Crypto Roundup 2022 – Major Market Sectors Estimated

BeInCrypto presents its annual overview of developments in the main sectors of the cryptocurrency market over the past year.

1- DeFi

Unlike the successful DeFi summer of 2021, last year was marked by collapses and stagnation, although signs of growth remain. Already before the beginning of the year, a decline in users of decentralized applications was recorded. DApp Radar attributed this decline in February to the outbreak of war in Ukraine.

The industry was significantly affected by the depegging of Terra’s TerraUSD (UST) and its subsequent collapse and resulting market decline. One of the most important indicators of DeFi is the total value locked, which dropped sharply after the TerraUSD event. Total TVL in DeFi sank from $158 billion in April to $89 billion in the days following the collapse a month later.

Crypto News, DeFi TVL, NFT
Source: DApp Radar

Meanwhile, Layer 1 DeFi protocols also saw their TVL fall, with Ethereum falling to $32 billion and BNB Chain to $6.5 billion. This represents a year-on-year decrease of 74.56% and 62.5%, respectively. On the other hand, Layer-2 protocols fared slightly better, with significant growth for Ethereum-based solutions Optimism and Arbitrum. Displacing other blockchains from leading positions, many projects have actively integrated these networks with users using them to test their products.

Despite the success of these protocols, DeFi ultimately struggled in 2022, with total TVL falling from a high of $211.4 billion in January to $55 billion in December, a loss of 73.97%. But while investments have declined, it seems that the number of users has progressed. The number of unique active wallets increased by 50% year-over-year from 1.58 million in 2021 to an average of 2.37 million in 2022.

2- Proof of stake

One of the most significant developments in cryptocurrency last year was the merger, Ethereum’s transition to a proof-of-stake system. This upgrade not only saved Ethereum significantly, but also brought proof of stake to greater importance.

Taking place between September 14th and 15th, the merge was accompanied by several hardforks that continued to enable proof-of-work. Although the performance of these networks turned out to be much worse than expected, Ethereum’s oldest hard fork, Ethereum Classic, thrived. This is probably because miners switched their rigs to the classic network in anticipation of the merger.

However, it was difficult to determine to which other proof-of-work blockchains the excess capacity of Ethereum miners was distributed. As a result of the merger, many miners may give up mining, sell their equipment and look for other sources of income. One popular alternative could be Ethereum staking, which has lower returns but is more sustainable in the long run.

3- Irreplaceable tokens

While cryptocurrency prices have been falling over the past year, non-fungible tokens have fared quite well. According to on-chain metrics, NFT trading volume has largely stagnated, increasing by just 0.41% year-on-year. However, the number of unique traders surged by 876%, reaching 10.6 million users, while total NFT sales increased by 10.6% to $68.35 million.

Crypto News, DeFi, NFT
NFT trading volume was largely stagnant, increasing by just 0.41% YoY

The most significant development for NFTs this past year has to be the increased integration of popular consumer brands. Twitter began including NFTs in January, while PayPal announced an integration with MetaMask. During the spring and summer Meta took several steps regarding NFT integration. It partnered with Polygon to support this in May, which allowed Instagram to support NFTs then. Meta also launched NFT integration via multiple wallets in August.

4- Web3

While cryptocurrency investment may have plummeted this year, the same cannot be said for other blockchain or Web3-based developments. A key metric in determining the progress of Web3 is the number of downloads of two critically important programming libraries: Ethers.js and Web3.js.

Crypto News, DeFi, NFT
Web3 metaverse projects to raise $10 billion in 2022

In the third quarter of this year, Web3 developers downloaded the Ethers.js and Web3.js libraries more than 1,536,548 times per week. This represents an increase of 178% compared to the previous year. As of 2018, developers installing any of these libraries on a weekly basis is increasing every year. Now, in 2022, that number has increased 10-fold from 2018’s record 145,799 weekly downloads.

In addition, Web3 metaverse projects have raised $10 billion in 2022, which is almost triple the amount of last year. For example, Nike launched a new Web3 platform called Swoosh in November that offers NFT products based on Polygon. Earlier in April, Nike acquired Web3 studio RTFKT in 2021 and issued digital Nike sneakers as an Ethereum NFT. This is a promising sign for the industry, as it will increase the exposure of NFTs and Web3 technologies to a wider audience.

5- Stable coins

Despite being at the bottom of the list, stablecoins ultimately played one of the biggest roles in the development of cryptocurrencies in 2022. Aside from the fall in cryptocurrency prices, the biggest factor contributing to major market woes last year was the depegging and collapse of the TerraUSD stablecoin . With losses of as much as 40 billion dollars, its collapse also led to the collapse of successful crypto companies.

But while algorithmic stablecoins like TerraUSD have significantly lost traction, fiat-based stablecoins continue to thrive. Circle, which issues USD Coin, holds $45 billion in stablecoins and includes Blackrock and BNY Mellon as its custodians. Paxos’ Binance USD stablecoin and the Paxos dollar together have about $20 billion in circulation. Despite the increase in market share, Tether is still roughly 50% higher.

Block Adjusted Om-chain stablecoin volume.  Crypto News, DeFi, NFT
Source: Blok

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