- Coinbase believes that 2022 will see brands embrace NFTs and Web3, with many Web2 companies like Facebook already making the move.
- It also predicts a rise in the use of L1 chains that scale like Avalanche and Solana as well as increased interoperability between L1 and L2 chains.
2022 is hours away and it looks set to be the best year yet for cryptocurrencies and blockchain technology. According to Coinbase, it could be a year in which we see Web3 come of age and become a critical tenet of the industry. In its predictions for 2022, the American exchange also stated that we are set to see Layer 1 chains like Solana and Avalanche become more popular and bridges that create interoperability between Layer 1s and Layer 2s become mainstream.
In a blog post titled ‘10 Predictions for Web3 and the Cryptoeconomy for 2022,’ Coinbase chief product officer Surojit Chatterjee looked at the trends that will define the upcoming year.
My predictions for what 2022 might hold for Web3 and the cryptoeconomy. Love to hear your thoughts. https://t.co/2yAmpp7knO
— Surojit (@surojit) December 30, 2021
Ethereum scaling, Layer 1s, and 2s
2022 will be defined by scaling. Blockchain networks are getting a lot of traction and with it, a surge in the number of users, be it for DeFi, NFTs, trading, and more. To serve these users, existing protocols will have to scale quickly or risk being upstaged by upcoming networks.
Ethereum is the big player and has the biggest ecosystem in the industry. It has already started its journey towards scaling with Ethereum 2.0, and Coinbase believes this will continue. However, other Layer 1 chains like Avalanche and Solana, which are already much more scalable, will see great growth.
Still on this, Coinbase believes that Layer 2s like Polygon will continue to grow aggressively. This will open up a great opportunity for bridges that connect the L1s and L2s.
And as scalability continues to take center stage, zero-knowledge-proof technology will get increased traction. This year, protocols like Starknet and ZkSync have become very popular and this growth will only accelerate in the new year.
As L1 chains get clogged with increased usage, ZK-rollup technology will attract both investor and user attention. We’ll see new privacy-centric use cases emerge, including privacy-safe applications, and gaming models that have privacy built into the core.
DeFi goes mainstream
2022 will be the year in which DeFi will go mainstream, Coinbase points out. This year, we have seen massive growth in DeFi in metrics such as the number of users and total value locked. This will only surge in the upcoming year, the exchange, which is publicly traded, believes.
With this growth, DeFi protocols will embrace regulations as they will be too big for authorities to ignore.
Decentralized identity and on-chain KYC attestation services will play key roles in connecting users’ real identity with Defi wallet endpoints.
Currently, DeFi is dominated by retail investors as it’s still considered quite risky. In 2022, more institutions will dip their feet in the DeFi waters and play an increasingly significant role. We’ve already seen it begin with the likes of Aave Arc which has brought in players like Swiss bank SEBA. KYC on DeFi will also need to improve to attract these regulated entities.
This growth will also require insurance. This year alone, DeFI platforms have lost $10 billion to hacks and exploits. As the industry grows, consumers will need a layer of protection from such events.
NFTs and Web3
Perhaps the most exciting prospect for 2022 will be NFTs and Web3. This sector is already seeing billions in investment, both from within the cryptocurrency community and the broader tech industry from the likes of Facebook. Coinbase believes this growth will implode in 2022.
NFT-based communities will give material competition to Web2 social networks, the exchange notes. Major brands will also start diving deeper into the Web3 and NFT world, with some like Adidas, Coca-Cola, Dolce & Gabbana, and Charmin already trying out NFTs.
Web2 companies will attempt to ape into the Web3 mania, Coinbase believes. Already, we’ve seen Facebook (now Meta) announce it will focus on this emerging sector. Microsoft is also quickly expanding its Web3 and metaverse capabilities, as are Google and Apple. Microsoft founder Bill Gates has already indicated that he sees the metaverse hosting all our meetings in three years.
But the entry of Web2 giants in the world of Web3 comes with its caveats, Coinbase notes. Surojit claimed that most of these companies will try to create centralized and closed versions of their metaverse where they still retain all the control.
Lastly, 2022 will be the year for DAO 2.0.
More people will join DAOs, prompting a change in the definition of employment — never receiving a formal offer letter, accepting tokens instead of or along with fixed salaries, and working in multiple DAO projects at the same time.
And with the growth of all these sectors, regulators will be forced to educate themselves much more on how they work so they can oversee them.