With less than a month into the new year, the market is already showing sustainable signs of recovery, and the “creative destruction” that has occurred could be a huge win not only for the consumer but also in terms of regulatory protections and rapid innovation, as well as reduced cost structures.
Despite many ups and downs, cryptocurrencies have become a major player in the global economy. Investors continue to invest their portfolios in this asset class. According to the new OKX reportHere are the five key trends in cryptocurrency investing that will define the coming year.
Ethereum Developers
Development in the Ethereum ecosystem has been constantly increasing. Completing the Fusion and switching from Proof of Work to Proof of Stake caused his power consumption to drop by 99%. To top it off, multiple, multiple OP 2 layers are scaling the network.
Danksharding would be another turning point for Ethereum as TPS increased to over 100k after getting close to the Shanghai updates. Ultimately, the design will pave the way for a much cheaper and faster execution that will ensure Layer 2 networks can thrive.
Onboarding Innovation
In recent years, the DeFi and Web3 space has seen a flurry of forays from financial enthusiasts. The COVID pandemic propelled tens of millions of gamers and punters into the GameFi and Play 2 Earn projects and this trend seems to be intensifying.
Subsequently, big players like Yuga Labs, Reddit, and Starbucks brought in traditional users with their NFT products. Various blockchain networks have also joined forces with major brands to attract new users.
Meanwhile, the storage and retrieval of public and private keys has been the Achilles heel of Web3 security. But wallet developers are now seeing huge investments to improve the experience and usability.
DeFi Revitalization
Strong deleveraging pressures inflicted in the second half of 2022 caused several prominent crypto firms to collapse. Total Value Locked (TVL) in DeFi took a heavy beating and declined by more than 76%. The failures are expected to set the stage for “bigger innovations ahead.” As such, the industry is looking to develop decentralized stablecoins that may have real-world utility.
The NFT market also suffered a similar fate at the hands of the crypto winter. But beyond NFT PFPs, which have no utility beyond their social attributes, securitization alongside DeFi, for example, can build credit, value, and equity. This is expected to trigger the explosion of NFT-Fi in the future.
An industry-wide approach to infrastructure
Permitless and decentralized infrastructure projects could see bigger bets this year. For example, mev-boost validator adoption has reached 90% since 2021. With the OFAC sanction of Tornado Cash, mev-boost flashbot relay validators are under scrutiny by the enforcement agency.
On the bright side, the MEV landscape is poised for a big change. Liquidity fragmentation caused by Layer 2, application chains and multi-chains could provide great opportunities for MEV. The introduction of danksharding is expected to disrupt the way Flashbot is normally mined on Ethereum.
Additionally, centralized data tools such as Dune and Glassnode have dominated the space for on-chain data analytics and investing. But decentralized data tools will become a central focus for developers in the coming months.
chain security
The space witnessed rampant fraud, with hackers rife, and no compensation.
As such, on-chain data, tracking tools, and asset recovery tools will be a major focus by 2023, focused on Web3 security governance, on-chain activity monitoring, Web3 user behavior, lost asset tracking and AML protection.
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