Only a few short years ago, things in the crypto industry used to be a lot simpler than they are today. Investors and traders were only interested in the change in prices and looking up new coins and tokens, seeking to invest in the projects with the most potential as early as possible.
While this is something that many are doing to this day, the overall situation has changed severely. Fortunately, this is a good sort of change, where the crypto industry is branching out in new directions. Its products are becoming trends, and as such, they are even establishing themselves as official sectors and industries.
The regulation is still not here, but the pressure on regulators to do something has never been higher, so many expect results from regulators around the world soon. With all that said, here are five major trends that are either already here, or are slowly picking up, but are worth keeping an eye on in both cases.
The metaverse is the latest of the major crypto/blockchain trends, and it actually started in late 2021. Many take Facebook’s decision to rebrand into Meta as the starting point of the trend, as the corporation’s move shifted the entire world’s attention to these digital worlds, and caused them to start exploring their potential.
The leading project in the crypto industry is, of course, Decentraland (MANA), which has been around for years, silently building up its world, selling digital plots of land in the form of NFTs, and inviting people over with the promise of being able to do virtually anything with their land. From using it to develop software, build games, launch a digital version of their business, or even organize virtual events — metaverse offers all of this, and much more, and it already proved that all of these things are possible on multiple occasions.
Not only that, but it developed special ties to the gaming industry, birthing projects like Axie Infinity, Ertha, Star Atlas, MyNeighborAlice, and many more that are slowly but surely rising to the top. We definitely do not expect the metaverse to go away anytime soon, so keep an eye out for its progress in the future.
The NFT sector has been the main trend of 2021, and due to its close ties to the metaverse, the hype about it was re-awoken in 2022. But, if we look at the NFTs outside of the metaverse, it mostly revolves around tokenization, where people have shown that they are willing to tokenize and offer virtually anything.
From digital and physical art to in-game assets, tweets, old photos, historical moments, and more, NFTs have absolutely dominated the headlines in 2021. There are now many collections that have grown to be quite famous, such as the Bored Ape Yacht Club, and different variations of this collection, CryptoPunks, Aziki collections, and more.
Each non-fungible token is completely unique, which allows its use for tokenizing digital and real-world assets and easily transferring ownership of said assets. There is no more need for paperwork, expensive intermediaries, signatures, and alike. Anyone can now sell a priceless piece of art simply by selling the token associated with it, and the transfer will be complete.
In the third spot, we have DeFi. DeFi, or decentralized finance, has been the leading trend of 2020, and it never stopped growing. Of course, there were instances when it took a step back due to market conditions, but other than that, the DeFi popularity has been on point for the last two years.
The reason behind this is quite easy to understand. After all, DeFi is offering decentralized banking services, where things like lending, staking, yield farming, and alike allow users to earn passive income in exchange for locking up their extra funds in smart contracts.
In doing so, they are essentially giving their funds to the project, allowing it to use them for liquidity and other purposes, and they get rewards in exchange. DeFi serves everyone equally, no matter where in the world they are, or what their financial situation might be. For loans, borrowers still need to provide collateral, but other than that, the process is quick, easy, and available to everyone. Some projects even have a reputation system, where reliable users can get access to undercollateralized loans, as well.
As of right now, lending is the most popular of DeFi activities, with Maker and Aave — both lending protocols — being the biggest ones in terms of TVL. The next one is Compound, in the fifth spot, followers by InstaDApp in the 7th spot.
4. Growing institutional adoption
With cryptocurrency adoption rising, regulators have rushed to try and come up with laws, rules, and guidelines, which showed institutional investors that they intend to regulate digital currencies, rather than openly ban them. This reassured many and gave them a push towards the crypto industry, especially since products such as crypto futures started to emerge.
Companies like Grayscale and Microstrategy have started offering custody services that have attracted investors, as their biggest issue with crypto is that they have little to no understanding of how to secure it and hold it themselves. With no banks to act as intermediaries, Grayscale and Microstrategy filled that void, buying hundreds of millions worth of Bitcoin on behalf of their clients and holding it for them.
Institutional interest then proved to the regulators that regulating crypto needs to happen, which is why special groups and teams dedicated to studying cryptocurrencies were founded. El Salvador changed the world forever after officially recognizing Bitcoin as a currency in the country, allowing businesses and individuals to accept it as legal tender.
The Russian invasion of Ukraine that started in late February 2022 also led Ukraine to bring a law that legalizes crypto, allowing the country to start accepting Bitcoin donations. Meanwhile, many other nations saw that adopting crypto does not mean that fiat currencies will crash or be eliminated, which encouraged some to start considering doing the same.
5. Stablecoins and CBDCs
Those who are not willing to legalize “traditional” cryptocurrencies, on the other hand, turned to CBDCs (Central Bank Digital Currencies). Essentially, these are centralized stablecoins that countries around the world are in the process of researching, developing, testing, and implementing. Seeing the popularity of crypto among retail and institutional traders and investors, they came up with this solution in order to remain relevant.
China is the country that started working on a CBDC first, and both competitiveness and fear of China grabbing too much power quickly caused other countries and their central banks to join the CBDC race.
Speaking of stablecoins, they have also received an increased amount of attention in the crypto industry. Not only did their use spike again last year during the two major price crashes that crypto saw after massive bull runs, but the likes of Tether (USDT) and USD Coin (USDC), as well as a few others even managed to climb up to higher positions in the crypto world, based on market cap.
Tether is still the leading stablecoin, and for now, it sits as the third-largest cryptocurrency, bested only by Ethereum and Bitcoin.
The crypto industry is advancing at a rapid pace, and it went from being barely known 5 years ago, to having multiple trends, branching out in different directions, forcing regulators to start writing laws for it, and forcing central banks to come up with their own digital currency solutions just to stay relevant. There is no telling what kinds of changes might arrive in the next 5 years, or even by the end of 2022. But, with these trends currently dominating the crypto world, we suggest keeping a close eye on them in months to come.