Binance's semestrial report: the crypto industry is in good health

Binance, the world's leading cryptocurrency exchange, has released its 120-page mid-year report on the state of the cryptocurrency industry. The report covers the major sectors of the industry, such as Bitcoin and Layer 1 and 2, stablecoins, DeFi and NFTs. It also explores gaming, metaverses, funding and institutional adoption.

To access the full report, click here (PDF).

The report provides a comprehensive analysis of adoption, usage and innovation in each sector. It shows that the industry is in a strong position, with a solid foundation for growth in the second half of the year and beyond.

Here are some key findings from the study:

While the first half of 2023 was not without challenges for the sector, the cryptocurrency market has shown resilience. The market capitalization of cryptocurrencies ended the period in positive territory.
Bitcoin's market dominance finished the semester at its highest level since April 2021, while its year-to-date price performance of over 87% has significantly outperformed many common TradFi investments. The correlation between Bitcoin and TradFi is also at its lowest level in several years. Ordinals and Inscriptions have reverberated throughout the Bitcoin ecosystem with new energy, and we expect to see continued development and innovation in the coming months.
Layer 1s had a busy first half. Ethereum liquid staking reached new highs, giving birth to LSTfi, while BNB Chain focused on scalability. Solana rebounded after a tumultuous 2022 and released a Web3 phone, while Tron's USDT dominance continued to grow. Avalanche made progress on sub-chains and corporate partnerships, while Cosmos made progress on shared economic security models.
As optimistic rollups continued to dominate, the ZK world reached new heights with the launch of the first fully functional zkEVMs. Many major players have laid out their vision for the future, largely converging around the idea of blockchain networks, i.e. L3s, Superchains, Hyperchains, etc.
Despite a 7.0% decline in the global value of stablecoins, changes in adoption trends, regulatory landscapes, and approaches taken by some players have significantly reshaped the market composition of the sector. Among these changes, USDT has seen a remarkable 25.8% increase in market share since the beginning of the year ("YTD"), which has led to its departure from the major stablecoin trio.
Since the beginning of the year, there have been notable developments in the DeFi sector, largely attributed to the remarkable rise of liquid staking, which has become the largest sub-sector, as well as the growing migration of users to DEXs. As the sector continues to unlock new use cases, DeFi's dominance has declined by 0.5% against the global cryptocurrency market.
NFTs saw higher trading volume in Q1 2023 than in Q2 2022, largely driven by increased activity on the Blur marketplace early in the year. However, NFTs have underperformed the overall cryptocurrency market, as the floor prices of many NFT collections have fallen since the beginning of the year.
The price of gaming tokens has risen significantly in the first half of 2023, benefiting from the overall market recovery. Currently, over 67% of games are built on BNB Chain, Ethereum and Polygon.
The first half of 2023 extended the decline in total crypto funding with a decline in venture capital funding. A clear area of interest has emerged, with the infrastructure sector attracting the most investment, followed by gaming/entertainment and DeFi.

The report reveals interesting data that may not be obvious to casual observers, but which point to positive trends for the sector. For example, Bitcoin trading volume has jumped 185% YtD, while its network transactions have increased by 58% and average tx fees by 143%. This increase in network activity is partly due to the development of Ordinals which enable the creation of NFTs and trading on Bitcoin.

It is important to note that Bitcoin's network security has also improved, with the hashrate increasing by an average of 40% and mining difficulty following with an increase of 43%. The report also uses data from other sources, such as sentiment analysis. The Bitcoin Fear & Greed Index has doubled since January, reflecting greater trader confidence.

Among other Layer 1s analysed in the report, Solana saw the highest growth in terms of market capitalisation in the first half of the year.