In early 2022, the cryptocurrency market cap and the non-fungible token (NFT) market achieved an incredibly healthy state. Cryptocurrencies reached a solid price of $2. 5 trillion and NFTs peaked after the exponential expansion of 2021.
Similar to previous crypto bull markets, new projects have attracted a lot of attention, resulting in competitive speculative investments; the Terra ecosystem is an excellent example. In addition, retail and venture capital investors were making a big investment in what fit into a crowded space. All this activity was taking hold in the context of a broader macroeconomic environment that felt infinitely strong, and with simple access to low-rate loans, the resulting frenzy in high-yield offerings seemed moderate as a source of wealth generation.
In September, we attended the most important generation event of the year: The Ethereum Merge. The Ethereum blockchain has effectively moved from its proof-of-work consensus layer to a proof-of-stake mechanism. Now that miners validate the chain, their energy consumption has been reduced and now presented as a much greener chain.
After The Merge, interest in layer 1 chains (Cardano, Solana, Avalanche) also to switch to layer 2 scale responses (Arbiturm, Optimism). Simultaneously, there has been a general race back for on-chain transaction fees, CEX trading fees, and most recently also fees for NFT trading platforms.
Numerous global conflicts during the year have provided enough opportunity to show the strength of low-friction cross-border price transfer of cryptocurrencies. At the beginning of the war in Ukraine, the cryptocurrency network mobilized to fund its aid, with millions of dollars raised and sent. to help the troops and their families.
In Canada there has been a political conflict. Hundreds of truckers protesting covid vaccine mandates. The streets of the capital were eventually governed through the protests, spurred through a $10 million GoFundMe crusade, which the site eventually shut down for violating its terms of service. In response, proponents turned to cryptocurrencies, raising approximately $900,000 in BTC to fund their additional efforts. This likely contributed to the Canadian government’s regulatory measures implemented last year.
Meta has committed billions on the metaverse as Facebook and Instagram seek to compete with TikTok. Despite their declining value, the tech giants are incredibly optimistic. They implement NFT for users, as we have effectively noticed on the social platform Reddit. Reddit brought the concept of virtual collectibles to millions of web users. Allow users to buy, sell, and set up their Reddit avatars on CryptoSnoo NFT.
It’s not just tech corporations that have jumped into the area this year. The main brands are “Web3” as a form of expansion and, in particular, the fashion giants. Tiffany
François-Henri Pinault, president of Gucci’s parent company, Kering, also has a team fully committed to building Gucci and BALENCIAGA’s presence on Web3 and the metaverse.
By the end of the current quarter of 2022, the 40% contraction in cryptocurrency market capitalization had wiped out around $1 trillion of the total value. During this period, it also became apparent that a variety of CeFi establishments were over-indebted. Large loans, many of them unsecured, have been made with Three Arrows Capital and other funds. As yields plummeted from inflated offers of up to 20% in Terra’s solid currency (UST, not USDT), to rates below inflation, we started to see the currency disintegrate. The acceptance of the cryptosphere as true with algorithmic solidcoins has particularly declined and has not recovered since. Three Arrows Capital lost a massive amount of capital in the sale that followed Terra’s failure. Yields have plummeted further, as have some other CeFi platforms, such as Voyager Digital and Celsius Network, which have been unable to recover funds from consumers.
By the end of the summer, markets were returning to some degree of confidence, thanks in part to FTX, a major exchange and custodian of inventory, which had stepped in to save giant CeFi BlockFi from bankruptcy. The perceived strength of FTX, led by founder Sam Bankman-Fried, has continued to see new investments in crypto companies. However, after rumors and a public debate involving Binance CEO Changpeng Zhao, other people began to question FTX’s creditworthiness and its ability to keep its token self-issued. , FTT. Traders began to take FTX’s flight budget. Due to uncertainty and the “race in the bank”, the value of FTT went from around $26 to $1 in a matter of days; FTX’s reaction to the suspension of visitor withdrawals only has greater concern and panic. This concern eventually led to the demise of FTX, which filed for bankruptcy.
In November, as centralized platforms continued to fall to new lows, coupled with monetary contagion from the aforementioned bankruptcy spread, many other ancillary projects began to decline.
Ishan Wahi, a former Coinbase employee, accused of insider trading while he, along with his relatives, profited from more than $1. 5 million by tapping into sensitive information from the platform’s directory, buying tokens before they were made public, and promoting in the wave of subsequent registrations. interest.
Similarly, former OpenSea worker Nathaniel Chastain was charged with engaging in an NFT-like insider trading scheme, the first case of its kind. The product manager used sensitive data about which NFT would be presented on the site’s homepage and the potential interest of users. .
The U. S. -authorized coin mixing protocolThe U. S. Department of Homeland Cash, Tornado Cash, mentions it as a national security threat used in foreign countries to launder stolen funds. Pertsev, has been arrested. A user of the protocol also used it to distribute 0. 1th to many known addresses (including Jimmy Falon’s), highlighting the absurdity of the now technically concerned parties and violating the new sanctions.
With all the chaos of 2022, there has been a firmer regulatory concentration in the crypto space. While some countries have taken steps to legalize crypto transactions (Panama) or recognize them as legal tender (El Salvador), the UK has ordered the closure of Bitcoin ATMs and is reviewing its position on stablecoins. Joe Biden also issued an executive order to “examine the dangers and cryptocurrencies. “
At XGo, we hope this year wasn’t charcoal under the Christmas tree for you. You in the new year. With any luck, crypto’s mischievous list 2023 will be a little shorter.
Digi516 is a long-time crypto researcher and NFT enthusiast. After running anti-fraud and data/business analytics, they have accumulated 6 years of commercial experience and more than four years of active network management. They now function as List and Managing Community in XGo.
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