With DeFi Hit by Tornado Cash Sanctions, Layer 2 Protocols Thrive Amid Ethereum Merger, According to DappRadar’s August 2022 Blockchain Industry Report

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Kaunas, Lithuania

–Direct News–

DappRadarthe global app store for decentralized apps, released its August Blockchain Industry Report today, revealing that while DeFi-based activity grew 3.7% from July, the industry’s TVL was down 10.47%.

In stark contrast, Ethereum scaling solutions are enjoying a huge boost in their DeFi metrics amid the merge; with Optimism promoted to top ten blockchains with around $1 billion in TVL.

After the Office of Foreign Assets Control (OFAC) imposed sanctions on Tornado Cash, Circle, the payments company behind USDC, banned some addresses, freezing $75,000 in cash, and in turn had a impact on the stability of the DAI stablecoin, whose peg stability is maintained by USDC repositories.

With protocols like dYdX and Aave prohibiting their use by anyone who dealt with Tornado Cash, the DeFi industry’s TVL fell 10.47% month-over-month, losing an estimated $8.7 billion. “Even though DeFi is showing signs of recovery when analyzing the industry’s unique active wallets, the overall DeFi TVL is still suffering and currently sits at $74.21 billion, an alarming drop considering that amount was $250 billion less than eight months ago,” the DappRadar report said.

On a more positive note, Ethereum-based Layer-2 (L2) protocols are showing signs of growth primarily driven by the upcoming Ethereum merger. In first position is Optimism, which entered the top 10 blockchains with a total value locked of around $1 billion, a growth of 57.61% MoM. Next, Arbitration has a monthly increase of 14.36%, followed by Polygonwhich has a monthly growth of 6.50%, although a decline of 62.58% year over year.

“Dapps developed on Ethereum Mainnet will continue to migrate to Layer 2s, due to incentives for liquidity mining, cheaper gas prices, and the possibility of retroactive token airdrops. As users accumulate on these rollups and as TVL grows, new protocols will be encouraged to be created directly on L2s, requiring UX improvements on on-ramps, wallets and bridges to enroll users directly on L2s” , notes the report.

On the other hand, the NFT market is going through a difficult period, as evidenced by the recent layoffs at Opensea, the decline in trading volume shown below, the devaluation of cryptocurrencies and the risk of a massive liquidation of Bored Ape NFT by BendDAO.

BendAO, a peer-to-peer lending company that allows users to borrow ETH by pledging their NFTs as “collateral”, is in the process of bankruptcy. BendDAO holds 272 NFTs from Bored Ape Yacht Club collection as collateral (2.72% of the entire collection). Of these 272 loans, 45 are dangerously close to the “danger zone” due to the lower floor price, and could be auctioned in the coming days. An auction of this size, worth an estimated $5.3 million, could have repercussions for the entire BAYC collection.

Despite these issues, July saw the introduction of two exciting new markets: stoppage of play and Nickelodeon NFT market. August was no different as we saw the emergence of a new NFT market, SudoSWAP, which aims to disrupt the way crypto consumers view NFT liquidity and transactions. This is achieved through the introduction of the concept of “automated market maker” (AMM) for NFTs via this new marketplace.

About DappRadar

Founded in 2018, DappRadar is The World’s Dapp Store: a global store of decentralized applications (dapps), which enables its base of over one million monthly users to easily track, analyze and discover dapp activity through its online platform. The platform currently hosts over 10,000 dapps across over 30 protocols and offers a plethora of user-friendly tools, including industry-leading comprehensive NFT valuation, portfolio management and daily actionable insights.

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See source version at newsdirect.com: https://newsdirect.com/news/with-defi-hit-by-tornado-cash-sanctions-layer-2-protocols-thrive-amid-ethereums-merge-dappradars-august – 2022-blockchain-industry-report-watch-175627103

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