Surojit Chatterjee, Chief Product Officer (CPO) of Coinbase gave 10 predictions regarding the crypto market for 2022.
2021 was a great year for the crypto market. BTC price gained 70% YoY, total market locked in defi crossed $150B. NFT emerged as a new category and took the market by storm where top companies like Ferrari, Visa all joined NFTs and Metaverse.
Let’s look at the 10 predictions for 2022 from Coinbase, Chief Product Officer, Surojit Chatterjee.
1: Eth scalability will improve, but newer L1 chains will see substantial growth
As millions of new users will join crypto and web3, scalability challenges for Eth are likely to grow. But Coinbase CPO is optimistic about improvements in Eth scalability with the emergence of Eth2 and many L2 rollups. He is also confident about Solana, Avalanche, and other L1 chains. Also, there will be newer L1 chains emerging with a focus on specific use cases such as gaming or social media.
2: There will be significant usability improvements in L1-L2 bridges
According to Chatterjee, As more L1 networks gain traction and L2s become bigger, the Crypto industry will desperately seek improvements in the speed and usability of cross-L1 and L1-L2 bridges. There will be interesting developments in the usability of bridges in the coming year.
3: Zero-knowledge proof technology will get increased traction
As L1 chains get clogged with increased usage, ZK-rollup technology will attract both investor and user attention. There will be a new privacy-centric use case emerging, including privacy-safe applications, and gaming models that have privacy built into the core. This may also bring in more regulatory attention to crypto as KYC/AML could be a real challenge in privacy-centric networks.
4: Regulated Defi and the emergence of on-chain KYC attestation —
Many Defi protocols will embrace regulation and will create separate KYC user pools. Decentralized identity and on-chain KYC attestation services will play key roles in connecting users’ real identity with Defi wallet endpoints. There will be more acceptance of ENS type addresses, and new systems from cross-chain name resolution will emerge.
5: Institutions will play a much bigger role in Defi participation
Institutions are increasingly interested in participating in Defi. Institutions are attracted to higher than average interest-based returns. However, they are still hesitant to participate in Defi. Institutions want to confirm that they are only transacting with known counterparties that have completed a KYC process. The growth of regulated Defi and on-chain KYC attestation will help institutions gain confidence in Defi.
6: Defi insurance will emerge
As Defi proliferates, it also becomes the target of security hacks. According to London-based firm Elliptic, the total value lost by Defi exploits in 2021 totaled over $10B. To protect users from hacks, viable insurance protocols guaranteeing users’ funds against security breaches will emerge in 2022.
7: NFT Based Communities will give material competition to Web 2.0 social networks
NFTs will become the next evolution of users’ digital identity and passport to the metaverse. Users will come together in small and diverse communities based on the types of NFTs they own. User-created metaverses will be the future of social networks and will start threatening the advertising-driven centralized versions of social networks of today.
8: Brands will start actively participating in the metaverse and NFTs
Many brands are realizing that NFTs are great vehicles for brand marketing and establishing brand loyalty. Coca-Cola, Campbell’s, Dolce & Gabbana, Visa, and Charmin released NFT collectibles in 2021. Adidas recently launched a new metaverse project with Bored Ape Yacht Club. There will be more interesting brand marketing initiatives using NFTs just like Instagram.
9: Web2 companies will wake up and will try to get into Web3
Facebook is already trying to recast itself as a Web3 company. So there will be other big Web2 companies dipping their toes into Web3 and metaverse in 2022. However, many of them are likely to create centralized and closed network versions of the metaverse.
10: Time for DAO 2.0
DAOs will become more mature and mainstream. More people will join DAOs. DAOs will also confront new challenges in terms of figuring out how to do M&A, run payroll and benefits, and coordinate activities in larger and larger organizations. Regulators will take more interest in DAOs and make an attempt to educate themselves on how DAOs work.