This year is undoubtedly the most tumultuous year for Web3. It started with a slump after all the excitement from 2021. After all the hype, the market and the industry as a whole exposed its dark sides.
The crypto bear market began this year. But let’s not forget that the whole world has decelerated as well, including traditional financial markets. Everything has a season, and they repeat over and over again. The best we can do is to learn from what we have experienced and prepare for the coming bull run.
Without further ado, let us look back at the highlights of 2022.
The NFTs/Gaming vertical attracted the most funding this year
We no longer see super expensive NFTs being the spotlight of headlines. Blue chip NFTs sank in price. But the NFTs/Gaming vertical still attracted the most funding this year. The category raised $8.3 billion in 2022, a record-breaking amount raised by a category in one calendar year. It also raised the highest number of pre-seed, seed & pre-series A, and early-stage deals in 2022.
During the year, many business ideas were shared, and NFTs surfaced as beneficial to different industries. NFTs are not just PFPs and jpegs. The technology has proven to be a tool for the future of many sectors, including but not limited to healthcare, legal, education, real estate, and more.
We, as a contributor to the NFT field, believe that blockchain and NFTs will be a part of our future daily lives.
Ethereum, the Merge
Ethereum, the world’s largest smart contract platform, migrated to a proof-of-stake mechanism. This is a move towards a scalable future and more ESG (environmental, social, and governance) compliant.
The 8-year-old blockchain network shows its potential to be one of the most powerful technologies and networks that the whole human race may (very likely) rely closely upon.
As the fundamental infrastructure of the most extensive NFT ecosystem in the world, Ethereum NFTs are expected to have more utility and greater adoption. The Merge introduced the potential capability of the network to provide services to trillions of people in the sense of scalability.
Ethereum or Solana?
Solana contended Ethereum as the new home ground to NFTs. But due to the fall of FTX and Alameda Research, the primary support of the Solana network, SOL token price significantly depreciated. SOL NFT blue chip projects, like Degods and Y00ts, started the shift to Ethereum and Polygon networks.
Vitalik Buterin, the co-founder of Ethereum, supports the Solana network and believes Solana still has intrinsic value and can recover from its current predicament.
We expect to see if Solana is still, as it said at its emergence, the Ethereum Killer.
Creator Royalties — The Debate
NFT was at its peak in 2021. The emergence of new marketplaces was a common trend in 2022, and the competition was about getting and keeping users in their ecosystem.
One way to get these liquidities is to provide users with zero-fees, zero-royalties trading. Zero-royalty trading volume jumped from 2.8% in January to 30% at the end of November.
For serious NFT traders, the cut in paying royalties on trades definitely helped in the bear market. Users determine the trend, so major players are in the zero-royalty game to fight for active users.
Debates and discussions surfaced around whether creator royalties should be kept for art NFTs but removed for game items or other non-art-related NFTs.
As royalties are still not a requirement for writing smart contracts, we are still looking for a common market consensus.
Yuga Labs Empire
The collection has developed its original creations in 2021, like MAYC, BAYC, and all the perks and fan art. Yuga Labs took an acquisition spree at the start of 2022, acquiring CryptoPunks and Meebits. After that, we witnessed the airdrop of ApeCoin, and the launch of metaverse Otherdeeds, leading to its volume dominance from 33.3% in January to a peak of 69.6% in early May.
The trend goes well as the data speak. However, the sale of metaverse land may have triggered the collapse of the NFT summer hype. The liquidity in ETH was drained and burned in the land sale leading to a decrease in trading volume and incentives. The NFT bubble burst and revealed the skyrocketing prices of PFPs are mainly just speculations. No intrinsic utilities and value supported them.
2022 is when NFTs started migrating to real utility and how the technology can help evolve our existing experience and real-life use cases. The art and IP-focused NFTs are still great, and now, the way is paved for further development.
The collapse of powerful centralized crypto players
This year was almost a total reversal of the industry’s optimism in 2021. We saw the great collapse of centralized crypto powers, somehow reinstating the vital pillar of crypto, decentralization.
Luna Terra’s fall triggered the collapse of centralized crypto players, including Three Arrows Capital, Voyager, Celsius, FTX & Alameda Research, and BlockFi. The above failures triggered uncertainty from countries, users, and stakeholders and also tightened regulations towards cryptocurrencies.
On the brighter side, it raised people’s awareness of decentralization and how we can prevent our assets from being in the hands of centralized powers and governments. CZ, Binance’s CEO, said, “the collapse is the result of company management failure, not the inability of crypto and blockchain. The industry and market will overcome and learn from what it caused.”
Final thoughts
Many have been upset about all the bad news and loss. But many are also optimistic about the creation and development of the industry’s builders. We saw more and more traditional sectors getting involved and experimenting with new technologies and mechanics.
To all industry supporters, we are staying and preparing for the next phase. Be ready for the next boom! Have a happy New Year.
