10 Predictions for Web3 and the Cryptoeconomy for 2022

Written by Surojit Chatterjee, Head of Product Division

2021 proved to be the year of the cryptocurrency hack as the price of BTC rose nearly 70% year over year, Defi reached $150 billion locked in, and NFT emerged as a new category. Here is my view of the crystal ball until 2022 and what it holds for our industry:

1. Ethical scalability will improve, but newer L1 chains will experience significant growthAs we welcome the next hundreds of million users in Crypto and Web3, Eth’s scalability challenges are likely to increase. I’m optimistic about improvements in Eth scalability with the advent of Eth2 and several L2 clusters. Traction of Solana, Avalanche and other L1 series shows that we will live in a multi-chain world in the future. We will also see the emergence of newer L1 threads focused on specific use cases such as gaming or social media.

2. There will be significant usability improvements in L1-L2 bridges– As more L1 networks gain traction and L2s become larger, our industry will be aggressively seeking improvements in the speed and usability of L1 and L1-L2 cross bridges. We will likely see interesting developments in the usability of bridges in the coming year.

3. Zero-knowledge proof technology will get increased traction2021 saw the debut of protocols such as ZkSync and Starknet. With L1 chains clogged with increasing usage, ZK-rollup technology will attract the attention of both investors and users. We’ll see new privacy-centric use cases emerge, including privacy-safe apps and game models that have privacy built in at their core. This may also draw regulators more interest in cryptography because KYC/AML can be a real challenge in privacy-focused networks.

4. Structured selection and appearance of the KYC certificate on the chain– Many identification protocols will include regulation and will create separate groups for KYC users. Decentralized authentication and identity services on the KYC chain will play key roles in connecting users’ real identity to Defi wallet endpoints. We will see more acceptance of ENS type addresses, and new systems of cross-string name resolution will emerge.

5. Institutions will play a much larger role in Davy’s participationOrganizations are increasingly interested in participating in Defi. For starters, institutions are drawn to above-average interest-based returns compared to traditional financial products. And the cost reduction in providing financial services with Defi opens up interesting opportunities for enterprises. However, they are still reluctant to participate in Defi. Organizations want to confirm that they only deal with known counterparties that have completed the KYC process. The growth of structured Defi certifications and on-chain KYC certification will help organizations gain confidence in Defi.

6. Defi will appear– With the spread of Defi, it also becomes a target for security hackers. According to London-based Elliptic, the total value lost to Defi exploits in 2021 is more than $10 billion. To protect users from hacks, viable security protocols that guarantee user funds against security breaches will appear in 2022.

7. NFT-based communities will give material competition to Web 2.0 social networksNFTs will continue to expand in how they are perceived. We’ll see creator tokens or fan tokens take first-class seats. NFTs will become the next evolution of users’ digital identity and passport to the metaverse. Users will come together in small and diverse communities based on the types of NFT they own. User generated metaverses will be the future of social networks and will begin to threaten the ad-driven centric versions of today’s social networks.

8. Brands will start actively participating in the metaverse and NFTsMany brands recognize that NFTs are great ways to market their brand and build brand loyalty. Coca-Cola, Campbell’s, Dolce & Gabbana, and Charmin released NFT collectibles in 2021. Adidas recently launched a new metaverse venture with the Bored Ape Yacht Club. We will likely see more interesting brand marketing initiatives using NFTs. NFTs and the metaverse will become the new Instagram for brands. And just like on Instagram, many brands may start out as NFT original. We’ll also see many celebrities jumping on the bandwagon and using NFTs to boost their personal brand.

9. Web2 companies will wake up and try to enter Web3We’ve already seen this with Facebook trying to re-brand itself as a Web3 company. We’ll likely see other big Web2 companies dip their toes into the Web3 and the metaverse in 2022. However, it’s likely that many of them will be creating network centric and closed versions of the metaverse.

10. Time for DAO 2.0We’ll see DAOs become more mature and friendly. More people will join DAOs, which will change the definition of employmentNever receive a formal letter of offer, accept tokens in place of or along with fixed salaries, and work on multiple DAO projects at the same time. DAOs will also face new challenges in terms of figuring out how to do mergers and acquisitions, managing payroll and benefits, and coordinating activities in larger and larger organizations. We will see the emergence of a large number of tools to help DAOs implement efficiently. Many DAOs will also figure out how to interact with traditional Web2 companies. We are likely to see regulators pay more attention to DAOs and try to educate themselves on how DAOs work.

Thanks to our customers and the amazing 2021 ecosystem. Looking forward to another year of building the foundations of Web3. Wagme.

The 10 predictions for Web3 and Cryptoeconomy for 2022 were originally published on the Coinbase blog on Medium, where people continue the conversation by highlighting and responding to this story.

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