Crypto will “start eating the world” Jump Capital’s top 10 predictions for the crypto market in 2022

According to the news, Peter Johnson, a partner of investment company Jump Capital, said that 2022 will be another important year for encryption. The overall theme is widespread adoption, including the widespread adoption of stablecoins, DAOs, high-speed chains, L2, and cross-chain applications. As encryption becomes more widely accepted, traditional companies and investors will adapt to the future where encryption is embedded in various industries and most investors participate in the crypto market in some way.

For 2022, Jump Capital has made 10 predictions on the top 5 crypto themes, all of which are related to the general tone of widespread adoption.

Topic 1: Stable coins lead the growth of crypto

1. The supply of stablecoins reaches 500 billion U.S. dollars

At Jump Capital, we have always believed in the adoption of stablecoins, and we have included the growth of stablecoins in our forecasts for 2020 and 2021, when the supply of stablecoins was approximately US$6 billion and approximately US$30 billion, respectively. Now that the supply exceeds 140 billion U.S. dollars, we have not seen any signs of slowing down in the adoption of stablecoins, and believe that there will eventually be trillions of dollars in stablecoins.

In 2022, we are particularly excited about the growth of stablecoins for non-transactional use cases. Historically, stablecoins are mainly used for transactions, but 2022 will be a year when their use in cross-border payments and safe-haven assets in countries with unstable currencies will become more obvious and greater growth drivers.

2. USDC and UST take market share from Tether

In the stablecoin market, we believe that most of the growth will come from USDC and UST, as they establish themselves as the dominant centralized and decentralized stablecoins. With the growth of USDC and UST, the market share of USDT (Tether) will drop significantly.

Topic 2: Development of DAO and DAO infrastructure

1. DAO is growing exponentially as a coordination tool

Decentralized Autonomous Organizations (DAOs) can use blockchain-based governance to achieve global coordination of individuals. DAO can be used for many purposes, including managing the operation and capital of blockchain projects (MakerDAO), managing investment capital (The LAO), managing the use of game assets (YGG DAO), coordinating cultural circles (Friends With Benefits) or coordinating assets Purchase (Constitution DAO).

We believe that Constitution DAO is a watershed for DAO because it has raised more than 40 million US dollars, showing that thousands of people have the ability to coordinate their funds and efforts to achieve common goals. By 2022, we believe that DAO, as the next generation way of coordinating global investment and community, will gain great appeal. Trying to buy a copy of the US Constitution is just the beginning; in 2022, there will be multiple DAO financings of more than $100 million, and they will focus on larger goals.

2. DAO governance design and mature infrastructure

Since encrypted networks have been iterating governance models to manage network decisions and communities, we are in the early stages of defining and agreeing with the full scope of the DAO.

We believe that by 2022, many encrypted networks will make significant progress in their decentralization journey, and governance models will gradually mature to achieve effective management of these DAOs. This maturity will be achieved through what we plan to see this year Enhanced DAO tools and infrastructure to achieve.

Topic 3: High-speed chain, L2 and cross-chain applications promote widespread adoption

1. The  high-speed chain continues to grow and L2 takes off

2021 witnessed the early launch of high-speed/low-cost blockchains such as Solana, Terra and Avalanche, Ethereum sidechains such as Polygon, and Ethereum L2 scaling solutions using Optimistic and Zk rollups.

We are optimistic about all these solutions because transactions are increasingly migrating from L1 Ethereum, and the exponentially growing “cake” creates room for various winners (at least in the short term). These high-speed chains and L2 enhanced user experience are a key part of achieving mainstream adoption and will be a key part of the cryptocurrency narrative in 2022. In the end, the winners (and losers) will be determined, but in 2022 we will bet on overall strong growth.

2. Cross-chain use becomes seamless

At present, the L1 and L2 blockchain ecosystems are quite isolated, and the bridges between ecosystems are usually either very complicated or rely on centralized exchanges. By 2022, solutions such as Wormhole will make great progress in making assets and information move seamlessly between blockchains, and applications will smoothly transmit transactions to the best blockchain to meet their purpose.

Topic 4: Every (innovative) company is an encryption company

1. Financial institutions, consultants and fintech companies provide crypto products

Cryptocurrency eventually becomes too big for financial institutions, financial advisors and traditional financial technology companies to ignore, and 2022 will be the year when cryptocurrency products are launched to customers. Allowing the buying and selling of cryptocurrencies will become a bet, and more forward-looking companies will also provide cryptocurrency-backed loans, high-yield savings accounts and other products that utilize cryptocurrencies.

As more and more financial institutions provide encrypted products, we also expect the product supply to mature, and we are particularly optimistic about the growth of the options market, which enables market participants to take more subtle hedging or speculative positions and use them to create structured products . Options currently account for less than 2% of crypto derivatives trading volume, and we expect this ratio to increase significantly in 2022.

2. Game studios go all out to embrace encryption

2021 witnessed the rise of crypto-based “play to earn” games led by Axie Infinity, where players can get real economic value from their gaming activities. The success of Axie and other blockchain-based games has led to a large number of crypto games-many of which are not great games and are unlikely to have staying power.

However, we believe that the concept of real ownership of the game will become the foundation of the future of the game. In 2022, we expect traditional game studios to enter the field of encrypted games and launch a new generation of encrypted games that not only provide economic incentives and real ownership, but also provide first-class gameplay.

3. Encryption begins to eat the world

Early adopters of the Internet were called “Internet companies” or “Internet companies,” but as Internet adoption crossed the adoption cycle, these nicknames were no longer used.

Similarly, over time, most companies will adopt encryption technology in some way-by providing encrypted products, using stablecoins as payment channels, enabling Web3 wallet logins, using NFTs, having a community or various Other use cases. By 2022, we expect that encryption technology will be widely adopted in many industries, and this trend is expected to accelerate further in the next few years.

Topic 5: Every VC is an encrypted VC

1. A record number of VC funds deployed in cryptocurrencies

In the first nine months of 2021, crypto startups invested 15 billion U.S. dollars, which is equivalent to nearly 5 times the total investment in crypto startups in 2020. This may seem like a lot, but only accounted for about 3% of total venture capital during this period.

In 2022, we expect that venture capital investment in crypto will increase significantly, because traditional VC funds are both eager to allocate to crypto-native projects and are attracted by the integration of crypto and various other industries. The increase in crypto venture capital funds will also be driven by the recently announced multiple crypto funds with more than $1 billion, and more crypto funds will be announced soon. In this capital-filled industry, the most successful investors will not be limited to just providing funds, but also help build products, provide liquidity, recruit talent, expand the scale of the organization, develop communities, attract users, and participate in governance.

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