This is our Q3 2023 crypto market sector snapshot, a report from our Sygnum investment research.
In the third quarter, user growth experienced significant changes within the crypto landscape. The recently introduced Layer 2 platform, Base, made a notable entrance, swiftly capturing a substantial market share and emerging as one of the top Layer 2 platforms in terms of Total Value Locked (TVL) and transaction volume. Meanwhile, the TVL in tokenised treasuries continued its impressive ascent, surging by 17 percent during Q3 and marking an astonishing 500 percent increase since the start of the year. Even more intriguingly, traded volumes of the recently launched friend.tech social tokens managed to outpace the trading volumes of Non-Fungible Tokens (NFTs) on certain days, underlining the dynamic nature of this evolving sector.
Performance across different crypto sectors in Q3 displayed divergent trends. The Web3 sector stole the spotlight, driven by robust fundamental dynamics, an upswing in user engagement for AI-linked projects, and a renewed enthusiasm for decentralised social media platforms. In contrast, the Layer 2 sector faced challenges, despite continuing positive trends in user growth and sector fundamentals. This underperformance was partly due to significant token unlocks for key projects, which, however, now leaves the sector relatively undervalued. The gaming and metaverse sectors continued to grapple with subdued user activity and limited developments, hinting at the need for further innovation and engagement to revive these segments.
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