The crypto industry in 2022 has been bumpy, with all events weighing in. Following the Covid-19 pandemic, the industry's lingering effects have also been felt. As such, this year, the global economy has struggled under macro and geopolitical headwinds. This year, several activities include monetary tightening by central banks to combat inflation, supply chain disruption, and the conflict in Europe.
Here is an overview of the crypto industry in 2022 and what we expect in 2023.
2022 Results
Although the crypto market has negatively seen some events and macro headwinds, it is natural for market cycles to fluctuate between bearish and bullish periods. However, such headwinds have been crucial to state how the market has been.
Such events have been notably:
The Terra stablecoin (UST) collapse caused by its connection to TerraUSD (UST), the algrothmic stablecoin of the Terra network. On May 7, over $2 billiom worth of UST was unstaked, and hundreds of millions of it were quickly liquidated.
The FTX bankruptcy in November. This came after the crypto exchange was revealed that Alameda had been using FTX's customer assets to cover trading losses.
Both events have had some subsequent fallouts that produced excruciating effects, affecting all players. Additionally, their collapse has declined confidence in the crypto community. We still cannot say that this is over. The effects are still in the market, causing the current "crypto winter."
2. Following the collapse of FTX, we have seen decentralized exchanges taking up a higher share of the total crypto spot trading volume. For instance, DEXs took up 14% of spot trading volume, compared to 9% in October. Additionally, every user desires to have complete control of their funds, shown by the growing adoption of non-custodial wallets.
3. Ethereum Merge
One of the positive things this year has been Ethereum's Merge on 15 September 2022. The Merge has seen Ethereum's energy consumption drop by 99.95%, as proof-of-stake (PoS) requires less energy than proof-of-work (PoW) mining rigs.
4. The Rise of L1 Blockchains like Aptos
Besides, there has been a notable increase in the popularity of new layer-1 blockchains, which have been under the spotlight. Such examples are Aptos and Sui.
5. Liquid Staking.
In the same year, liquid staking visibly flourished due to the flexibility and security it provides depositors. Liquid staking enables users to yield on the PoS token while maintaining some degree of liquidity.
6. Increased NFT Partnerships.
There has also been an increase in NFT partnerships and innovations in 2022.
Such examples include;
In thejust completed FIFA Worldcup, Crypto.com was an official sponsor. Crypto.com launched a series of NFT collections around the event.
Opensea also saw a rise in the daily volume, driven by the launch of the "Otherdeed for Otherside" collection by Yuga Labs.
Crypto.com also collaborating with A Story to develop the "Extraordinary Whales Club" social NFT series.
7. Decentralized Social Network Landscape.
Additionally, the decentralized social network landscape proliferated. While several prominent players dominate Web2, the Web3 landscape is much more varied and nuanced, with categories including social graph, identity, messaging, and data storage.
8. The Most Crypto Hacks
Lastly, a lot of money has been lost in crypto hacks in 2022, which is about $3.7 billion. However, this has been a 63% drop compared with 2021. The leading cause of such hacks is vulnerabilities in bridges, which has been a major cause.
The major ones have been:
Wormhole Crypto Bridge which happened in February and $320 million lost.
Axie Infinity in March and $625 million lost.
Beanstalk Farms in April and $182 million lost.
Nomad bridge attack in August, losing $190 million.
Wintermute Hack in September, losing $160 million.
FTX wallets hacked in November, losing $400 million.
Expectations for 2023
In November 2022, the number of crypto owners reached a new milestone crossing 400 million. In 2023, we expect this number to take a positive turn further.
AAA Games.
Besides, the blockchain gaming sector is expected to see a few AAA games coming up. Such a move will provide players with new gaming experiences that integrate high-performance gameplay with blockchain technology.
2. Soulbound Tokens .
Another expectation is the use cases for Soulbound Tokens (SBTs), which could be another potential market driver. The adoption of SBTs directly leads to a decentralized society or a co-determined sociality. Another use case that is expected to rise is the Web3 community, which is flocking from Web2.
Final Thoughts
Besides the above trending topics, developments in other areas are expected to be watched. Such include the new blockchain infrastructure, ZK proofs adoption, more utility-based DeFi applications, Ethereum’s Shanghai upgrade, and institutional adoption.
It will still be an adventure, and we cannot wait to see what this industry has in the coming years.
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