Blockchain Gaming and the Metaverse Managed to ‘Avoid’ Terra’s ‘Lehman Brothers-Style’ Collapse in May – Though Decentralized Finance (DeFi) and Non-Fungible Tokens (NFTs) Weren’t So Far lucky, according to a report.
In a July 29 report from decentralized application data aggregator DappRadar, Terra’s collapse in May was of a similar magnitude to the subprime mortgage crisis of 2008 – causing decentralized finance (DeFi), non-fungible tokens (NFT ) and companies such as Capital of the Three Arrows (3AC), Celsius and Travel to cop the weight of the destruction of Terra.
“It is becoming clear that the Terra debacle has evolved into a Lehman Brothers-like event that has sent shockwaves throughout the crypto industry and aftershocks that will affect us for many months to come.”
However, Dappradar noted that blockchain and Metaverse gaming projects had either minimal downsides or even positive signs of growth over the same period.
weather the storm
The report compares different metrics to show how the collapse of Terra (in the middle of Q2) impacted the performance of various crypto sectors between the first two quarters of this year.
One of the key metrics the report looks at is deal count (the total number of completed deals), which basically shows user engagement. DeFi and NFT saw the biggest declines with 14.8% and 12.2% each, while blockchain games and NFT-related Metaverse projects “managed to avoid the ensuing bear market” by posting increases of 9.51% and 27% each.
The report also added that while the average amount of activity from unique active wallets (UAWs) in NFTs fell 24% in the second quarter, blockchain gaming saw a drop of just 7%, suggesting that users continue to interact with gaming dApps” at about the same rate as before the Terra incident.
Trading volume for Metaverse-related NFT projects was also described as a “ray of hope”, with volumes up 97% since Q2, despite an overall decline of 32.66% in the NFT sector in Q2. trimester.
In a separate DappRadar report starting in July, the company suggested that blockchain gaming might have fared better than other crypto sectors last quarter due to the non-speculative aspects of the games themselves.
“This bullish activity indicates that engagement with virtual worlds is not based on their profitability for the end user. This shows that virtual worlds are inherently fun for the end user as communities remain active despite the devaluation of native tokens,” the report states.
DappRadar also said there is sustained institutional investment in blockchain games and the metaverse, pointing out that many large companies see the potential for strong economic growth in both sectors in the future.
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The report went on to highlight that the amount of investment in blockchain games and Metaverse projects remained constant during the second quarter despite the carnage of Terra:
“Despite a financial hit and shaken confidence in the industry, investors remain optimistic as the number of investments in blockchain games and metaverse projects remained consistent quarter over quarter at 2.5 billion dollars invested in the first and second quarters.”