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.
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.
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.
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 will continue.
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 for gamers, in particular those in the Philippines.
NFTs, DeFi and play-to-earn gaming are also converging. Binance in October launched its new Initial Game Offering (IGO) arm for customers to invest in gaming NFTs projects. With the rise of “GameFi,” Hai predicts that traditional free-to-play developers will go into blockchain games. “This game genre will not be driven by crypto native developers anymore but we will see big developers/publishers enter the space by the end of next year,” Hai said.
Hai predicts that traditional markets such as music, ticketing, entertainment will be disrupted by NFTs in the coming year, including the possibility of revenue participation via smart contracts that involves all constituents of a value chain such as composers, artists, musicians, producers and collectors. Although NFTs, for now, are mainly static images, Hai expects to see dynamic NFTs being integrated with real-world events such as weather data or stock data. “Any real-world data can flow into NFTs and can have an impact on the NFT itself,” Hai said, in an email to Forkast.News.
Rachel Mayers, VP of product at Circle, agrees that the use cases for NFTs will only continue to explode: “Brands and creators just reinforcing loyalty community behavior in terms of rewarding NFTs, distributing content, making a purchase, everything will be an NFT next year.”
The metaverse is also a key theme as a head into 2022. Facebook’s corporate rebranding to “Meta” and plans to go big on the metaverse as a virtual social platform brought the word into the mainstream and sent the prices of tokens of decentralized metaverses built on the blockchain such as Decentraland and The Sandbox soaring.
3. Rise of the DAOs — and how they are changing the way we live, work and engage
DAOs, short for decentralized autonomous organizations, have emerged as an organizational structure to manage tokenized assets, fundraise and facilitate transparent governance. “DAOs are likely to have an enormous impact on the adoption of Web3 products,” wrote Carra Wu and Chris Dixon from venture capital firm a16z in a recent blog post.
DAOs have been touted as an alternative governance mechanism to the traditional board structure in companies and a new way for crypto companies to go public. Many DeFi applications, such as Uniswap, Aave and MakerDAO, are governed by DAOs, which provide a mechanism for protocol development and treasury management through self-executing smart contracts on the blockchain. There is currently US$13 billion in assets under management in DAOs, according to DeepDAO data.
DAOs have also been formed for investing purposes. BitDAO, which touts itself as one of the biggest DAOs in the world, the BitDAO treasury currently has over US$3 billion worth of crypto assets, according to the BitDAO website.
Source : https://forkast.news/
