Binance’s mid-year report shows a healthy crypto industry

Global cryptocurrency exchange platform Binance has released its semi-annual report detailing the state of the industry. Launched at the end of the first half of 2023, the 120-page report covers key verticals in the industry, including Bitcoin and layer-1s; layer-2s; stablecoins; DeFi; and NFTs. The analysis also examines gaming, metaverse, funding, and institutional adoption.

The comprehensive mid-year report reveals the state of adoption, usage, and innovation in each major category. The analysis in Binance’s semi-annual report provides a compelling argument for the industry being in better health than expected, forming a solid foundation for growth in the second half and 2024.

Key findings include:

● The total market capitalization increased by 30% year on year, closing at USD 1.17T on June 30;

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● Bitcoin dominance ended the semester at the highest level since April 2021, while its correlation with TradFi is now at the lowest level in the last three years;

● Despite a 7% decrease in the global stablecoin market value, USDT has recorded a 26% increase in market share in the last year (YtD);

● Liquid staking has become the largest DeFi sector.

The report highlights values that are not immediately evident to daily traders but whose growth can be interpreted as positive. For example, Bitcoin trading volume increased by 185% YtD, while network transactions increased by 58%, and average fees by 143%. This increase in network usage was partially attributed to the growth of Ordinals that allow the creation and trading of NFTs on the Bitcoin network.

Essentially, the hashrate used to secure the Bitcoin blockchain also increased by 40% YtD, with mining difficulty increasing by 43%. While on-chain analysis was heavily used in Binance’s mid-year report, it also draws data from other sources, including sentiment analysis. The Bitcoin Fear & Greed Index has doubled since January, indicating increased trader confidence.

Among other L1s profiled in the report, Solana recorded the strongest market capitalization growth in the first half of the year. BNB Chain has the best network performance YtD, with a 113% increase in daily tx compared to Ethereum’s 48%. The same trend appears in active addresses, 118% versus 63%. Avalanche’s progress in subnets and Cosmos’ new shared security models are also interesting developments.

One of the biggest stories of the year presented in the mid-year report is the growth of liquid staking and the emergence of LSTfi (the amalgamation of liquid staking and DeFi tokens), with the latter experiencing rapid growth of 460% in total value locked since April. The Binance H1 report also profiles the L2 sector in detail, with zkEVM growth and Polygon’s upcoming transition to Polygon 2.0 being key points. Emerging sectors are also discussed in detail, including the growth of L3s: application-specific chains that connect to the existing Layer 2.

In addition to reviewing the dynamics of the main stablecoins market, the report examines emerging competitors that have gained market share in 2023. These include USDD, crvUSD, GHO, and LUSD, with the latter’s market capitalization growing by 54% YtD.

In almost every vertical analyzed by Binance, the crypto industry has experienced impressive growth in the first half. In DeFi, users have grown by 43% YtD, and even NFT volumes have increased compared to S2 2022, despite falling minimum prices. As for fundraising, Binance reports that the top 10 funds raised a total of $3.6 billion in the first half. There is also ample evidence supporting institutional adoption, including significant tests involving CBDCs, blockchain projects for enterprises, and the emergence of real-world on-chain assets.

The report ends on an optimistic note: “The market has largely benefited from the ‘Bitcoin ETF’ season, driving the new dynamics as Bitcoin reached new highs for this year, contributing to increased investor confidence. As we enter the second half of the year, we look forward to seeing new innovations, greater adoption, and a brighter future.”

The report can be accessed at: https://research.binance.com/en/analysis/half-year-2023.