Stockhead continues our crypto-prediction series, with developers, thought leaders, founders and creatives offering their take.
DeFi tokens to gain ground after lagging in 2021
“I think it’s been interesting to observe this year that leading assets in DeFi— the sector of crypto with the most solid user traction, product-market fit, and revenues— have highly underperformed more speculative sectors such as the metaverse, NFTs, and nascent L1 projects,” says Jeremy Musighi, head of growth at Balancer, the automated portfolio manager and trading platform.
“Some experts, like [Three Arrows Capital chief executive] Su Zhu, have proposed that this indicates market doubt in the long-term growth of the Ethereum ecosystem, in favour of DeFi ecosystems on other chains. However, I would highlight two points that I think run contrary to this idea:
“1) DeFi protocols that have most proactively expanded cross-chain (ie Aave, Sushi, Chainlink) have performed just as badly in the markets as protocols that haven’t.
“2) Leading native DeFi projects on Solana and Avalanche have taken a beating as well (ie Raydium, Trader Joe, Pangolin).
“Crypto is both a narrative-driven and cyclical market. Momentum continuously rotates from one sector to another, as whales cycle profits and narratives change at the drop of a dime.
“In 2022, market narratives will continue to change and it’s hard to see them continue to discount DeFi as they have in 2021.”
DAOs, NFTs and play-to-earn trends to evolve
“I think many of the crypto trends that emerged in 2021 will see an evolution in 2022,” says Xavier Ekkel, the Aussie founder of prePO, a Singapore-based crypto platform set to disrupt pre-public investing by letting retail investors get in on-early pre-IPO projects.
“DAOs will evolve from niche crypto collectives into a legitimised structure for spinning up a community around a common purpose.
“NFTs will evolve beyond collectible jpegs into high-utility multipurpose digital assets.
“Play-to-earn will evolve from a crypto-native experiment into a business model adopted by the mainstream games industry (alongside premium and freemium).
“The metaverse is already evolving from a niche concept into a mainstream inevitability that every big brand and crypto project will need a strategy for, but high user counts will still be years away.
“DeFi protocols will continue to evolve in their capital efficiency (including cross-chain), and the DeFi user experience will evolve from complex crypto-native interfaces requiring a crypto wallet, into familiar FinTech UXs powered by DeFi infrastructure in the background.
“Layer-2 scaling solutions for Ethereum will evolve from test mode into rapid adoption mode, amplified by native token incentives, huge ecosystem grants, and direct withdrawals from popular centralized exchanges.
‘Very bullish on next year’s market’
Yubo Ruan, the Stanford, California-based founder of Parallel Finance, the Polkadot and Kusama-based DeFi project with $675 million in total value locked, says he’s looking forward to big 2022.
“Next year, we will see much easier access for scalability and low-cost transactions thanks to Layer 2 solutions, which means web3 applications such as marketplaces, social networks, etc can more easily exist,” Ruan told Stockhead.
“These reasons make me overall very bullish on next year’s market.”
Digital property to gain mainstream acceptance
“We’re going to see a lot of play-to-earn integration in blockchain gaming,” predicts Sydney-based NFT artist, designer, creator and brand collaborator Bianca Beers.
“This is going to reshape the way we as a society interact with the world around us including the way we perceive value and the way we value our time.
“The rise of play-to-earn culture will drive more social platforms to integrate ways in which creators profit directly from posting. There’ll be a massive shift in how we view and value ourselves and how we perceive online content.
“More and more, work, play, finances and interactions will occur in digital spaces, creating a shift in the value of digital property — digital items will be perceived as just as ‘real’ or valuable as physical items and spaces in the common psyche.
“Socially we’ll see an interesting divide arise between people who are open to the evolution and integration of the metaverse (and technology in general), and people who would prefer to interact solely in the physical world, and live ‘off-the-grid.’
“I predict platforms adding fiat-purchase capabilities for NFTs, attracting a whole new demographic to the NFT community.”
“We’ll see a tipping point towards mainstream adoption, more companies accepting crypto and a mix shift into digital payments, eventually relinquishing physical fiat.”
Interoperable gaming assets
Beryl Li, the co-founder of Yield Guild Games, the play-to-earn crypto gaming guild, predicts that in 2022, Web2 games will start incorporating crypto features like governance and NFT assets.
Meanwhile, native crypto/Web3 games will begin offering more innovative tokeneconomics, as well as interoperable gaming assets, she says.
‘Everything is getting tokenised’
“Security tokens are going to take off now that key infrastructure is in place — broker-dealers, exchanges and custodians,” says Julian Kwan, the chief executive of InvestaX, a Singapore-based blockchain platform for digitising securities, including private equity and real estate.
Key players around the world include not just his company but OSL in Hong Kong, Archax in London, Atlas One in Canada and Securitize/INX/Tzero/Republic in the US, Kwan says.
“DeFi and CeFi will become more intertwined with everything being tokenized creating an explosion of value,” Kwan says, referring to decentralised and centralised finance.
Kwan says that NFTs will keep booming, and split into utility tokens representing art and collectibles and security tokens that represent income and royalty streams.
“95% of projects will still fail, just like in the non blockchain start-up world,” he warns.
But “crypto is going to continue to suck in capital and the numbers of users will continue to grow…. Everything is getting tokenized.”
Leveraging NFTs for social good
“We’ll see more verticals unlock the power of Web3 for higher purpose goals,” says Bianca Musico, cofounder of AussieMates NFTs, a collection of digital kangaroo companions that’ll be able to hop around with their owners in the metaverse, with a portion of the mint price going to a mental health charity.
“Imagine a future where NFT ecosystems are used to reward social impact and better behaviours by industry and citizens alike, that’s ultimately rewarding for the world.”
“Take ecotourism, imagine receiving a POAP [proof of attendance protocol] from each country you’ve visited and local ecotourism initiatives supported. Like a virtual passport stamp for how much goodness you put back in the world.”
“I predict more creatives, NGOs and agile small businesses will leverage NFTs for sustainable income streams.
“NFT creators will dream up more imaginative utility to attract and retain members as NFTs surge towards an exciting tipping point. Equally, NFT creators will be challenged to deliver on their promises.”
‘NFTs will revolutionise global economics’
“NFTs will fundamentally revolutionize global economics – featuring verifiable ownership of digital assets; tokenization represents freedom, empowerment, streamlined efficiencies, eco-friendly alternatives, global interconnectedness, and opportunity,” says Robbie Cochrane, cofounder of Chain Guardians, a sci-fi anime blockchain game and metaverse.
“2022 will be a year for economic advancement and furtherance of blockchain mass adoption driven by the cutting-edge innovation in NFTs.”
NFTs will keep evolving
“Digital fashion NFTs will offer greater interoperability both across the Metaverse and into the real world, with NFT smart contracts getting smarter exponentially, and offering more utility to their owners,” predicts Brad Morris, founder of tech-luxe fashion house MYAMI.
“NFT drops will drive deeper forms of connection and community belonging, uniting individuals through shared passions, values and interests. Whoever you are, wherever you are and whatever’s your vibe there’s a community in the making.”
The founder of the DeadFellaz NFT community, @Betty_nft, also forecasts huge things for non-fungible tokens in the new year.
“In 2022 we’ll see NFTs begin to shake up the outdated structures of centralised businesses as mass adoption continues across gaming, sports, fashion, art and more,” she says.
“This will bring a shift in power dynamics to a bilateral relationship between consumer and creator.”