The DeFi sector has been a major focus in Q1 2023 with the Total Value Locked (TVL) in DeFi reaching $83.3 billion by the end of the quarter.
According to the Q1 2023 DappRadar report, this represents a substantial increase of 37.44% from the previous quarter and reflects a growing interest in decentralized finance.
The growing popularity of scaling solutions such as Arbitrum, Fantom, and Optimism have played a significant role in the increasing interest in DeFi.
"How many people have used a layer 2?" – @VitalikButerin pic.twitter.com/PN4dKIPWKi
— BitKE (@BitcoinKE) February 21, 2023
Additionally, the increase in Ethereum’s price by 48% to over $1,800 in Q1 2023 was also a contributing factor in raising TVL.
In terms of blockchain activity:
- BNB Chain remains the most active in Q1 2023 with an average of 449,543 daily unique active wallets (dUAW) despite a 28.62% decrease from the previous quarter
- Wax follows closely behind, with an increase of 9% over the past three months reaching an average of 397,273 dUAW
- Meanwhile, Polygon had a strong quarter and witnessed a 25.93% increase in its daily Unique Active Wallets reaching 197,343 unique wallets per day
- Arbitrum emerged as the top performer with a remarkable increase of 125.83%, reaching an average of 46,071 daily unique active wallets (dUAW). This growth can be attributed to the Arbitrum airdrop that took place in March 2023
The Rise of Social Dapps
The social dapps vertical has emerged as one of the most favored sectors within the industry. This category includes all Web3 platforms for social networking, messaging, and content creation, and recorded an average of 210,644 daily unique active wallets (dUAW) in Q1 2023.
Although this figure indicates a 4.9% decline from the previous quarter, the vertical has expanded by a remarkable 2,250% since Q3 2022.
Social dapps now account for 12% of DappRadar’s on-chain activity.
Social dapps utilize blockchain technology to provide users with data privacy, security, and transparency. They offer various features such as user profiles, messaging systems, and content sharing functionalities.
Top social dapps by Unique Active Wallets in Q1 2023 are as follows:
- Hooked – 120,584
- Glaxe – 39,953
- CyberConnect – 30,407
- Lens Protocol – 3,146
- Phi – 2,405
NFT Market in Q1 2023
When it comes to the non-fungible token (NFT) market, we see a strong start in Q1 2023 with the best performance since Q2 2022. Although there was a slight decline in trading volume in March 2023, the overall trend was bullish.
During the quarter, the market experienced a significant rise in trading volume with a 137% increase compared to the previous quarter, totaling $4.7 billion. However, March 2023 saw a 15.65% drop in trading volume due to the inflated February 2023 period caused by the Blur token farming. Despite this, the sales count of NFTs only decreased by 4.63% in March 2023 with a total of 2.7 million NFTs sold.
Overall, Q1 2023 saw a total of 19.4 million NFT sales marking an 8.56% increase from the last quarter of 2022.
The Ethereum blockchain continues to hold the largest share of the NFT market by trading volume with 89.50% market share by March 2023 with total trading volume over the quarter growing by 245.43% to reach $4.1 billion compared to Q4 2022. The CryptoPunks NFT collection was the most traded on Ethereum with a trading volume of $241 million, a significant increase of 1,214% from the previous month.
In March 2023, the NFT collections from Yuga Labs took over the Ethereum volume, accounting for 38.61% of the NFT volume on Ethereum and 34.55% of the entire NFT industry.
According to DappRadar, the NFT market is experiencing a rapid evolution, with new players emerging and changing dynamics.
Based on this analysis, Blur dominated the NFT market experiencing a significant increase in trading volume and market dominance during the quarter. The NFT marketplace witnessed a remarkable surge in trading volume, amounting to $2.7 billion, marking a significant increase of 783.89% from the previous quarter and accounting for 57.44% of the NFT market in Q1 2023.
In March 2023, although the trading volume for Blur decreased by 6.56% to $1.2 billion, it still held a market dominance of 70.5%.
At the same time, OpenSea, one of the largest NFT marketplaces, had a 68.41% increase in trading volume, reaching $1.4 billion with a market dominance of 31.10% during this period. OpenSea’s trading volume declined by 35% to $381 million in March 2023, and its market dominance decreased to 22%, the lowest market share it has had since February 2021.
One more notable factor in Q1 2023 was the increasing dominance of blockchain gaming which now accounts for 45.60% of all on-chain activity according to DappRadar. Platforms like ImmutableX and Polygon are said to be leading the way in the gaming space, with their partnerships and innovations paving the way for the future of Web3 gaming.
Despite the impressive resilience that continues to be demonstrated by the crypto space, the sector still experienced considerable challenges.
In Q1 2023, there were still instances of hacks and exploits resulting in the loss of funds, with a total of $373 million lost. However, this was a significant improvement from the previous quarter, which saw a loss of $5 billion. The decline in losses demonstrates the resilience and adaptability of the blockchain ecosystem and the efforts made by industry players to improve security measures.
Another issue that has emerged is the collapse of Silicon Valley Bank which has highlighted the need for stablecoin regulations. With more traditional financial institutions entering the crypto space, it has become increasingly crucial to establish clear guidelines and regulations to ensure market stability and security.
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