Secret Network is the first blockchain with customizable privacy that allows its users to choose what they share, with whom, and how. It aims to protect users and empowers developers to build a better Web3. Smart contracts, as self-executing pieces of software, are publicly available through most blockchains. In other words, all of the content of these contracts are exposed to anyone with access to the blockchain's data. Secret network supports encrypted inputs, outputs, and states for smart contracts to allow users to store sensitive information on the blockchain. Privacy is an essential part of the security and the mass adoption of Web3 and Secret network aims to bring unique functionality to this sector of the cryptocurrency industry.

Methodology

The required data for this analysis were selected from fact_swaps and dim_labels tables of the osmosis.core schema.

Secret Token Swaps

In the following chart, the daily volume of swaps to the SCRT token has been plotted against its number of transactions and its number of traders in the past 3 months. Both the number of transactions and traders has had a downward trend since the end of March which coincides with the current crypto market downtrend. The volume of swaps to SCRT tokens has been relatively low due to the fact that many traders and investors are looking for risk-off assets, hence small-cap tokens have had a lower trading volume in the past few months. A major uptick can be seen in the volume of the swaps on the 12th of May which is directly influenced by the Terra crash and panic sells of LUNC (previously LUNA) and UST tokens and swapping them to other assets.

SCRT Swap Pairs

To further analyze the swaps of SCRT tokens, the volume, transaction number, and traders of its pairs have been also evaluated in the same period. Overall, it can be seen that before the Terra crash, meme coins such as HUAHUA and CRBRUS had the highest daily volume. During and after the Terra incident, the classic LUNA token (LUNC) has had a tremendous swaps volume to SCRT tokens.

Conclusion

Interestingly, the number of transactions and the number of traders of OSMO and ATOM tokens to SCRT has been the highest for the whole period and did not affect by any major crypto event. Overall, the lack of interest and the decrease in user engagement can be interpreted from the charts.

Since the start of 2022, the whole crypto market has been in a major downtrend which ultimately resulted at the beginning of a bear market. During this period, some external events have occurred that acted as a catalyst for further drops in the price of crypto assets. Besides the geopolitical unrest in Europe that has affected the globe, inflation is the biggest reason that all major asset classes are underperforming. After bottoming out in late January, the market saw a recovery until the end of March to regain some of the losses. However, the market has been in a downfall since April with no signs of finding a bottom yet.

The war in Europe has resulted in inflation levels not seen in decades before. In the first half of each month, around the 10th, the Bureau of Labor Statistics (BLS) reveals the Consumer Price Index (CPI) of the United States. Since this metric is a representative of inflation and because it has not been slowing down in the past few months, whenever the data comes out, the amount of fear, uncertainty, and doubt (FUD) increases in the market which ultimately results in a sell-off.

On the other hand, The Federal Reserve of the United States has adopted a hawkish approach to control inflation by raising interest rates. With the current level of inflation, it is more likely that FED increase the interest rates by 50-100 basis points to further slow down the economy.

Besides the macro-economic status quo, events such as the depeg of UST and its subsequent Terra crash, the government's crypto regulations, and authority lawsuits against some crypto companies, act as a catalyst to incorporate FUD into the market.

Market Overview

In conclusion, the swaps analysis of SCRT tokens has demonstrated that the behavior of this token is the same as other small-cap tokens in the industry. There are macro economic events in play since the beginning of 2022 which directly affect the whole crypto market, especially bitcoin. All of the layer2 projects and their tokens are subsequently correlated to their layer1 blockchains which in turn are directly correlated to bitcoin themselves. As the FUC increases in the current bear market, the whole crypto space tends to drop lower until it finds its bottom. During this time, incidents such as the Terra crash have had the highest impact on the industry and acted as a catalyst to further put pressure on smaller projects.