Four best or four worst

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The start of 2022 has seen both the crypto market capitalization and the non-fungible token (NFT) market reach incredibly healthy status. The crypto reached a strong valuation of $2.5 trillion and NFTs peaked after the exponential growth of 2021.

As in previous crypto bull markets, new projects have attracted considerable attention, leading to aggressive speculative investing; the Terra ecosystem is a perfect example. Additionally, retail and venture investors were investing heavily in what was quickly becoming a crowded space. All of this activity was taking place against the backdrop of a broader macroeconomic environment that felt infinitely strong, and with easy access to borrowing at low rates, the resulting frenzy in high-yield offerings seemed reasonable as a source. wealth generation.

The four crypto pros of 20221) The Ethereum Merge

In September, we witnessed the main tech event of the year: The Ethereum Merge. The Ethereum blockchain has successfully transitioned from its proof-of-work consensus layer to a proof-of-stake mechanism. Since miners are now unnecessary to validate the chain, its energy consumption has been reduced and it now functions as a much greener chain.

After The Merge, interest in Layer 1 chains (Cardano, Solana, Avalanche) also seemed to shift to Layer 2 scaling solutions (Arbiturm, Optimism). Simultaneously, there has been a general race to the bottom for on-chain transaction fees, CEX trading fees and, more recently, fees for NFT trading platforms as well.

2) Conflict and crypto

Numerous global conflicts throughout the year provided ample opportunity to showcase the strength of crypto’s low-friction cross-border value transfer. At the start of the war in Ukraine, the crypto community rallied to fund its support, with millions of dollars being raised and sent to support the troops and their families.

In Canada, we have seen a political conflict break out. Hundreds of truckers protesting Covid vaccine mandates. The streets of the capital were ultimately dominated by the protests, fueled by a $10million GoFundMe campaign – which the site eventually shut down for violating its terms of service. In response, supporters turned to crypto, raising nearly $900,000 worth of BTC to further fund their efforts. This likely contributed to the Canadian government’s regulatory measures put in place throughout the year.

3) Adoption of tech giants

Meta has committed billions to the metaverse as Facebook and Instagram seek to compete with TikTok. Despite their declining value, the tech giants seemed incredibly bullish. They deploy NFTs to users, much like we’ve seen successfully on social platform Reddit. Reddit introduced the idea of ​​digital collectibles to millions of internet users. Allow users to buy, sell and set their Reddit avatars on CryptoSnoo NFTs.

4) Fashionable adoption

It’s not just tech companies that got into the space this year. Big brands are using Web3 as an expansion route, especially fashion giants. Tiffany & Co. has officially entered the space by creating a series of 250 limited edition gold pendants. These custom coins were only for wanted Cryptopunk NFT owners.

François-Henri Pinault, President of Gucci’s parent company, Kering, also revealed that Kering has a team fully dedicated to building Gucci and BALENCIAGA’s presence on Web3 and the metaverse.

The Four Downsides of Crypto in 20221) Funds Go Bankrupt

By the end of the second quarter of 2022, the 40% contraction in crypto market capitalization had erased approximately $1 trillion from the total value. During this period, it also became apparent that a selection of CeFi institutions were overleveraged. Large loans – many unsecured – have been made with Three Arrows Capital and other funds. As yields plummeted from inflated offers of up to 20% on the Terras stablecoin (UST, not to be confused with USDT), to below inflation rates, we started to see the pieces become undocked. Cryptospheres’ faith in algorithmic stablecoins has declined significantly and has not recovered since. Three Arrows Capital lost a huge amount of capital in the sale that followed Terra’s failure. Yields plummeted further, along with some other CeFi platforms, like Voyager Digital and Celsius Network, which were unable to return client funds.

2) Collapse of trade

By the end of the summer, a degree of confidence was returning to the markets, thanks in part to FTX – a major exchange and custodian – stepping in to seemingly rescue major lender CeFi BlockFi from bankruptcy. The perceived strength of FTX, led by founder Sam Bankman-Fried, has continued to see new investment in crypto companies. However, after rumors and public discussion involving Binances CEO Changpeng Zhao, people started to question FTX’s creditworthiness and ability to maintain its self-issued token, FTT. Traders have started withdrawing funds from FTX. Due to the uncertainty and bank rush, the price of FTT fell from around $26 to $1 in a matter of days; FTX’s response to suspend client withdrawals has only heightened concern and panic. This fear ultimately led to the demise of FTX, which filed for bankruptcy.

In November, as confidence in centralized platforms continued to fall to new lows, coupled with financial contagion from the aforementioned bankruptcy spread, many other ancillary projects began to pull back.

3) Insider Trading

Ishan Wahi, a former Coinbase employee, has been charged with insider trading when he, along with relatives, profited from more than $1.5 million by leveraging the platform’s confidential listing information, by buying tokens before they go public and selling in the wave. post-registration interest.

Similarly, former OpenSea employee Nathaniel Chastain has been accused of participating in an NFT-related insider trading scheme, the first case of its kind. The product manager used confidential information on which the NFTs would be featured on the homepage of the sites and the interest of potential users.

4) Tornado Cash and changing regulations

US-sanctioned coin-mixing protocol Tornado Cash, citing it as a national security risk used by foreign countries to launder stolen funds. Numerous lawsuits arguing otherwise have been filed and a legal battle is still ongoing, while a lead developer, Alexey Pertsev, has been detained. A user of the protocol also used it to distribute 0.1th to many well-known addresses (including Jimmy Falon’s), highlighting the absurdity of these parties now technically involved and violating the new sanctions.

With all the chaos of 2022, there has been a firmer regulatory focus 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 risks and benefits of cryptocurrencies.

Here at XGo, we hope it wasn’t coal under the Christmas tree for you this year. Despite the number of gms dropping and awkward family conversations at home approaching all-time highs, keep BUIDLing and be there for you in the new year. Hopefully, the naughty list of 2023 cryptos will be a bit shorter.

Digi516 is a longtime crypto researcher and NFT enthusiast. After working in fraud prevention and data/business analytics, they have accumulated 6 years of trading experience and over 4 years of active community management. They now operate as Lists and Community Manager at XGo.

Disclaimer. Cointelegraph does not endorse any content or product on this page. Although we aim to provide you with all important information we may obtain, readers should do their own research before taking any action related to the Company and take full responsibility for their decisions. , this article also cannot be considered investment advice.

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