Terra’s recent crash appears to have undermined investor confidence in other major layer-1 (L-1) blockchains, data shows.
The blockchain’s value imploded in the first two weeks of May, and is now trading at a fraction of the billions it was initially valued at.
But this implosion likely fuelled broader scrutiny towards other L-1 blockchains, particularly those which were valued similarly to Terra. Traders likely feared a similar implosion in other L-1s, given the ongoing weakness in the market.
Coupled with a severe crypto market crash in the past two weeks, a majority of tokens dumped by traders came from L-1 blockchains. Even in the DeFi space, L-1 protocols saw the sharpest drop in total value locked (TVL).
Terra causes L-1 rout
Data from blockchain research firm Kaiko shows that amid a broader crypto crash, L-1 blockchains, excluding Bitcoin, were the worst performers in the first two weeks of May. This trend also occurred concurrently with Terra’s crash.