Stockhead continues our cryptocurrency prediction series, with developers, thought leaders, founders, and creatives weighing in.
After lagging in 2021, DeFi tokens are expected to gain ground
"I think it's been interesting to see this year that leading assets in DeFi—the sector of crypto with the most solid user traction, product-market fit, and revenues—have significantly underperformed more speculative sectors like the metaverse, NFTs, and nascent L1 projects," says Jeremy Musighi, head of growth at Balancer, an automated portfolio manager and trading platform.
"Some experts, such as [Three Arrows Capital CEO] Su Zhu, have proposed that this reflects market scepticism about the long-term growth of the Ethereum ecosystem, in favour of DeFi ecosystems on other chains." However, I would like to highlight two points that I believe contradict this notion:
"1) DeFi protocols that have most aggressively expanded cross-chain (e.g., Aave, Sushi, Chainlink) have performed just as poorly in markets as those that have not.
"2) Managing native DeFi projects on Solana and Avalanche has also taken a beating" (That is Raydium, Trader Joe, Pangolin).
"The cryptocurrency market is both narrative-driven and cyclical." Momentum is constantly shifting from one sector to another, as whales cycle profits and narratives shift on a dime.
"Market narratives will continue to shift in 2022, and it's difficult to see them continuing to discount DeFi as they did in 2021."
DAOs, NFTs, and play-to-earn trends will continue to evolve
"I believe that many of the crypto trends that emerged in 2021 will evolve in 2022," says Xavier Ekkel, the Australian founder of prePO, a Singapore-based crypto platform that aims to disrupt pre-public investing by allowing retail investors to invest in projects as early as pre-IPO.
"DAOs will evolve from niche crypto collectives into a legitimate structure for forming a community around a common goal."
"NFTs will progress from collectable jpegs to high-utility multipurpose digital assets."
"Play-to-earn will transition from a crypto-native experiment to a business model adopted by the mainstream gaming industry" (alongside premium and freemium).
"The metaverse is already transitioning from a niche concept to a mainstream inevitability for which every major brand and crypto project will require a strategy, but high user counts will be years away."
"DeFi protocols' capital efficiency (including cross-chain) will continue to evolve, and the DeFi user experience will evolve from complex crypto-native interfaces requiring a crypto wallet to familiar FinTech UXs powered by DeFi infrastructure in the background."
"Layer-2 scaling solutions for Ethereum will transition from testing to rapid adoption, aided by native token incentives, massive ecosystem grants, and direct withdrawals from popular centralised exchanges."
'I'm very bullish on the market for next year.'
Yubo Ruan, the Stanford, California-based founder of Parallel Finance, the Polkadot and Kusama-based DeFi project with a total value of $675 million locked in, says he's looking forwards to a big 2022.
"Thanks to Layer 2 solutions, we will see much easier access for scalability and low-cost transactions next year, which means web3 applications such as marketplaces, social networks, and so on can exist more easily," Ruan told Stockhead.
"For these reasons, I am very bullish on the market for next year."
The mainstream acceptance of digital property
"There will be a lot of play-to-earn integration in blockchain gaming," predicts Bianca Beers, a Sydney-based NFT artist, designer, creator, and brand collaborator.
"This will reshape how we as a society interact with the world around us, including how we perceive value and value our time."
"With the rise of the play-to-earn culture, more social platforms will incorporate ways for creators to profit directly from posting." There will be a significant shift in how we view and value ourselves, as well as how we perceive online content.
"More and more, work, play, finances, and interactions will take place in digital spaces, causing a shift in the value of digital property — digital items will be perceived as just as 'real' or valuable in the common psyche as physical items and spaces."
"An interesting social divide will emerge 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 that platforms will add fiat-purchase capabilities for NFTs, attracting a completely new demographic to the NFT community."
"There will be a tipping point towards mainstream adoption, with more companies accepting crypto and a shift towards digital payments, eventually leading to the abandonment of physical fiat."
Gaming assets that are interoperable
Beryl Li, co-founder of Yield Guild Games, a play-to-earn crypto gaming guild, predicts that Web2 games will begin incorporating crypto features such as governance and NFT assets in 2022.
Meanwhile, she predicts that native crypto and Web3 games will begin to offer more innovative tokeneconomics as well as interoperable gaming assets.
'Everything is becoming tokenized.'
"Security tokens will take off now that key infrastructure — broker-dealers, exchanges, and custodians — is in place," says Julian Kwan, CEO of InvestaX, a Singapore-based blockchain platform for digitising securities such as private equity and real estate.
According to Kwan, key players around the world include not only his company, but also OSL in Hong Kong, Archax in London, Atlas One in Canada, and Securitize, INX, Tzero and Republic in the United States.
"DeFi and CeFi will become more intertwined, with everything being tokenized, creating an explosion of value," Kwan says of decentralised and centralised finance.
According to Kwan, NFTs will continue to grow and will be divided into utility tokens representing art and collectibles and security tokens representing income and royalty streams.
"95 percent of projects will still fail," he predicts, "just like in the non-blockchain start-up world."
However, "crypto will continue to suck in capital and the number of users will continue to grow.... "Everything is turning into a token."
Using NFTs for Social Good
"We'll see more verticals harness the power of Web3 for higher purpose goals," says Bianca Musico, cofounder of AussieMates NFTs, a collection of digital kangaroo companions that can hop around with their owners in the metaverse, with a portion of the mint price going to a mental health charity.
"Imagine a future in which NFT ecosystems are used to reward social impact and better behaviour by industry and citizens alike, which is ultimately beneficial to the world."
"As an example, consider ecotourism. Imagine receiving a POAP (proof of attendance protocol) from each country you've visited and local ecotourism initiatives you've supported. "It's kind of like a virtual passport stamp for how much goodness you put back into the world."
"I predict that more creatives, NGOs, and agile small businesses will use NFTs to generate long-term revenue streams."
"As NFTs approach an exciting tipping point, NFT creators will devise more imaginative utility to attract and retain members." Similarly, NFT creators will face pressure to deliver on their promises."
'NFTs will revolutionise global economics,' says one expert.
"NFTs will fundamentally transform 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 the expansion of blockchain mass adoption, fuelled by cutting-edge innovation in NFTs."
NFTs will continue to evolve.
"Digital fashion NFTs will offer greater interoperability both across the Metaverse and into the real world," predicts Brad Morris, founder of tech-luxe fashion house MYAMI.
"NFT drops will foster deeper forms of connection and community belonging by bringing people together through shared passions, values, and interests." There's a community in the making, no matter who you are, where you are, or what your vibe is."
@Betty nft, the founder of the DeadFellaz NFT community, predicts big things for non-fungible tokens in the coming year.
"By 2022, we'll see NFTs begin to shake up the outdated structures of centralised businesses as mass adoption continues in gaming, sports, fashion, art, and other industries," she predicts.
"There will be a shift in power dynamics in a bilateral relationship between consumer and creator as a result of this."
