2021 was an exceptional year for crypto, with BTC price increasing by 70% per year as well as Defi reaching $150 billion value locked transactions, and NFTs being introduced as a brand new type of market. Here’s my perspective on the crystal ball to 2022 and the future for the business:
1. Eth capacity will increase however, more recent L1 chains will see significant growth. as we welcome the next 100 million people to cryptocurrency and Web3 the scalability issues for Eth will likely increase. I’m hopeful about advancements in Eth scaling with the advent of Eth2 as well as other L2 rollups. The integration between Solana, Avalanche, and other L1 chains indicates that we’ll be living in a multi-chain environment in the coming years. There’s also the possibility of seeing newer L1 chains come up which focus on certain applications like playing games or using social media. The Bitcoin code is given due importance too.
2. There will be substantial improvements in the usability of bridges between L1 and L2 as more L1 networks expand and L2 networks expand and more widespread, the industry will look for improvements in speed and ease of use of cross-L1 bridges and L1-L2 bridges. It is likely that we will see fascinating advancements in bridge usability over the next few years.
3. ZKP technology is expected to gain more traction 2021 was the year that saw protocols such as ZkSync and Starknet starting to gain popularity. As L1 chains become clogged by increased usage ZK-rollup technology is sure to attract both the attention of investors and users. It is likely that new privacy-centric applications emerge, such as games with privacy-safe features, and privacy-safe models with privacy built into the fundamental. This could also draw greater attention from regulators on cryptocurrency as KYC/AML can be a major issue for the privacy-focused network.
4. Regulated Defi and the emergence of on-chain KYC attestation — A lot of Defi protocols will be embracing regulation and establishing distinct KYC users pools. On-chain and decentralized KYC attestation services can play a key role in connecting users’ actual identity to the Defi wallet’s endpoints. We’ll see a rise in acceptance of ENS types of addresses, and new technologies based on cross-chain name resolution will be developed.
5. Institutions will play a more significant part in Defi’s participation. Institutions are becoming more attracted by the prospect of participating in Defi. First of all, they are attracted by the greater than average returns on interest when compared with traditional products for finance. Additionally, the reduction in costs associated with providing financial services via Defi creates exciting opportunities for institutions. But, they’re reluctant to join Defi. Institutions would like to prove that they’re only dealing with known counterparties who have passed a KYC procedure. Increased use of the regulation of Defi as well as on-chain KYC attestation can help institutions build faith in Defi.
6. Defi insurance is expected to emerge. In the course of time, as Defi grows as it expands, it becomes the victim of security breaches. As per the London-based firm Elliptic, the total loss due to Defi hacks in 2021 was more than $10 billion. To safeguard users from hackers and to ensure the security of that users’ money is safe from security breaches are expected to emerge by 2022.
7. NFT Based Communities will give an important challenge to web 2.0 social networks. NFTs will continue to grow in the way they are perceived. We’ll see creator tokens or fan tokens gain an elite seat. NFTs will be the next generation of digital identities for users and passports to the world of the metaverse. Users will join together in smaller and more diverse groups, based on the type of NFT they have. Metaverses created by users are an exciting future for social networking and be threatening the advertising-driven centralized versions of these networks we have in the present.
8. Brands will be actively involved in the metaverse as well as NFTs Numerous brands are beginning to realize that NFTs are a powerful tool to market their brands and establish brand loyalty. Coca-Cola, Campbell’s, Dolce & Gabbana, and Charmin launched NFT-related collectibles in 2021. Adidas recently announced a new metaverse in conjunction with Bored Ape Yacht Club. We’re likely to see many more innovative brand marketing strategies made using NFTs. NFTs and the metaverse are likely to be the next Instagram for companies. Just like Instagram, numerous brands could begin as native to NFTs. There will be many more famous people jumping on the NFT train and using them to boost their personal image.
9. Web2 companies will be awake and try to break into Web3 We’ve already seen this happen with Facebook seeking to redefine itself as a Web3 company. We’re likely to see more large Web2 companies toeing their feet into Web3 and the metaverse by 2022. But, a lot of them will likely create closed and centralized metaverses that are network-based.
10. The time is now to think about DAO 2.0 – We’ll be seeing DAOs becoming more established and popular. A greater number of people are expected to join DAOs which will lead to changes in the terms of employment which will not include an official offer letter or a formal offer letter, accepting tokens instead or alongside fixed wages, or working in several DAO projects simultaneously. DAOs will also have to face new challenges when it comes to understanding how to manage M&A or payroll, manage benefits, and organize operations in larger and bigger organizations. There will be a myriad of tools developed to aid DAOs in their efforts to run efficiently. A lot of DAOs will also have to figure out how to communicate with traditional Web2 businesses. It is likely that regulators will show greater interest in DAOs and make an effort to understand how DAOs operate.
Thank you to our customers and the entire ecosystem for a fantastic 2021. We look forward to the next year of laying the groundwork for Web3. Wagmi.
