or 7.4%. Long-standing blue-chip Aave has fallen from the top 3 by TVL, with Convex Finance climbing to third with $15.2B or 6%.

The TVL of the Ethereum network has pulled back 7.5% this week to sit at $164B and is down nearly 11% from its early November record of $185B. Binance Smart Chain ranks second by TVL with $16.7B after shedding 11% this week. BSC is now down by 50% compared to its early May record high.

Competition among other top chains offering Ethereum Virtual Machine (EVM)-compatible Layer 1s is heating up, with less than $1B now separating Terra, Solana, and Avalanche. While Terra is the third-largest network by DeFi with $12.8B, Solana is closely behind with nearly $12.5B, and Avalanche with $11.9B.

Although Terra’s TVL is up 9% for the past seven days, its TVL has pulled back 11% from its Dec. 5 ATH of almost $14.4B. Solana slipped roughly 15% for the week, and Avalanche is down 10% despite posting record highs for TVL earlier in recent days.

Tron follows in sixth with $5.41B, followed by Polygon with $4.78B, and Fantom with $4.41B.

Layer 2 Action

Arbitrum is still Ethereum’s leading Layer 2 by DeFi with $1.85B — despite having retraced 34% from its early November ATH at $2.79B, followed by derivatives DEX and dedicated Layer 2 dYdX holds second place with $983M, according to L2Beat.

Recently launched Optimistic rollup network Boba Network comes in third with $350M, continuing to beat out rival and pioneering roll-up project Optimism with $301M.

Burn Rate

According to Ultrasound Money, Ethereum’s burn rate has continued to stagnate, with 76,521 ETH destroyed over the past week at a rate of 7.59 Ether per minute — a 6.3% reduction compared to late November.

ETH transfers were the largest source of burned Ether with 8,138 ETH destroyed, beating out OpenSea’s 5,855 ETH, Uniswap v2’s 5,781 ETH, Tether’s 4,304 ETH, and Uniswap v3’s 2,789 ETH.

More than 1.12M Ether (worth $4.5B at current prices) has been burned since Ethereum’s London upgrade went live in early August.