Looking ahead: 3 crypto predictions for 2022 1 Blockchain and cryptocurrencies came into their own in 2021, with the total market cap of cryptocurrencies crossing the US$2 trillion mark and traditional companies such as Microstrategy , PayPal and Tesla making major moves into crypto. The prices of cryptocurrencies hit all-time highs, as the number of crypto users surged.
As 2021 draws to a close, Forkast.News consulted crypto industry leaders on some of the major milestones this year and the key themes and trends to watch in the year ahead. 1. DeFi going mainstream — with regulators to follow
Crypto adoption soared in 2021 with the number of crypto users doubling in the first half of the year and institutional investors adding cryptocurrencies such as Bitcoin and Ethereum to their balance sheets. The launch of the much-anticipated Bitcoin Futures ETFs in the United States was seen as a watershed moment for the industry , providing legitimacy — and the assurance — that the asset class is here to stay.
Decentralized finance (DeFi) , which took off in the so-called “DeFi summer” of 2020, continued its skyrocketing trajectory this year. DeFi — where users can perform financial transactions directly with one another using smart contracts without the need for intermediaries — has the potential to bring economic and social benefits to the world’s unbanked by allowing them to have savings accounts and obtain loans that would otherwise be out of reach to them.
The DeFi industry is still in its infancy, but a wide array of financial services from asset management, yield farming or borrowing and lending, decentralized exchanges , derivatives, and stablecoins — on the blockchain have flourished in 2021, increasing from US$22 billion at the start of the year to over US$250 billion now locked across DeFi protocols, according to DeFi Llama data .
Alongside DeFi’s growing popularity, fraud and thefts across DeFi platforms have also soared, rising 600% from US$1.5 billion in 2020 to over US$10.5 billion this year, according to Elliptic, a blockchain data analytics firm.
Regulators are still grappling with how to deal with DeFi , especially since there may not be a clearly identifiable intermediary to regulate in a truly decentralized protocol operating on smart contracts .
“Regulators that take an active role in shaping regimes to accommodate new technologies will likely be a positive force in establishing their markets as hubs for secure DeFi activity, globally, and helping to reduce rates of crime,” Chris DePow, Elliptic’s senior adviser for financial institution regulation and compliance, told Forkast.News .
Danny Chong, co-founder and CEO of Tranchess, a yield-enhancing asset tracker, expects more definitive standards to be observed across borders as financial institutions increasingly venture into crypto. “This will ultimately make DeFi more mainstream friendly and allow more possibilities for DeFi to evolve,” Chong told Forkast.News . “In turn, we will see a rise in TradFi institutions adopting crypto, along with new protocols, chains, layer-2 scaling solutions and tech upgrades.”
Chong expects the convergence of traditional finance with crypto to accelerate via investments and mergers and acquisitions, and crypto firms reaching out to a mainstream audience through sponsorship deals.
See related article: How DeFi, NFTs and DAOs are building a value exchange layer for Web 3.0 2. NFT use cases expand as the metaverse builds out
2021 has been a banner year for non-fugible tokens (NFTs). US$69 million — that was the eyewatering amount that an NFT artwork by digital artist Beeple titled “Everydays: The First 5000 Days” sold for in a Christie’s auction in March. NFT sales this year to date, as of the first week of December, amounted to over US$11.8 billion, an increase of a whopping 17,700% compared to 2020, according to Nonfungible.com .
Opensea , the world’s biggest NFT marketplace, crossed the US$10 billion mark in cumulative trading volume in November. Payments giant Visa to McDonald’s China are among the many brands and companies that have jumped onto the NFT bandwagon.
Helen Hai, head of Binance NFT , sees NFTs as an asset class and tool for engaging fans and collectors and adoption will get a huge boost next year, and the trend for NFT avatars (PFP profile picture collections) will continue.
See related article : Riding the NFT trend: questions to consider before investing in these hot digital assets
Beyond art and collectibles , play-to-earn blockchain games such as Axie Infinity and Alien Worlds exploded in popularity. Playing Axie Infinity and breeding cute Axies went from being a fun pastime during pandemic lockdown to a source of income […]
Protected by Patchstack