By Surojit Chatterjee, Chief Product Officer
2021 proved to be a breakout 12 months for crypto with BTC price gaining nearly 70% yoy, Defi hitting $150B in worth locked, and NFTs rising as a brand new class. Here’s my view by the crystal ball into 2022 and what it holds for our trade:
1. Eth scalability will enhance, however newer L1 chains will see substantial progress — As we welcome the subsequent hundred million customers to crypto and Web3, scalability challenges for Eth are more likely to develop. I’m optimistic about enhancements in Eth scalability with the emergence of Eth2 and many L2 rollups. Traction of Solana, Avalanche and different L1 chains exhibits that we’ll dwell in a multi-chain world in the future. We’re additionally going to see newer L1 chains emerge that target particular use instances equivalent to gaming or social media.
2. There will probably be important usability enhancements in L1-L2 bridges — As extra L1 networks acquire traction and L2s change into greater, our trade will desperately search enhancements in pace and usability of cross-L1 and L1-L2 bridges. We’re more likely to see attention-grabbing developments in usability of bridges in the coming 12 months.
3. Zero information proof know-how will get elevated traction — 2021 noticed protocols like ZkSync and Starknet starting to get traction. As L1 chains get clogged with elevated utilization, ZK-rollup know-how will appeal to each investor and person consideration. We’ll see new privacy-centric use instances emerge, together with privacy-safe functions, and gaming fashions which have privateness constructed into the core. This might also carry in additional regulator consideration to crypto as KYC/AML may very well be an actual problem in privateness centric networks.
4. Regulated Defi and emergence of on-chain KYC attestation — Many Defi protocols will embrace regulation and will create separate KYC person swimming pools. Decentralized id and on-chain KYC attestation providers will play key roles in connecting customers’ actual id with Defi pockets endpoints. We’ll see extra acceptance of ENS kind addresses, and new techniques from cross chain title decision will emerge.
5. Institutions will play a a lot greater position in Defi participation — Institutions are more and more thinking about collaborating in Defi. For starters, establishments are interested in larger than common interest-based returns in comparison with conventional monetary merchandise. Also, price discount in offering monetary providers utilizing Defi opens up attention-grabbing alternatives for establishments. However, they’re nonetheless hesitant to take part in Defi. Institutions wish to affirm that they’re solely transacting with recognized counterparties which have accomplished a KYC course of. Growth of regulated Defi and on-chain KYC attestation will assist establishments acquire confidence in Defi.
6. Defi insurance coverage will emerge — As Defi proliferates, it additionally turns into the goal of safety hacks. According to London-based agency Elliptic, whole worth misplaced by Defi exploits in 2021 totaled over $10B. To defend customers from hacks, viable insurance coverage protocols guaranteeing customers’ funds towards safety breaches will emerge in 2022.
7. NFT Based Communities will give materials competitors to Web 2.0 social networks — NFTs will proceed to broaden in how they’re perceived. We’ll see creator tokens or fan tokens take extra of a first-class seat. NFTs will change into the subsequent evolution of customers’ digital id and passport to the metaverse. Users will come collectively in small and various communities primarily based on sorts of NFTs they personal. User created metaverses will probably be the way forward for social networks and will begin threatening the promoting pushed centralized variations of social networks of right now.
8. Brands will begin actively collaborating in the metaverse and NFTs — Many manufacturers are realizing that NFTs are nice automobiles for model advertising and establishing model loyalty. Coca-Cola, Campbell’s, Dolce & Gabbana and Charmin launched NFT collectibles in 2021. Adidas just lately launched a brand new metaverse undertaking with Bored Ape Yacht Club. We’re more likely to see extra attention-grabbing model advertising initiatives utilizing NFTs. NFTs and the metaverse will change into the new Instagram for manufacturers. And similar to on Instagram, many manufacturers could begin as NFT native. We’ll additionally see many extra celebrities leaping in the bandwagon and utilizing NFTs to boost their private model.
9. Web2 firms will get up and will attempt to get into Web3 — We’re already seeing this with Facebook attempting to recast itself as a Web3 firm. We’re more likely to see different massive Web2 firms dipping their toes into Web3 and metaverse in 2022. However, a lot of them are more likely to create centralized and closed community variations of the metaverse.
10. Time for DAO 2.0 — We’ll see DAOs change into extra mature and mainstream. More individuals will be a part of DAOs, prompting a change in definition of employment — by no means receiving a proper supply letter, accepting tokens as a substitute of or together with mounted salaries, and working in a number of DAO tasks at the identical time. DAOs may even confront new challenges by way of determining how you can do M&A, run payroll and advantages, and coordinate actions in bigger and bigger organizations. We’ll see a plethora of instruments emerge to assist DAOs execute with effectivity. Many DAOs may even work out how you can work together with conventional Web2 firms. We’re more likely to see regulators taking extra curiosity in DAOs and make an try to coach themselves on how DAOs work.
Thanks to our clients and the ecosystem for an unimaginable 2021. Looking ahead to a different 12 months of constructing the foundations for Web3. Wagmi.
10 Predictions for Web3 and the Cryptoeconomy for 2022 was initially printed in The Coinbase Blog on Medium, the place persons are persevering with the dialog by highlighting and responding to this story.