Whenever thinking about 2022, only one quote comes to mind:
“Hard times create strong men,
strong men create good times,
good times create weak men,
and weak men create hard times.”
2022 was one hell of a year.
Wars, Market meltdowns, Political Scandals, inflation, scams as far as the Nigerian prince could send his emails… If it tried to intrude on your life or impacted you negatively in some way, shape, or form, it happened in 2022.
Crypto was not excluded from the chaos. The nascent economic sector saw drawdowns of over >80%. Centralized service providers imploded, wreaking havoc on the deposits of their customers. Decentralized service providers got decimated through a series of hacks, losing the trust/faith of their backers.
NFTs. The promise child of Lambos for all. The burgeoning industry that set off a mainstream mania, sending people into frenzies trading cartoon pictures of apes for millions of dollars, went through an absolute sh*t show. Under the guise of “WEB3.0” & In its mission to “empower creators,” NFT technology singlehandedly gave rise to some of the most sophisticated scams of all times. The Psyops happening on Twitter & Discord brought a whole new meaning to Social Engineering. Honest Hardworking People were tricked out of their money & the fraudsters lavished. This last year for NFTs has just been atrocious. While I’m sure there have been a few outliers, insider traders & trading savants that made great money, it’s safe to say the vast majority of participants lost.
Ok, ok. I’m being a bit too critical. There were some fantastic technological developments in the NFT space, such as…… lower fees?…. Or maybe that was a byproduct of the collapse in demand network usage across the board…
NFTs have really helped starving artists! For example, the artist Beeple sold his artwork for over $69,000,000… Oh wait, that was 2021… Maybe I’m not being too critical.
So much has happened in 2022 that it be would nearly impossible to capture it all through a single publication. Below I have attempted to boil down all of the noise, HOPIUM, FUD & mental fog into a succinct list of 10 of the most important events within the digital asset (Crypto & NFT) space.
Note that these are in no specific order.
Without further ado, let’s dive in:
1. Stablecoins becoming the leading indicator of liquidity.
Many of the largest applications have begun implementing stablecoin-denominated income models. This pivot to a preferential settlement in stablecoin, rather than in underlying network assets, diverts demand from assets that appreciate (ETH/SOL) to assets that expand their monetary basis (USDC/DAI). This will dampen the demand side of things for speculative assets. Considering the ravaging declines in cryptocurrency dominance, market-cap, and pricing the past 18 months, it was inevitable.
Source 1 → Here ←
Source 2 → Here ←
Source 3 → Messari 2023 Report ←
2. Collapse of TERRA/LUNA
The shitstain across the dashboard of decentralized stablecoins. The single most catastrophic on-chain failure of any protocol. May 7th marked the first wobble off peg for the UST stablecoin & by May 9th the LUNA token spiraled from $80 → >$0.90… The consumer pain created has triggered the SEC. Now this will be haunting the industry through obscene regulation.
🔗 More on Terra/LUNA → here ←
3. FTX Fraud & SBF
One of the largest consumer trading platforms in the world, FTX downright violated all of its users by commingling customer funds with other businesses that failed. Which then sparked a chain reaction of defaults throughout other players in the industry. Its founder, SBF, Sam Bankman Freid is insane. Brilliant. But an absolute piece of sh*t.
🔗 More on the FTX Fraud → here ←
4. BlockFI, Genesis Capital, 3AC, Voyager, & the rest…
Some of the most promising startups, hedge funds & cefi service providers in the space were involved in shady trading, impractical lending, & lousy accounting that resulted in a sweep of defaults & bankruptcies across the board. Most, if not every single failure & default was in some way tied to FTX (no surprise)… This has created a stranglehold of systemic risks throughout the industry that regulators will use as ammo against decentralization.
🔗 More on the State of Cryptos post failures → here ←
5. Ethereum Merger
Pushed off for years but delivered at last in 2022, this was perhaps the technological highlight of the year. Akin to “changing a plane engine mid-flight,” the Ethereum merger was considered to be the most anticipated software upgrade in history, a technical feat!
- transformed its base layer consensus model from (POW) Proof-of-Work to (POS) Proof-of-Stake.
- ETH token supply emission reduced by -88.7%
- Reduction in Block processing time (was 13 sec/block → now 12 sec/block)
🔗 More on the → Ethereum Merger here ←
🔗 Specifics around → Post-Merge ETH Supply Impact Here ←
6. TornadoCash Sanctioned by OFAC
Claimed by the US Department of Treasury to have laundered more than >$7 Billion between 2019–2022, The Privacy mixer protocol on Ethereum Tornado Cash has been sanctioned by (OFAC) Office of Foreign Assets Control.
- The Sanctioning put’s the TornadoCash Protocol on the same level of regard by the US Government as a terrorist organization.
- The Sanctioning has a negative externality via a retroactive component, whereby all addresses that have interacted with the protocol in the past are by default sanctioned as well. This is Ludacris given that a single sanctioned account can just spam send out dust transactions throughout all major on-chain addresses…
🔗 More on the → TornadoCash vs OFAC here ←
7. LBRY Credits (Loses) vs SEC (wins)
LBRY is an open-source project launched with the purpose of providing a decentralized, content-sharing blockchain-based platform. Back in 2016, LBRY launched its network’s native digital currency, LBC (LBRY Credits), which was to be deployed on the LBRY blockchain for denominating network transactions & operational expenses. On-chain, the token’s purpose was to publish content, tip creators, buy paywall content, and compensate the network’s miners.
Contrary to ICOs (where users buy tokens from a factory contract), The LBC tokens were sold to a wide range of participants directly through the official LBRY application interface, which in turn (in the eyes of the SEC) is the same as buying tokens from the company.
The court has ruled in favor of the SEC.
LBRY’s token LBC has been recognized as a security.
While it is not catastrophic to the livelihood of the industry, this event has begun to set a precedent for future cases of the SEC vs Crypto (Ripple’s XRP coming up soon!)
🔗 More on the → LBRYCredits vs SEC here ←
8. RWA Market Growth — MakerDAO investing in US Treasuries
RWA (Real World Assets) have started to transfer into the blockchain space. The largest decentralized stablecoin issuer MakerDAO has expanded its operations through projects: Centrifuge & TinLAke to provide the infrastructure to support RWA collateralization. From structured credit to Gig economy payment advances, everything is slowly becoming superfluid with a well-designed combination of (claims on future collectibles + Stablecoin Issuance). Over the course of 2022 alone, MakerDAO has purchased more than $500,000,000 worth of US government treasuries. 👀
🔗 More on the → Real World Assets here ←
🔗 More on the → Centrifuge + Tinlake Protocols here ←
9. DCCPA was averted
Last year, a bill called the “DCCPA — Digital Currency Consumer Protection Act” was attempted to be pushed through congress. The focus of this bill was around the regulatory implications regarding DEFI; namely banning the AMM model & allowing for an Orderbook model (cheeky shit). Filled with controversial language around DEFI, it comes as no shock that this rat poison was created & promoted through WashingtonDC by none other than our dearly beloved SBF from FTX; fortunately, pushback from leaders in the space (credit to Erik Voorhies) did not let the bill make it through; the bill died on its last mile, alongside its Fraudulent overlords at FTX…
🔗 More on the → DCCPA here ←
🔗 Chapter 4, section 1, page → Messari 2023 Report ←
10. BlackRock enters the Chat
Sometime in mid-late August, of the largest & most famous financial firms in the world, BlackRock officially began offering a private Bitcoin Trust exposure to its Institutional Clients. This is not bullish for the short term, as the nature of such players entering the crypto markets. If Blackrock gets in, Blackrock gets in at a discount. But, this is ultimately one of the highest forms of recognition from the legacy financial world for the Digital Asset space.
🔗 More on → BlackRock here ←
11. Bitcoin is still Bitcoin*
In spite of all the regulatory headwinds & scammy tailwinds, Bitcoin continues to print blocks. Network security(hashrate) continues to expand, seeing higher highs & higher lows. Steadily & with great certainty, every 10 minutes of 2022 produced a new BTC blockchain block.
🔗 More on → Bitcoin (BTC) here ←
Last year was all about the MACRO.
The crypto industry was at the whim of the global market forces (inflation, war, etc.) Fundamentals are not reflected in the price during times of crises.
Any individual project has been omitted from this list (Such as Openseas progress with SEAPORT NFT← →NFT swap engine, UNISWAPS v3 AMM development or AAVE’s absolute domination of the inter-chain lending markets).
As we wipe the dirt from our shoulders & tip-toe our way out of the Bear Market, it is important to remember where we began.
Out of this chaos, we will rise stronger, smarter & more efficient.
As the dust settles, we see all that remains.
I see you.
Never give up.
May the Blockchain be with you.