Less than a month into the new year, the market is already showing steady signs of recovery, and the “creative destruction” that has taken place could ultimately be a huge win, not only for the consumer, but also in terms of regulatory protection and rapid innovation, as well as a lower cost structure. Despite many ups and downs, cryptocurrency has become a serious player in the global economy. Investors continue to invest their portfolios in this asset class. According to a new OKX report, here are five key crypto investment trends that will shape the coming year.
Ethereum Developers
The development of the Ethereum ecosystem is steadily growing. Completing the merger from Proof of Work to Proof of Stake resulted in a 99% reduction in power consumption. To top it off, multiple, multiple layer 2 operating systems are scaling the network. Danksharding will be another turning point for Ethereum, raising TPS to 100k+ as we move closer to the Shanghai upgrades. The design will, in effect, pave the way for significantly cheaper and faster execution, which will ensure Layer 2 networks thrive.
Implementation of innovations
The DeFi and Web3 space has seen a flurry of forays by financial enthusiasts in recent years. The COVID pandemic has pushed tens of millions of gamers and gamblers to GameFi and Play 2 Earn, and the trend seems to be picking up. Subsequently, major players such as Yuga Labs, Reddit, and Starbucks introduced their NFT products to traditional users. Several blockchain networks have also joined forces with big brands to attract new users. Meanwhile, storing and retrieving both public and private keys has been the Achilles heel of Web3 security. But wallet developers are now seeing a big investment in improving the interface and usability.
DeFi Revival
The strong pressure to deleverage during the second half of 2022 led to the collapse of several well-known crypto companies. Total Value Locked (TVL) in DeFi has been hit hard and is down over 76%. The setbacks are expected to set the stage for “greater innovations in the future.” As such, the industry is looking to develop decentralized stablecoins that can be useful in the real world. The NFT market has also suffered a similar fate at the hands of the crypto winter. But beyond assets that have no use other than their social attributes, securitization combined with DeFi, for example, can bring credit, value, and fairness. This is expected to cause an NFT-Fi explosion in the future.
Industry-Wide Focus on Infrastructure
Big bets could be made this year on projects without permits and decentralized infrastructure. For example, mev-boost adoption by validators has reached 90% since 2021. With Tornado Cash authorized by OFAC, Flashbots mev-boost relay validators are under intense law enforcement scrutiny. On the other hand, the MEV landscape is undergoing huge changes. The fragmentation of liquidity provided by layer 2, application chains, and multi-chains can provide huge opportunities for MEV. The introduction of danksharding is expected to change how Flashbot typically mines data on Ethereum. Moreover, centralized data processing tools such as Dune and Glassnode dominate the blockchain data investment and analysis space.
On-chain security
The crypto space has witnessed rampant scams, hackers abounded, and no redress. Therefore, online data, tracking tools, and asset recovery tools will be in the spotlight in 2023, focusing on Web3 security management, web activity monitoring, Web3 user behavior, lost asset tracking, and AML protection.