As the world enters the final months of 2022, the world of cryptoverse and macroeconomics in general find themselves in the precipice of a bear market. Interest in the board has fallen sharply, and sentiment across all capital markets and industries is lower than it has been in recent years.
Crypto-Twitter is a shadow of the past 12 months, with many fans either checking out or leaving the space. It turns out that maybe, just maybe, the believers of WAGMI (We’ll All Make It) know that, at least for the time being, everyone can’t.
In the midst of this, it’s easy to forget the significant and incredible progress the crypto industry has made since the last bear market crash – the ICO (Initial Coin Offering) boom and bust of 2017. With Bitcoin’s “Fear & Greed Index” at an all-time low, it is understandable that most individuals only focus on the pain of today versus the fruit of yesterday and the promise of tomorrow.
But true believers in the blockchain industry will see this moment as only a minor setback, if that. After all, when the market becomes too frothy, it is only nature that needs to reset. In the process, there is an industry shakeout, taking away participants and projects that have no substance or future. This leaves only the players who will provide the industry with innovations, upgrades and subsequent creations for the industry and advanced adoption.
In the meantime, it helps to focus on what has been done in blockchain over the past few years and how these achievements have progressed the space so far.
A thought again
After the dust settled from the 2017 ICO boom, the crypto market saw Bitcoin fall from the (then) all-time high of USD$19,000/BTC to around USD$3,300/BTC. After Bitcoin shed more than 80 percent of its value from its December 2017 high, market sentiment is understandably in the dumps.
Like the current environment, the next bust from five years ago shook out those projects and players who do not have the means or propositions of value to continue moving forward – and instead strengthen those who do to continue building.
When the market settled down, with BTC stabilizing in the short term in the range of USD $9,000-10,000, crypto began to wake up again, pulled by space updates and new possibilities enabled by the blockchain.
Prior to the introduction of monkey serum and NBA Top Shot, developers have been working on and releasing NFTs onto the Ethereum blockchain. While the timeline below may contain many names unfamiliar to casual participants of the NFT economy, many projects are still popular today – including Cryptopunks (released June 2017), CryptoKitties (released November 2017), Decentraland (released January 2018) and Gods Unchained Collectibles (released December 2018).
While it seemed more experimental from the beginning, these NFTs set the stage for NFT-mania that took over the crypto world for the majority of 2021 – introducing and creating well-known collections such as Bored Apes, Meebits, Cool Cats and others. .
More importantly, beyond PFP (Profile Picture) NFTs, potential use cases for NFTs have begun both inside and outside of the crypto industry. From luxury powerhouses (LVMH, Gucci) to retail (Starbucks, Nike, Adidas), global commercial brands are beginning to enter the waters of Web3, interested in the promise of what NFT can do and how they can use it to continue attracting and building brand loyalty with generations next the consumer.
Summer of DeFi
Outside of the more consumer-friendly NFT space, the period after the initial ICO boom is also finally leading us to the summer of 2020 – sometimes referred to as “DeFi Summer.” One of the key pillars of Bitcoin and blockchain technology has always been the elimination of the middleman. Therefore, it is especially exciting when the summer of 2020 sees real loans, borrowing and investing without using financial intermediaries. financial instruments, such as flash loans, enable innovative ways to use capital and take advantage of arbitrage opportunities.
While the introduction of the scheme may have raised many eyebrows both inside and outside the crypto world, the possibilities offered by this early concept provide a foundation for building DeFi solutions in the future.
In the beginning, decentralized lending and borrowing was generally limited to ecosystems where the platform required users to provide tokens that could be used as collateral (e.g. ETH). In the exchange, stablecoins will be released. As long as the collateralization ratio determined by the platform is maintained, users can use their existing assets to carry out other transactions with the released capital.
Today, the The collateralization of NFTs began not only to rise as a concept and practice but also to develop. Ideas such as tokenizing real estate deeds and using them as collateral to obtain liquidity are not far-fetched. Renting NFTs has also materialized, with projects like the IQ Protocol not requiring borrowers to post collateral.
Assuming that DeFi continues to develop, the possibilities enabled by the tokenization of assets (both fungible, non fungible, real and virtual) and lending to them look very promising for the next generation of this space.
Blockchain data, metaverse, Web3 games and migration to the digital world
Who knew that the lack of land in the digital world could develop into such an interesting place? When Decentraland emerged in early 2018, it was far from the only virtual land platform out there. It may surprise users to know that The Sandbox has been around since 2012 (that’s why it’s mobile games). Others, like Otherside – created by Yuga Labs – introduced in 2022.
The over-referenced Axie Infinity – the most famous game in the blockchain industry at the moment – also introduced another way of the decentralized world, as well as the concept of Play-to-Earn (P2E) games.
The concept of the metaverse is still very much in its infancy, and P2E games and blockchain games as an industry still have some issues to resolve in aligning user incentives to the game economy. As blockchain games collect and use more data, developers will be able to create a world where users will be motivated to spend time. Powered by solutions like PARSIQ, which offers fast Web3 data through APIs and data lakes, projects and users will continue to get a better and better view of how this decentralized world will succeed.
To draw potential parallels, one need look no further than centralized the world of Roblox – the virtual world is now “owned” by parent company with the same name. Roblox may represent the world’s first successful step into the metaverse and metaverse games. Daily active users (DAU) at tens of millions, Roblox has an impressive customer base that mostly belongs to Generation Z (more than 80 percent of the user base is under 24 years old).
Since Roblox is a public company, the world has a unique insight into the virtual platform. Quarter after quarter, the company reports impressive growth in various useful metrics (DAUs, daily paying users, profits and more). This is perhaps the most promising view of how future generations will interact in the virtual world and how they will value digital assets, digital currencies and virtual experiences.
Bear will go into hibernation again
For those new to the crypto space, the crash of ’22 could be devastating. But those who have been around since the beginning of Bitcoin and cryptocurrencies know this is just another cycle for the industry. Eventually, the bear will return to hibernation, and the products and services developed at this time will generate the next bull run and further showcase the future benefits and use cases of crypto and blockchain technology.
We are only scratching the surface of what is possible in a decentralized world. Although the mainstream seems quiet, look closely and one will quickly see how much work has been done behind the scenes. From global investment banks entering the space to push forward with laws and regulations to monitor and supervise the crypto industry, progress has been made, and there is an overall recognition that this space will rise again.
In the meantime, this is a good opportunity for everyone to re-evaluate and take inventory of the Web3 landscape to see where it is today. What’s on the horizon for blockchain and crypto?