Footprint February Review Monthly Report | DeFi Slowly Recovers, While NFT Craze is Declining

Lido's single-asset staking model helps Terra surpass BNB Chain to become the second-largest public chain.

• Author: Mar. 2022, Vincy
• Data Source: Footprint Analytics – February 2022 Report Dashboard

In February, despite the macroeconomic downturn caused by the Russia-Ukraine conflict, applications in the blockchain sector continue to operate steadily. DeFi is slowly recovering, and some public chains and cryptocurrencies show a slight rebound.

Footprint Analytics data shows that DeFi's TVL is $207.18 billion, with a monthly growth of 1.06%. BTC and ETH have a monthly increase of about 10%. Of particular note, Terra surpassed BNB Chain to become the second-largest public chain in the network, with the LUNA token price soaring to $91.01, a monthly increase of 75.8%.

However, the monthly trading volume of NFTs is facing a cooling trend. The following will analyze the overall situation of the cryptocurrency market in February through data.

BTC and ETH Rise by Approximately 10%, Clearing Funds Decrease by 95.53%

In February, the price of BTC fluctuated between $37,000 and $44,000, while ETH ranged from $2,600 to $3,200, both failing to recover to the peak values of November last year.

Analyzing the price changes of BTC and ETH before and after the Russia-Ukraine conflict:

• On February 24, the announcement of "military action" by Russia and Ukraine led to a global financial market impact causing a drop in BTC and ETH prices;
• At the end of February, the Russia-Ukraine conflict and the subsequent economic sanctions exposed the demand for decentralized ecosystems, with cryptocurrencies increasingly used for humanitarian and military aid, leading to a noticeable increase in coin prices.

According to Footprint Analytics price trends, as of February 28, the price of BTC was $43,286, and ETH was $2,929.53, with a rise of approximately 10% compared to the previous period. This indicates a high correlation between cryptocurrency prices and national policies and macroeconomic conditions.

Due to the Russia-Ukraine conflict, investors were triggered for liquidation in the AAVE lending protocol on February 24, accounting for over 80%. However, compared to January, the liquidated amount in February decreased from $425 million to $18.96 million, a 95.53% decrease.

DeFi Slowly Recovers, with a 1.06% Increase

Following the overall decline in the DeFi market in January, there was a slow recovery in February. Total Value Locked (TVL) increased from $205.02 billion to $207.18 billion, with a slight 1.06% increase by the end of the month. Despite the modest increase in TVL, the overall market size remains above $200 billion.

Lido's Single-Asset Staking Model Propels Terra to Surpass BNB Chain as the Second-Largest Public Chain

During the macroeconomic downturn, the competition between public chains and protocols remains unaffected. Terra surpassed BNB Chain to take the second position with a locked value of $188.3 billion for several months, further distancing itself from BNB Chain in February. The growth of Terra's TVL is attributed to the support from the Lido and Anchor protocols.

LUNA is Terra's native token. By the end of February 28, the price of LUNA rose from $52.31 at the beginning of the month to $91.01, representing a monthly growth of 75.8%.

The upward trend of LUNA is driven by two main factors:

• Terra and the non-profit organization Luna Foundation Guard (LFG) announced a $10 billion LUNA token sale on February 23 to help develop a decentralized forex reserve to protect the peg of UST TerraUSD to the US dollar;
• Lido supports multiple mainstream public chains, with Terra having the largest share of Lido TVL (approximately 55%). It also features innovative tokenomics, allowing single-asset staking (such as staking LUNA to earn stLUNA at a 1:1 price) in external contracts for higher APY.

Leading Fixed-Rate Protocols Lido and Anchor, Emerging "Dark Horses" in the DeFi Ecosystem

While the positions of Curve and MakerDAO remain unshaken, being pegged to stablecoins, their stability has gained the trust of the majority of users.

Among many DeFi protocols, the most prominent and rapidly growing are Lido (+46%) and Anchor (+52%), with TVLs of $11.2 billion and $10.3 billion, respectively, surpassing protocols like Compound and Uniswap v3. Both Lido and Anchor are deployed on the Terra network, which provides users with a stablecoin UST savings and lending service, focusing on algorithmic stablecoins.

NFT Trading Volume in February Decreases by 67% Compared to January

According to Footprint Analytics data, the NFT trading volume in February was $2.787 billion, a significant 67% decrease compared to January. It seems that investor interest in NFTs is waning. However, for NFTs, the decline in trading volume in February may just be a simple correction as the data in January was at high levels.

Furthermore, under the conflict between Russia and Ukraine, investors have shifted their focus to cryptocurrencies, viewing BTC as a hedge.

OpenSea Targeted by LooksRare and X2Y2 Emerging Markets

In February, there was a noticeable slowdown in the growth of OpenSea's trading volume, particularly since February 14, showing a continuous decline in daily average trading volume. This slowdown in OpenSea has led to the rise of emerging exchanges LooksRare and X2Y2. In early February, LooksRare successfully attracted a significant portion of OpenSea's NFT trading volume, but short-term incentive programs did not threaten OpenSea's dominant position.

Terraforms and Meebits Stand Out as Prominent NFT Projects

Footprint Analytics data shows a surge in NFT series transactions for the projects Terraforms and Meebits from February 16 to 21, with the transaction volume reaching $56 million. Established NFT projects like Axie Infinity and Bored Ape Yacht Club have relatively stable transaction volumes and attract the most user participation.

Monthly Investment Amount Decreases by 19.6%

Data indicates that the investment amount in February was $4.7 billion, a 19.6% decrease compared to January. In terms of investment areas, the NFT sector saw the largest decline, as investors shifted their focus to cryptocurrencies, reducing investments in NFTs.

On the other hand, with the gradual mainstreaming of decentralized systems, Web3-based technologies are becoming more crucial. Additionally, a16z is the largest investor in the Web3 sector, with a team comprising former officials from various U.S. government departments, driving the highest increase in Web3 investments in February (79% month-on-month).

Monthly Summary

In February, despite a bearish environment, applications in the blockchain sector continued to run steadily and showed a slight upward trend. The Russia-Ukraine conflict and economic sanctions have highlighted the need for decentralized ecosystems, with cryptocurrencies being used for military aid purposes, showcasing the true potential of blockchain to the crypto community.

However, this has impacted NFTs, as they face a significant decrease in trading volume and a shift of investors toward the Web3 sector. It is hoped that in March, NFTs can recover to the peak values of January.

February Event Review

Policy and Current Affairs

• Ukraine has raised $16.7 million in cryptocurrency donations.
• ECB President calls for approval of cryptocurrency regulatory framework to prevent Russia from evading sanctions.
• South Africa to complete financial law amendments in 2022, involving cryptocurrency-related regulations.
• Argentina Central Bank sets new rules for digital wallets.
• Bill to make Bitcoin legal tender to be introduced in Mexico.

Financing

• Blockchain storage application ArDrive completes a $17.2 million seed round, led by the Arweave team.
• Web3 infrastructure provider Aligned secures $34 million in funding with Gsr and others.
• Hacker risk investment company raises a $200 million fund to support early-stage cryptocurrency startups.
• NFT platform Ucollex completes a $10 million Series A funding round, led by Animoca Brands.
• Brazilian cryptocurrency exchange Foxbit secures a $21 million Series A funding.
• Payment technology company Flutterwave announces a $250 million Series D funding, valuing at $3 billion, led by B Capital Group.

Public Chains

• The locked ETH amount in ZkSync L2 network has exceeded 90,000, with a TVL of $75 million.
• A U.S. court orders Terra's Do Kwon to comply with the U.S. Securities and Exchange Commission's subpoena.
• The TVL of Avalanche Bridge reaches $6.238 billion.
• Ethereum's preferred transaction network Eden Network releases a POS chain expansion plan.

DeFi

• BTC and ETH rise by 10%, with short positions triggering $143 million in liquidation.
• Yearn.Finance deployed on Ethereum Layer 2 solution Arbitrum.
• PancakeSwap DEX to ban users from Iran.
• MakerDAO launches a $10 million bug bounty on Immunefi.
• WaveBridge releases Chainlink nodes, introducing digital asset index data to DeFi.

NFT

• OpenSea phishing email attack occurs again, official reminders of risks.
• Top NFT game Axie Infinity generated $1.3 billion in revenue last year.
• ENS domain "defi.eth" trades on Opensea for 40ETH.
• India's media giant Faltoo NFTs sold out within 48 hours.
• NFT market X2Y2 begins vampire attack on OpenSea.
• CryptoPunk #5822 sold for 8000 ETH, the highest price in the NFT series' history.

Security Events

• Multichain recovers $2.6 million of stolen funds, with conditional compensation for losses.
• Titan Finance company hacked, profits 4828.7 BNB.

This article comes from the Footprint Analytics community contribution. The content above is for personal views, reference, and communication purposes only and does not constitute investment advice. Feedback is welcome in case of any clear understanding or data errors.

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