Binance Research has identified some major trends and themes to watch in a 2022 report.
Binance Research is the research division of Binance, the world’s largest cryptocurrency exchange.
The report, titled ‘Full-Year Review 2022 & Themes for 2023,’ predicted a sharp decrease in total value locked (TVL) due to ‘exogenous market occurrences.’ The entire value of cryptocurrency locked in a smart contract is described as TVL, and it is used to assess the health of a DeFi protocol.
TVL is currently worth around US$40 billion, or roughly 25% of what it was at the start of the year. According to the research, DeFi began 2022 already in a bear market. Only months later, the wider Web3 environment would follow suit.
The collapse of the UST stablecoin in late Spring caused a flight from the DeFi ecosystem that has yet to be rectified.
The 2022 report is catastrophic for the NFT business, with 83% of total sales occurring in the first half of the year, totaling $18.3 billion. However, the market increased 10.6% year on year. The market hit rock bottom in October before recovering little in November and December. By the end of the year, sales had dropped to a fraction of what they had been in January.
The implosion of UST stablecoin and Three Arrrows Capital contagion are suggested as factors.
Interest in NFTs peaked in January, according to Google Trends, before falling throughout the year. A small group of aficionados also kept the market going. The number of unique buyers and sellers has about halved since the beginning of the year.
Furthermore, while blockchain-based games continue to flourish, their impetus has stalled. Many play-to-earn games have received criticism for the quality of their gameplay and the sturdiness of their tokenomics. Following a successful 2021, interest in the Metaverse has waned.
As development prospects within the crypto ecosystem become more difficult to come by, Binance Research forecasts that asset tokenization will become a greater priority. The sector has also lost major faith in authorities.
Governments are less enthusiastic about Web3 than they were the previous year. As a result, regulations will be stiffer than they would have been otherwise, but the industry will gain clarity on a number of fronts. A promising sign for long-term growth.
According to the paper, NFTs will become more about utility and will progress beyond profile-picture NFTs. The next driver of adoption will be real-world use cases.
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