The crypto market in 2022

2021 is a hot year for the crypto market, so what about 2022? No one can tell. Everyone also has ideas. This article also casually said a few words. However, it should be stated that I am not a financial consultant and the article is only used for technical communication and entertainment purposes.

The ups and downs of the past 2021 have continued to be hot for the crypto market, which can be said to be a high fever.In the past year, we have witnessed incredible growth and innovation. For example, the Bitcoin market has received the attention and participation of institutional investors, the rise of the distributed storage sector, the highly anticipated London hard fork of Ethereum, and the explosive expansion of the Solana ecosystem in the summer. We have seen DeFi swell to an industry valued at more than 100 billion U.S. dollars, Bitcoin reached a peak price of 69,000 U.S. dollars, and NFT sales exceeded 22 billion U.S. dollars. At the same time, we have seen the inefficiency and full-blown vulnerabilities of encryption applications, from the absurd fuel cost of Ethereum to the use of a $600 million vulnerability in the PolyNetwork smart contract.

It is indisputable that the crypto market has attracted the attention of the public in an unprecedented way. Every day, thousands of users register addresses on the blockchain, search and trade NFTs on OpenSea, and invest more in DeFi and web3.0. In particular, the participation of institutional investors has provided greater imagination for the development of this industry. With the beginning of 2022, I look forward to seeing how this trend towards the mainstream guides the direction and speed of encryption innovation—expanding the boundaries of the realization of the encryption market; and hope to see greater investment in helping to achieve the decentralization and opening of the Internet User-oriented Web3.0 ecosystem.

So in which directions may the development of the crypto market in 2022 attract more attention? In my opinion, the market continues under the current trend, specifically in the following aspects.

The Layer 2 war with the goal of improving TPS

Currently talking about L2 is to discuss how to implement Rollup, whether it is Optimistic (optimistic) or ZKP (zero-knowledge proof) scheme, both of which may develop. The reason why Layer2 is important is that Ethereum is currently the largest crypto community and platform. However, it has been criticized because its increasingly high gas fees are daunting. This inhibits the computing power of dapps and prevents users who lack large amounts of funds. The second layer (L2) solution solves this problem by executing transactions off-chain (reducing the amount of slow and expensive on-chain calculations), and then publishing batch transaction data on the chain (called “aggregation”). This is not only to reduce the gas fee, but also to effectively increase the TPS.

The Rollup of Optimistic and zkp schemes have their own merits. Arbitrum, as the highly anticipated project of Optimistic Rollup, was launched in September of last year (2021). The performance is acceptable, but it is still far from the expected goal. It will take time to form a complete ecosystem and system. Rollup of the ZK system will be faster to transfer funds to the mainnet. However, there are still many technical problems that need to be resolved when zero-knowledge proof is used in conventional contracts, and efficiency is also a very important aspect that needs to be considered. In 2022, this will still be an important issue for the crypto market. It is too early to say who can win.

Composability and Web3.0

“Web3.0” can be said to be one of the biggest buzzwords in 2021. After that, there was also a Metaverse that also set off a climax. However, the industry does not have a clear consensus on what Web3.0 is and how to define the Metaverse. Its scope is very wide, and it is difficult to tell. However, there are some aspects that are more consensus, that is, Web3.0 is bound to be open and more decentralized, users have clear and unified ownership and control of their data and assets, as we currently see in this ecology The same, what we should see is an open world, composable application ecology.

2021 is an important year for digital ownership. NFT now constitutes a $7 billion industry and continues to grow as more and more artists and art consumers seek verifiable forms of ownership in the digital realm. Most NFT data is stored on the IPFS/Filecoin network, and the link between storage and contract requires open interfaces and access methods.

The launch of DFinity provides the possibility of web-level blockchain applications, but at the same time, DFinity is only a part of the blockchain world. How to use the unique features of DFinity to improve the performance of applications in the encrypted world requires more openness. , More standard interfaces and more links, we can imagine such a scenario, the logic of the application is carried out in the subnet of DFinity, and the data is stored in the IPFS/Filcoin network, accessed through the CID of the data, and at the same time, the transaction It can be put into Layer 2 of Ethereum to form a closed loop. This may be a model for decentralized applications in the future.

Content-based decentralized applications

Can the crypto world in 2022 open up new areas, break through financial applications and expand to other areas?possible. Someone might say that there are already such applications in 2021, such as GameFi. Isn’t that just a game? It’s not finance. However, almost all of the current GameFi applications are not decentralized, they are just Game+Token. The Game part is basically centralized, and the Token in the Game (including FT and NFT) is traded on the chain. This is a breakthrough, but it is not truly decentralized. Data is still centralized. In other words, it is not a content-based decentralized application.

There may be a breakthrough in this area in 2022. One milestone that can be expected is the launch of Filecoin’s virtual machine. This can be the natural combination of Filecoin’s data and smart contracts, which can provide support for DataDao and form a richer ecology. In Filecoin, content-heavy applications can be implemented, which opens up a new path to the blockchain world.

NFT expansion

NFT is undoubtedly one of the hottest encryption trends in 2021. The digital asset market OpenSea’s transaction volume increased from US$1 billion to more than US$10 billion in just three months, demonstrating the viral adoption wave that NFT has begun. Other projects, such as NBA Top Shot and Bored Ape Yacht Club, provide NFT with an excellent platform in popular culture, so that NFT has become one of Google’s hot search queries this year.

Looking ahead, it is important to note that physical art represents an asset class of up to $1.7 trillion, which means that NFTs are just beginning to touch the surface. With the popularity of digital art and the increasing degree of tokenization of physical art, in order to promote better verifiability and a more liquid market, NFT will continue to be popular in the coming year.

However, NFT is different from FT. NFT has poor liquidity, insufficient price discovery mechanism, and insufficient market sensitivity. In terms of improving the liquidity of NFTs, securitization applications with NFT assets as the endorsement are gradually emerging. This is also fragmented by the market, or asset sharing. There needs to be a whole set of mechanisms to achieve this, but I believe that in 2022, attempts in this area will attract widespread market attention.

DAO (Decentralized Autonomous Organization)

DAO is also one of the hottest encryption trends in 2021, and has received widespread attention because it is expected to become a tool for fair and decentralized collective action. We have already seen DAO start around sharing digital cultural identities (such as FWB and plesrDAO), around crowdfunding and capital allocation (such as BitDAO and ConstitutionDAO), and even around social impact factors (such as KlimaDAO for climate change). Given their prominence, I hope to see DAO become a mainstream tool for online organizations and collective action, helping individuals around the world to effectively participate in the cause they care about.

In addition to the increasing number of DAOs, the encryption field has also begun to recognize (and resolve!) several gaps in DAO tools, operations, and onboarding. Platforms like Syndicate can simplify the process of establishing DAOs for collaborative investment, and Station can help users join DAOs, making it easier than ever to start and run functional DAOs in record time. As DAO operations become more and more complex, I expect to see more projects to build DAO tools and infrastructure in 2022.

Privacy calculation?

Privacy computing is a big subject, and it still relies on the breakthrough progress of zero-knowledge proof. With the development of the blockchain network, the theoretical and engineering breakthroughs of zero-knowledge proof are also ongoing. We first saw that ZCash uses zero-knowledge proofs to ensure privacy in digital currency transactions. This is the first time that privacy protection for value transfer has been realized in a public network when all data is disclosed.

Then, Filecoin built the largest zero-knowledge proof network, using zero-knowledge proofs to realize data replication proofs and time-space proofs, and implemented SnackPack in 2021 to greatly increase the aggregation of a large number of zero-knowledge proofs, thereby realizing zero-knowledge proofs Efficiency, especially verification efficiency.

Another breakthrough of zero-knowledge proof is the emergence of ZEXE, which allows people to see the engineering possibility of zero-knowledge proof for general-purpose computing. We have already seen in the second half of 2021 that some teams have begun to experiment with the implementation of virtual machines based on zero-knowledge proofs. This is a good start. Will it truly go to the market and open the ecosystem in 2022? I think that in this encrypted market, we may see more than one project that uses zero-knowledge proofs for privacy calculations appear in 2022, but at the same time, I also think that we will see applications based on zero-knowledge proof virtual machines in 2022. The possibility of a large number of outbreaks is relatively small. However, the enthusiasm of the market may be ignited.

All in all, 2021 has witnessed tremendous growth and a staggering number of innovations in the encryption field, from blockchain infrastructure to DeFi to NFT and so on. Encryption has clearly declared itself to be one of the most powerful technologies of our time, providing unparalleled privacy, trustlessness, composability, and decentralization, while traditional networks are still highly exploited, monopolized, and decentralized.

The public’s eyes have never been so focused on the encryption market as they are today, and the increasing mainstream adoption of encryption technology may shape and accelerate the pace of innovation in the coming year. I am very excited to see how encryption will start the ecology and application of Web3.0 in 2022, and expect encryption technology to occupy more mainstream financial and content fields, and become a more powerful and secure platform for our interaction with the Internet. power.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/the-crypto-market-in-2022/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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