Thread by @cryptoPothu

Where’s the crypto market headed?

Between the Eth merge and macroeconomic conditions, it’s hard to say.

I dove into Chainalysis’ 109 page State of Web3 Report to gain a better understanding.

I read it all so you don’t have to.

Here’s everything you need to know 🧵

The Chainalysis report covers a lot.

Some of the most interesting things it covers are:

• Institutional investment in Web3
• DeFi usage
• DAO statistics
• Web3 and privacy

Keep reading for my takeaways and insights ⬇️

1. People use crypto even when prices are falling

On-chain transaction volume has since leveled off over the past few months.

This is largely due to price declines in Eth and other assets.

The number of individual transfers hasn’t fallen.

This suggests that more individual investors are entering the ecosystem.

2. NFTs are far from dead

A lot of people think that the bear market has killed NFTs.

NFTs are still going strong.

Since the beginning of 2021, NFT transaction volume has grown significantly, but the growth does fluctuate.

n 2022, over $37 billion have already been spent on NFTs.

This outpaces 2021. In 2021, there was a total of $40 billion spent on NFTs.

A lot of people still use NFTs. There were ~750k NFT buyers and sellers active on-chain last quarter.

Who is buying NFTs?

There are a lot of retail investors. Transactions smaller than $10k command ~90%+ of the frequency of transactions for NFTs.

Institutions have started to roll in as well. Most NFT volume comes from large transactions by institutions.

As late as April 2022, there were over 4000 institutional transactions each month.

3. Web3 has the potential to make the internet safer

Web2 has failed to protect consumers.

Web3 can solve internet privacy issues.

Networks and protocols, like @SecretNetwork @TornadoCash are capable of disentangling payments and consumer data from real world identity.

@SecretNetwork @TornadoCash @MineApp, a privacy startup, estimates that the average consumer’s personal data is held by 350 different brands.

Millions have been affected by data breaches. Compromises reveal their personal information.

Web3 allows users to take back control.

4. Over $40 billion is staked across major networks

Staking is one of the most popular ways to earn yield.

Take a look at TVL staked by chain.

PoS blockchains vary widely in yield.

Be careful when staking though. Most crypto assets are extremely volatile.

Take a look at the different yields by blockchain:

5. DEXs are bigger than CEXs

Decentralized exchanges have managed to do over $1 trillion in volume.

When compared to CEXs, DEXs now have a lead in on-chain transaction volume.

At its peak, DEX transactions were ~2.5 times that of CEX transactions.

How did DEXs take the lead?

Most CEX transactions happen off-chain on centralized databases.

The rapid growth of DeFi contributed to the rise in DEX usage.

A lot of users started using DEXs primarily for yield farming.

6. DAOs have a long way to go

DAOs give people the ability and freedom to create things and make collective financial decisions.

They’re supposed to be decentralized.

But across several major DAOs, less than 1% of all holders have 90% of voting power.

What do most DAOs do?

DeFi currently Dominates DAOs.

DeFi-related ventures hold around 83% of the capital in DAOs.

The average DeFi related DAO controls ~$100 million in assets.

7. So what’s going to happen to the crypto market?

Based on the report, it’s clear that Web3 is far more established than in past cycles.

The past bull run was largely fueled by growth in addition to speculation.

Crypto is still risky, but it’s not going to tank or go away overnight. There are too many people using it.

There are too many potential use cases.

Yet, it might take a while for prices to pick up.

Institutional investment was just starting to get off the ground.

Then the bear market hit, and we’re in the worst macroeconomic environment of the past decade.

The merge is just a single catalyst. I think the market is going to take a while to recover.

There will likely need to be more innovation to catalyze an uptrend.

Fear still seems high at the moment.

There’s simply no way to predict the bottom.

Benjamin Graham put it best when he once said “It’s best to pay no mind to “Mr. Market”, who frequently boomerangs from exuberance and euphoria to despair and depression.”

I don’t know when crypto will bounce back, but I’m confident it will.

Don’t step away from Web3, unless you want to miss out on the opportunity of a lifetime.

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You can download a copy of the report here:

go.chainalysis.com/2022-web3-repo…