For the coming year, Coinbase recently gave its impressions of the crypto market. Between the rise of NFTs, the development of decentralized autonomous organizations (DAO), increased interest in layer 1 blockchains, a panorama of what the crypto sector could look like in 2022!
In a recent blog post, Coinbase delivered its predictions on what paths the crypto industry could take in 2022. Here are 5 takeaways for the coming year according to Surojit Chatterjee, chief product officer at exchange Coinbase.
1 – Level 1 Blockchains Will Continue To Develop
2021 saw the extremely rapid development of projects like Solana or Avalanche. While these two blockchain projects were near the top 100 just 12 months ago, they are now among the top 10 major cryptos.
However, experts at the Coinbase platform consider that none of these level 1 projects can challenge DeFi’s leadership position of the Ethereum blockchain. On this point, the development of other blockchains could especially be carried out in a logic of cohabitation. Moreover, Coinbase estimates that the year 2022 will also be an improvement in scalability on the Ethereum network . Thanks in particular to the deployment of Ethereum 2.0 and “rollup” technologies. Contrary to some readings from other players in the crypto world, Coinbase seems to consider that Ethereum could strengthen its rank in 2022.
According to Surojit Chatterjee, the year 2022 could also be about improving the bridges between level 1 and level 2 blockchains.
2 – The Growth Of Regulations In DeFi
This is a point that divides the crypto community. For some, regulation is a serious threat to the sector. Others see it as an opportunity for new players to enter this market. For the coming year, Chatterjee believes that the decentralized finance sector should be much more regulated. Thanks in particular to the emergence of on-chain KYC certificates. Many decentralized finance protocols could be tempted to adopt more regulations by creating, in particular, separate pools of KYC users, a practice already implemented by the Aave protocol. According to Coinbase, the strategic stake is clear: to succeed in proposing greater regulation while retaining the interest and the essence of decentralized finance .
Another point raised for the security of DeFi, the CPO of Coinbase predicts an increase in insurance for decentralized finance services. Indeed, according to the company Elliptic, nearly 10 billion dollars would have been lost or hacked in the DeFi sector in 2021. The deployment of these new products guaranteeing the funds of the users could then contribute to clean up and open the market to new investors.
3 – Institutional Investors Will Invest The World Of DeFi
And among these new investors, institutional investors will occupy a prominent place according to Surojit Chatterjee. If 2021 was the year in which institutional investors entered the crypto world massively, 2022 could see some form of extension. And even of development when we know that the majority of investments still take place on Bitcoin . In 2022, the DeFi sector has everything to massively attract institutional investors. There are two main reasons for this:
- The returns served are more attractive than for traditional investment products
- Reducing costs on the provision of financial services
For this axis to be effectively validated, it would seem that the sine-qua-non condition is for the achievement of the previous point: improvement of regulations. As Surojit Chatterjee recalled
Institutions are still hesitant to participate in DeFi. They want to confirm that they only trade with known counterparties who have gone through a KYC process. The growth of regulated DeFi and on-chain KYC attestation will help institutions have confidence in DeFi.
4 – 2022: A Year Marked By NFTs And The Metaverse
We were able to have an overview throughout the year for the NFTs and for 3 months for the metaverse following the announcement of Facebook to change its name and invest heavily in this booming sector.
Coinbase predicts that NFT-based communities will compete with Web 2.0 social networks. The example is also very telling concerning the metaverse which could ultimately modify the relationship of companies to advertising. 2022 should therefore be the continuation of the development of NFTs which are better and better understood and perceived by users and cryptophiles.
Some first-level blockchains could also develop and focus entirely on the world of video games. The projects that will manage to best articulate level 1 blockchain, NFT and metaverse could then be among the big winners of the year 2022.
5 – The Awakening Of So-Called “2.0” Companies
Facebook’s announcement of tipping into the metaverse is just the tip of the iceberg. In the coming months, many companies could be tempted to switch and digitalize their products and services . Cases already visible with Nike which invests the metaverse Roblox or its rival Adidas which deploys its NFTs. If many executives are banking on a fragile fad around non-fungible tokens, they may quickly have to change their long-term view, at the risk of downgrading their markets.
In 2022, other major brands could then enter the metaverse sector. To deploy their products there and gain visibility while providing a leading user experience. Coinbase clarifies and cautions that many versions of these metavers could remain centralized versions.
