In 2021, crypto surpassed the 3 Trillion market cap; precisely on Nov. 10th. A remarkable date where both main assets; Bitcoin and Ethereum, achieved their respective all-time highs.
With nearly a 300% rise in just 313 days for crypto as a whole. In the same period of time, Decentralised Finance 'DeFi' assets rose to 200 Billion, which is an increase of 823% - assets excluding BTC and ETH surpassed the $1 Trillion mark in market cap.
At least 52% of financial institutions have already invested in cryptocurrencies. What's more, over 71% of institutional investors expect to buy or invest in digital assets in the future, and of those, 90% expect crypto assets in their portfolio by 2026. Crypto adoption worldwide grew 2,300% from the third quarter of 2019 to the end of the second quarter of 2021, with Turkey having the highest rate (20%).
Rise of the DEXs
While the number of active cryptocurrency exchanges has steadily decreased in the last year, decentralized exchanges (DEX) have grown massively.
The value on large decentralized exchanges like Uniswap, PancakeSwap, Curve and SushiSwap grew 5X compared to the last year. But, the overall number of active cryptocurrency exchanges has been on a steady decline, as smaller projects shut down.
On the other side, with the embracement of chains like Avalanch, Solana or Polygon, dedicated DEXs, like TraderJoe, Raydium or QuickSwap, conquered the users during 2021.
Not only did the volume flourish on the DEXs last year, but the number of the large decentralized exchanges have grown more than any other category since 2019, and the one that was still increasing in 2021 compared with other kinds. One of the main reasons for their success would be their minimal know your customer (KYC) requirements.
We expect not only to continue but to grow even more during 2022. The 2021 momentum has been just a test for the industry. Big corporations and institutions have been onboarded during these last months. Next year will be the year we will see the true potential of decentralization. The ongoing restrictions on several countries are highlighting how needed decentralization is for freedom.
Number of Exchanges Growth 2019-2021:
On the other hand, the growth of DEXs coincides with the explosive growth of the DeFi category in general. DeFi is a catch-all term for a group of financial products that allow their users to trade, borrow and lend crypto assets without the need for third-party intermediaries.
What’s Next for DEXs?
Over the course of 2021, the DEX trading volume trajectory was downward, by 142% since May’s peak. One of the main reasons probably was Ethereum's unstable gas fees, which can range up to hundreds, even thousands of dollars when doing most complex transactions within DeFi protocols. Fortunately, Layer 2 scaling solutions are starting to integrate Ethereum-based dApps to address this issue.
For instance, Arbitrum One portal has several dApps available, with drastically lower transaction fees. Bear in mind that DEXs could end up offering the same services as CEXs do, but with significantly lower costs. Case in point, in July last year, Uniswap achieved 77% of Coinbase’s trading volume with 33x fewer employees. Knowing that the possibility of seeing DEX trading volume will surpass that of CEXes in the next year 2022 is a reasonable possibility.
Blockchain Surprises
2020 & 2021 has seen a new ‘Multichain Environment’ really take hold - with greater demand, higher prices and increased usage on blockchains; scalability and cost have proved problematic.
The Ethereum Network is overloaded, and the ‘ETH Killers’ have seized this opportunity. To alleviate these pains, and provide competition we have seen a number of projects like Solana, Terra or Polygon, attempting to innovate, improve and thrive with these conditions. Markets are perfect.
Outside of that, we have seen unparalleled growth in the Crypto Gaming sector, the most successful one being Axie Infinity, not only within Crypto and Play-to-Earn but in Global Gaming. All those projects pushing in 2021 are set to shine in 2022, bringing new ones in their trail, as new platforms are created every week. I firmly believe we’ll see new top performers all along the year!
NFTs, Everywhere
Those unique cryptographic assets helped shift the paradigm for how we understand cryptocurrencies by how unique and irreplaceable they are, making them impossible to be valued equally.
NFTs as a concept is still very new. The scope for NFTs reaches as far as anything that needs provable ownership. Including Digital Art, such as Images, Videos, Music, Collectables, Game Items, but also Real World Items like a deed to a car, tickets to events or legal documents.
Everything NFT, from value, adoption and utility down to social interest and sales, exploded in 2021. We have seen billions in dollars spent on jpegs! For example, last year only, NFT sales reached $23 billion in trading volume, with over 140,000 active daily wallets.
Some projects reached mind-blowing numbers, a single CryptoPunk being sold at 4,200 ETH ( Four THOUSAND Ethereums! $7 million at the time!), or a Bored Ape for 769 ETH.
I continue to bet on the NFT industry and its growth in 2022. We have seen just a small portion of its true potential. The metaverse along with gaming will be a huge booster for the industry, which won't get stuck on JPEG collectibles.
Crypto Gaming: Where Playing Means Earning
One of the most exciting developments in crypto over the last twelve months has to be the rise of crypto gaming. The sector was almost nonexistent in January last year, and now we sit at a collective market cap of over 25 Billion.
Last year saw the concept of 'Play to Earn', the process of playing games for money or tokens, come to life. It's quite a simple concept on paper, but when you actually think about the bigger picture here and the potential behavioral changes, it's quite amazing. I’m sure many of you have always viewed gaming as a black hole of time and resources… You play a game all day for hours only to look back and think 'what a waste of a day' - Well with play to earn this dynamic changes, and that wasted time can actually be monetized.
One of the biggest breakthrough innovations in crypto gaming was the use of NFT assets. Turning in-game items and even characters into NFTs created multiple additional revenue sources for playing as well as encouraging further innovations.
Axie Infinity was one of the first projects to really explode and is now sitting on a Market Cap just shy of 7 Billion Dollars.
Axie Infinity
In a nutshell, I think this space will continue to evolve and explode. Last year alone over 4 Billion Dollars has been invested into blockchain games and this shows no signs of slowing down. Over the course of 2022, we’ll start to impact the lower age brackets, specifically the 18-24-year-old sectors, and reach new sectors and regions.
But, the biggest change we will see next year has to be the introduction of big players into the space. They have been watching and have seen the potential, and we’ve only just started to see the start of this. With big names like Ubisoft who tried to lead the pack, this is a sector to keep an eye on.
All in all, 2022 is set to push new records in all domains, no matter what is thrown at the market. Blockchain technologies are here to stay, integrated into new sectors every day, making their growth impossible to stop.
Will you jump on the Crypto Train?
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