2022 was a 12 months of each challenges and alternatives for the crypto business, with a number of important developments value revisiting and contemplating as 2023 approaches.
From the explosive progress of the metaverse and Web3 to the continued evolution of decentralized finance and non-fungible tokens, 2022 was a 12 months of main milestones and breakthroughs on the earth of crypto.
The world additionally witnessed the worldwide crypto group aligning to help Ukraine amid its tensions with Russia. Hundreds of individuals and main manufacturers joined arms to donate crypto funds to Ukraine, which can go down in historical past as some of the distinguished mass-market makes use of of blockchain expertise so far.
2022 may even be remembered for the launch of the first-ever Ukraine NFT Struggle Reminiscences Museum, constructed to protect tradition and historical past utilizing blockchain expertise and non-fungible tokens, and for the launch of probably the most weird NFT assortment ever – the Trump Assortment.
The A lot-Wanted Purge
Past the worldwide financial headwinds, the crypto ecosystem discovered itself floundering over the course of the 12 months amid a number of unprecedented occasions, together with however not restricted to hacks, in addition to the downward spiral and collapse of among the greatest names within the crypto area.
Promising tasks like Terra (LUNA) collapsed as many traders continued exiting the market. Terra’s algorithmic stablecoin UST misplaced its greenback peg, resulting in traders shedding billions within the blow-up. Terra’s native token LUNA misplaced everything of its worth, additional including to the downward strain.
Total, the Terra disaster wiped off billions from the crypto ecosystem in a matter of weeks in Might. A number of centralized finance (CeFi) lending establishments like Voyager Digital and Celsius, and hedge funds like Three Arrows Capital (3AC), misplaced great quantities of cash as a result of they’d leveraged positions or had lent important funds to Terra.
The market began displaying early indicators of revival by the tip of the summer season. Retail and institutional traders started making their approach again to crypto land. Nevertheless, this renewed investor curiosity, contemporary on the heels of the Terra debacle, was short-lived. Because the market was battling an prolonged crypto winter, surprising revelations about FTX – one of many largest crypto exchanges – emerged in November.
Binance CEO Changpeng Zhao (CZ) added extra gasoline to the fireplace by exposing considerations about FTX’s solvency and the worth of the platform-issued FTT token. Shortly after, Binance dumped all its FTT tokens, sparking a panic. Traders, most of whom had been nonetheless tending to the losses from Might’s Terra implosion, rushed to withdraw their belongings from FTX.
This resulted in a large liquidity crunch at FTX, following which the platform filed for chapter. On high of this, a number of new considerations got here to gentle, particularly that FTX was commingling buyer deposits and funds. Identical to the Terra implosion, the downfall of FTX wiped billions from the ecosystem and took down a number of different tasks, hedge funds, and lending establishments with it.
In essence, two of the largest meltdowns in crypto historical past transpired this 12 months. The chain of occasions successfully cleansed the nascent ecosystem, permitting the group to construct upon the errors and experiences, rooting out the unhealthy apples within the ecosystem whereas enabling different tasks to rise to new heights. As an example, the downfall of FTX and Sam Bankman-Fried enabled Binance to place itself on the middle of the crypto ecosystem.
The Historic Ethereum Merge
Ethereum’s (ETH-USD) “Merge” on September fifteenth emerged as some of the essential occasions of 2022. The most important sensible contract blockchain efficiently accomplished the Merge, formally transitioning from the energy-intensive Proof-of-Work (PoW) consensus mechanism to the environmentally-friendly Proof-of-Stake (PoS) consensus mechanism.
One of many constructive results that got here on account of the Merge is that the Ethereum community’s total power consumption dropped by 99.95%. To place this determine in perspective, the brand new PoS Ethereum blockchain’s power consumption is roughly equal to 1% of what PayPal (NASDAQ:PYPL) consumes.
With the Merge, the Ethereum workforce has phased out different deliberate upgrades and updates all through 2023. These collection of updates will overcome the scalability issues clouding the Ethereum community.
Sponsorships & Partnerships
Crypto.com led the best way for different manufacturers in 2022, venturing out of the crypto bubble and connecting to customers by leveraging partnerships with mainstream manufacturers, celebrities, and sports activities personalities, to call a number of.
When it comes to elevating consciousness and inspiring extra folks to enter the world of cryptocurrencies, Crypto.com has left no stone unturned. The platform launched a number of commercials with distinguished personalities like Matt Daemon and LeBron James. The platform additionally signed a number of partnership agreements with the UFC, NBA, Formulation 1, and dozens extra.
Different blockchain ecosystems like Tezos (XTZ), Polygon (MATIC), and several other extra additionally entered into strategic partnerships with mainstream manufacturers and occasions. Tezos’ thriving checklist of name integrations contains names like Manchester United (NYSE:MANU), McLaren Racing, Papa John’s, Evian Water, Hole (NYSE:GPS), Ubisoft, and plenty of extra. Tezos was additionally the principle accomplice on this 12 months’s Artwork Basel in Miami Seashore, serving to customers to expertise crypto artwork and generate NFTs of their very own.
In the meantime, Layer-2 blockchain Polygon continued to contribute in the direction of the general progress of the crypto ecosystem. Polygon roped in a number of huge manufacturers all through 2022, together with however not restricted to Reddit, Adidas (OTC:ADDYY), the NFL, Starbucks, Adobe (NASDAQ:ADBE), and even Meta (NASDAQ:META).
Polygon has additionally expanded its presence within the conventional finance business and the expertise business as effectively. Buying and selling platform Robinhood (NASDAQ:HOOD) partnered with Polygon to launch its Web3 pockets. Equally, funds supplier Stripe is utilizing Polygon to facilitate Web3 cost transactions, and smartphone model Nothing is using Polygon’s infrastructure for Web3 utility growth.
Above all, crypto was on show through the FIFA World Cup, positioning cryptocurrency tasks and leaders to carry Web3, metaverse, and different rising applied sciences in entrance of billions of individuals. Main crypto platforms like Binance and Crypto.com, in addition to metaverse ecosystems like Upland, introduced multi-year offers and launched a number of occasions for customers to get acquainted with the expertise.
NFTs – Apes Had been Bored
Whereas NFTs have been round for greater than 5 years, the non-fungible growth occurred in 2021. The pattern carried on up till the Terra disaster shook the crypto ecosystem. Throughout this era, we witnessed the delivery of the BAYC NFTs.
The Bored Ape Yacht Membership (BAYC) NFTs gained immense reputation in 2022. Everybody was flaunting their Ape avatars, which led to those NFTs altering arms for thousands and thousands of {dollars}. Distinguished celebrities and personalities jumped the hype practice, additional rising the demand and worth of the NFTs.
Yuga Labs, the workforce behind the BAYC NFTs, continued to broaden all through 2022, buying main platforms like CryptoPunks, Meebits, and WENEW Labs. Due to the recognition of the “Apes,” Yuga Labs’ NFT collections dominated the combination NFT capitalization through the fourth quarter regardless of the prevailing bearish circumstances.
Promising Development, Capital Inflows, Hacks, and Extra
The tumbling valuation backdrop apart, one other phase that outperformed falling costs during the last 12 months was the decentralized utility (dApp) universe, which registered round a 50% improve within the variety of distinctive lively wallets (UAW) in comparison with 2021.
On the identical time, the decentralized finance (DeFi) business discovered itself tangled in a large number – first due to the Terra implosion after which as a result of FTX-Alameda meltdown. At present, the entire worth locked (TVL) in DeFi protocols has dropped considerably, not too long ago touching lows beneath $40 billion (almost 80% lower than the all-time excessive in 2021).
On-chain analytics for the NFT market stayed on the constructive aspect, however not by a lot. The typical improve in NFT buying and selling quantity in 2022 is merely 0.41% greater than 2021’s quantity. In the meantime, blockchain video games accounted for roughly 49% of the entire on-chain exercise in 2022, with Splinterlands nonetheless holding the crown as the most well-liked play-to-earn (P2E) recreation.
Regardless of the ups and downs, enterprise capital influx into the blockchain ecosystem remained steady all year long. Capital investments and venture incubation peaked through the first half of 2022, with Web3 infrastructure and startups taking the lion’s share of the funding pool. Enterprise capital companies and angel traders had already poured in upwards of $30 billion into blockchain expertise by the tip of June 2022, exceeding the entire funding throughout all of 2021. But, as a result of prolonged bear market, capital influx slowed considerably over the again half of 2022.
On the flip aspect, 2022 was a 12 months of record-shattering hacks. All year long, there have been a complete of 312 hacks, leading to losses of almost $50 billion – the best within the historical past of cryptocurrencies. Concurrently, these incidents have pushed regulators and governments to speed up developments throughout the broader spectrum. Between the European Union’s MiCA rules and the primary White Home Invoice for regulating digital belongings, severe progress has been made towards establishing a complete investor safety framework.
The Takeaway
Because the 12 months involves an in depth, it’s clear that 2022 was a pivotal one for the business and that there was no scarcity of thrilling developments to trace. Whereas the way forward for crypto is at all times unsure, it’s clear that the business is continuous to develop and evolve at a speedy tempo. Looking forward to 2023, it will likely be fascinating to see what contemporary improvements and breakthroughs the crypto universe has in retailer.
