USDT Dominates Stablecoins, VC Fund Takes Massive Dive — Binance Report

The first half of 2023 has been a dynamic period for the cryptocurrency market, marked by both challenges and noteworthy achievements. In a comprehensive report, Binance delves into various aspects of the crypto industry during this time, analyzing the performance of major cryptocurrencies, advancements in blockchain technologies, and shifts in market trends. 

Firstly, Bitcoin, the world’s largest cryptocurrency, saw its market dominance increase during the first half of 2023, reaching a little over $30,000 after starting the year at the $16,000 mark, indicating an increase in its share of the total cryptocurrency market capitalization.

Additionally, Bitcoin’s year-to-date price performance exceeded 87%, outperforming many traditional financial investments (referred to as “TradFi” investments). 

Moreover, Bitcoin’s correlation with traditional finance (TradFi) assets is now at multi-year lows, indicating that it may be becoming less influenced by traditional market trends. 

It also added that the increased energy in the Bitcoin ecosystem suggests that there are new developments and innovations to look forward to in the coming months. An example is the launch of BRC-20 tokens and Bitcoin Ordinals. 

Stablecoins, Layer 1s, and Layer 2s

Another finding of the report is the dominance maintained by USDT in the stablecoin economy. Despite a 7.0% decline in the overall global stablecoin market value, the sector’s market composition underwent significant changes. Adoption trends, regulatory landscapes, and the approaches adopted by specific players influenced this shift. 

Notably, Tether (USDT) experienced a remarkable 25.8% increase in market share year-to-date, indicating that it gained a larger share of the stablecoin market. As a result, USDT’s market share exceeded that of other major stablecoins.

While there were significant developments that took place on L1s, Ethereum’s liquid staking reached new heights, giving rise to a new sub-sector called LSTfi. LSTfi, a new DeFi protocol built on top of Liquid Staking Tokens (LSTs), has gained popularity among crypto investors due to its liquidity benefits. 

LSTs have replaced other collateral types in Ethereum DeFi, resulting in over 50 LSTfi protocols, and their TVL has surpassed that of Decentralized Exchanges, making them the top-ranking DeFi category with a market valuation of over $18 billion. This growth indicates LSTfi’s significant role in expanding DeFi’s reach and a promising future for its protocols.

BNB Chain prioritized scalability; Solana rebounded from challenges in 2022 and launched a Web3 phone; Avalanche made progress in subnets and corporate partnerships; and Cosmos advanced with shared economic security models.

Binance highlights that Optimistic rollups remained the primary Layer 2 scaling solution, improving blockchain transaction throughput. The launch of zkEVMs (Zero-Knowledge Ethereum Virtual Machines) in the ZK world signifies a substantial advancement in Ethereum’s scalability and privacy features. 

Also, major players in the crypto space are converging around the concept of networks of blockchains (L3s, Superchains, and Hyperchains), indicating a rising interest in interoperability between different blockchain networks.

DeFi, NFTs, and VC Funding

Furthermore, Binance noted that the Decentralized Finance (DeFi) sector experienced notable developments in the first half of 2023. Liquid staking played a crucial role in driving growth in DeFi, becoming one of the largest sub-sector within the space. 

Additionally, there was an increasing migration of users towards Decentralized Exchanges (DEXes), contributing to DeFi’s continued evolution and unlocking newer use cases. Despite these positive trends, DeFi’s dominance experienced a slight decline compared to the overall crypto market.

Then, NFTs saw increased trading volume during H1 2023 compared to H2 2022. Thanks to Blur NFT Marketplace, that displaced Opensea from the top spot. However, NFTs underperformed the broader crypto market, as the floor prices of many NFT collections declined year-to-date. 

On the other hand, gaming-related tokens experienced price appreciation during the first half of 2023, likely benefiting from the overall market recovery. 

The report mentions that more than 67% of games are built on BNB Chain, Ethereum, and Polygon, indicating the dominance of these blockchains in the gaming sector.

Lastly, during the first half of 2023, crypto deal activities and venture capital funding for cryptocurrency projects decreased. Notably, the infrastructure sector received the most investments, with gaming/entertainment and DeFi also attracting investor interest, indicating a focus on supporting projects related to blockchain infrastructure development and improvement.

Despite facing challenges in the first half of 2023, the cryptocurrency market showcased resilience, concluding the period with positive growth in overall market capitalization, suggesting its ability to withstand adverse conditions.