New Year’s Special

El Salvador’s Bitcoin strategy evolved with the bear market in 2022

After making Bitcoin legal tender in the country, El Salvador has faced a tough year of critics and the nonstop sinking of Bitcoin pricing.

Cryptocurrency adoption has been on the rise in El Salvador in recent years, with the country becoming the first in the world to adopt Bitcoin (BTC) as a legal tender. This landmark decision has attracted the attention of the global cryptocurrency community and has sparked discussions on the potential benefits and challenges of widespread adoption.

El Salvador’s controversial move with its cryptocurrency adoption would not have been possible if it was not due to President Nayib Bukele, who garnered international attention after announcing the Bitcoin adoption plan and passed it into law. The legislation required all businesses within the country to accept Bitcoin as a form of payment for goods and services. As a legal tender, Bitcoin now has the same status as traditional fiat currencies, which worries other regulators, economic experts and many everyday Salvadorans.

The country’s adoption of Bitcoin as a legal tender has made it easier for Salvadorans living abroad to send money back to their families in the country through remittances. Chivo Wallet, the official wallet of the Salvadoran government, claimed to have onboarded 2.2 million Salvadorans a month after declaring Bitcoin as a legal tender.

This could potentially increase financial inclusion for these individuals, who previously relied on cash transactions or informal financial services. Every user who successfully downloaded the app immediately received $30 in Bitcoin. However, this massive adoption was not as smooth as hoped, as it was faced with numerous roadblocks, including missing funds, system issues and disinterest from everyday citizens.

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Bukele also proposed the creation of a low-tax Bitcoin city at the base of the Conchagua volcano, which would power the city’s infrastructure and crypto mining operations. The project would be funded through the sale of $1 billion worth of bonds known as Bitcoin bonds or volcano bonds, which have an annual interest rate of 6.5% and are intended to be in effect for 10 years.

The adoption of Bitcoin in El Salvador has generated a lot of interest and has the potential to pave the way for the wider adoption of cryptocurrency in other countries, but it remains to be seen how this experiment will play out.

What worked and what didn’t?

El Salvador’s decision to make Bitcoin legal tender has caused concern among its citizens due to the cryptocurrency’s volatile nature and the uncertain success of the plan. While some parts of the implementation of Bitcoin as a legal tender went according to plan, many didn’t, which resulted in some unintended consequences.

El Salvador’s credit rating and ties with the International Monetary Fund (IMF) have suffered as a result of Bitcoin adoption. Local borrowers have been forced to charge higher interest rates as investors have become less willing to lend to the nation. Moreover, due to the significant risks to financial and market integrity, financial stability and consumer protection, the IMF advised El Salvador to revoke Bitcoin’s legal lender status due to its volatility as well as its usage in fraud and other criminal activities.

Recent: Crypto companies aim to build trust within future products and services

The World Bank has also raised worries about the negative environmental effects of cryptocurrencies that El Salvador’s Bitcoin strategy has brought to light.

The majority of Salvadorans still lack knowledge about Bitcoin. Despite promises of economic freedom and servicing the unbanked, blockchain tech can be clunky from a user experience perspective, and many find it easier to continue to transact in U.S. dollars.

Furthermore, El Salvador is a poor country with one of the lowest rates of internet use in the Americas. There are many vendors, street hawkers and farmers who are not equipped to handle cryptocurrency transactions. Thus, the usage of Bitcoin for everyday transactions is low, despite the government’s big push.

However, the decision to open up the economy to Bitcoin has managed to attract foreign investment to the country. Carlos G. Alfaro, technical sales manager at blockchain software firm Koibanx, told Cointelegraph:

“I have managed to meet several foreign investors who have come because of the Bitcoin Law but are not only investing in the blockchain industry — they are also investing in different areas such as hotels, real estate, and franchise companies.”

Before the Bitcoin Law, a large portion of Salvadorans lacked a mechanism to retain their money digitally and conduct transactions with one another. Hence, the project introduced many residents to the idea of savings and investments.

And while participation and use of Bitcoin may remain relatively low among the populace, Alfaro stated that the $30 Bitcoin reward from the Chivo Wallet has served as a catalyst to get citizens more interested in savings and investments, adding:

“I think that, little by little, the average citizen is finding how to use it, from having a small bank account, sending money between countries both personally and with companies, being able to save a little and learning how investments work.”

The country’s investment strategy has also become more moderate. The country has bought Bitcoin 11 times at different amounts and purchase prices based on tweets posted by Bukele himself. The latest such purchase was 80 BTC for $1.5 million on June 30, 2022, but now El Salvador is buying 1 Bitcoin per day using a dollar cost averaging strategy to minimize the impact of Bitcoin’s volatility on the country’s economy.

Expectations for 2023 and beyond

Demand for Bitcoin in El Salvador is still present, and with the announced plans to build a Bitcoin city, the country hopes to continue to attract BTC investors in the years to come.

In 2023, El Salvador is expected to expand its administrative capacities for dealing with cryptocurrency use in its economy, including addressing any possible criminal activities. Guillermo Contreras, CEO of DitoBanx, told Cointelegraph:

“In this sense, there has been a lot of openness, cooperation and communication between the different government institutions and the companies that are operating under this heading, and now precisely this issue is being further consolidated with the opening of the National Bitcoin Office that will function as a central entity to deal with all issues related to it.”

The new Digital Assets Issuance Law, which will be implemented in 2023, permits the issuing of El Salvador’s Bitcoin bonds to fund the infrastructure of the Bitcoin city and buy more Bitcoin. This law will also permit the development of blockchain-based business models in a controlled setting.

Recent: Redeeming physical NFTs: Easier said than done?

El Salvador continues to take concrete steps so that Bitcoin will be incorporated into financial literacy programs across the country. In 2023, the country’s Ministry of Education is expected to address educational concerns at a mass level with a training module in financial education that incorporates updated content such as cryptocurrencies and electronic wallets.

Contreras concluded: “The implementation of Bitcoin and digital wallets allowed more than four million people to safeguard their money, receive money from remittances and other sources safely and instantly. At the beginning, of course, there was a feeling of fear of the unknown, but fortunately, El Salvador had already experienced something similar when we adopted the U.S. dollar as legal tender instead of the Salvadoran colones. It is a process that took a bit of time, but finally users were able to confirm that it was real money just like any other currency, and although there are still some challenges to overcome, the path is well marked and there is a good perspective.”

Tribulations and triumphs: The biggest surprises in crypto of 2022

2022 was a challenging year for many crypto companies, but some maintained exemplary performance.

2022 saw the fall of many linchpin crypto and blockchain firms as the May market drawdown shook the industry. It caused many cryptocurrencies to lose value and many investors to pull their money from the market. Furthermore, the unprecedented knock-on effects of the meltdown exposed many blockchain and cryptocurrency firms that were ill-prepared for turbulent times.

However, a collective of companies was able to resist negative market forces and grow amidst the turbulence. The crypto market as a whole continues to grow and has now reached 320 million users.

As we look back on a year full of surprises, we have compiled just a few of the biggest stories that took the industry by surprise.

Binance and the beast

Binance is currently the world’s largest crypto exchange by trade volume. The company has managed to penetrate major crypto markets in recent years, including the United States with its Binance.US subsidiary. The exchange, which features over 300 cryptocurrencies, is estimated to have facilitated the trading of crypto collectively worth approximately $22 trillion in 2022.

According to data derived from Similarweb, the platform was consistently getting over 70 million visits a month in the third quarter, which is about double the number achieved by Coinbase, its closest rival.

The crypto exchange made some notable acquisitions in 2022 to boost its geographical coverage. Among them was Sakura Exchange BitCoin, a Japanese crypto trading platform, and Tokocrypto, an Indonesian digital currency brokerage firm.

That said, it has not all been smooth sailing. In December, Binance CEO Changpeng “CZ” Zhao, was forced to downplay concerns regarding a sudden increase in user redemptions after $1.9 billion was withdrawn by users from the platform in 24 hours. Zhao stated that external factors were to blame for the FUD (fear, uncertainty, and doubt) among a section of users.

FUD heightened after the Mazars proof-of-reserve auditing firm paused its collaboration with Binance and other crypto clients. The unexpected turn of events caused investors to become anxious about keeping their money on the exchange.

Dacoco in the Alien Worlds 

Dacoco is the publisher behind Alien Worlds, the highest-ranked gaming metaverse ecosystem in 2022.

The game was able to maintain its position as the most popular GameFi platform in the world in 2022, averaging just over 200,000 unique active wallets daily, according to data derived from DappRadar. This was a worthy surprise considering the stiff competition that Alien Worlds faced. The game had topped the crypto gaming list in 2021, and so retaining its position was an extraordinary feat.

That said, Alien World’s popularity has been boosted by features such as multichain interplay that harnesses the best elements of the WAX, Ethereum, and BNB Smart Chain to improve gaming experiences.

In 2022, Dacoco developers introduced a few innovative concepts to engage users further and enhance democracy in the Alien Worlds ecosystem. Among them were in-game decentralized autonomous organizations (DAOs). The new feature allowed players to use their Alien Worlds Trilium (TLM) coins, the native in-game governance token, to support and regulate any of the six competing DAOs, dubbed “syndicates.”

That said, the platform experienced a few hair-raising moments earlier in the year when there was a steady decline in transaction volume. At some point in March, when volumes were at their lowest, the platform recorded less than 4 million daily transactions. Alien Worlds has since bounced back, and current numbers exceed 13 million daily transactions.

Alien Worlds is set to face some serious competition from some upcoming blockchain gaming projects such as Meta, Decentraland, and The Sandbox once the games truly go mainstream.

A terraforming collapse

Terraform Labs is the blockchain company behind the Terra Classic (LUNC) and TerraClassicUSD (USTC) tokens. The company is based in Seoul, South Korea, and is headed by Kwon Do-Hyung, commonly known as Do Kwon.

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The Terra crypto ecosystem is seen as a catalyst to the crypto market plunge that occurred in May that eventually wiped out over 2 trillion dollars from the market. This is after the USTC algorithmic stablecoin depegged from its dollar value and threw investors into a selling frenzy. Very few entities knew about the extent of the damage before the sudden change in market trajectory and many investors were caught by surprise.

A cascade of events, including sudden outsized withdrawals mimicking a bank run, are believed to have led to the eventual collapse of the network.

Billions of dollars worth of the stablecoin and its sister coin LUNC were liquidated within hours due to this turn of events. Terraform Labs executives have faced allegations of manipulation and fund mismanagement. 

What did you do, FTX?

The FTX collapse in 2022 was among the most spectacular surprises in the industry. The implosion saw the exchange’s collateral drop from approximately $60 billion to just $9 billion within months while at the same time facing $8 billion in liabilities due to investors fleeing the firm. The liquidity issues came on suddenly, and few investors could have predicted the crisis.

FTX is currently headed by a new team led by CEO John J. Ray III, who has been involved in the restructuring of several major companies affected by scandal, with the most notable of them being Enron.

CoinShares shows off gains

CoinShares is one of Europe’s largest digital asset investment companies and manages billions of dollars worth of digital assets. The firm’s client base is comprised of institutions and high-net-worth individuals with an affinity for digital asset investments. CoinShares currently has offices in major investment hubs such as Jersey, New York, London, Stockholm and Paris.

2022 was a good year for CoinShares, and its assets under management (AUM) increased by a huge margin. According to the company’s announcement in October, its AUM had increased to $25 billion. This is a considerable increase from the $2.67 billion AUM the firm had reached in June 2021. The positive results came as a surprise, considering that the crypto industry had been on a downtrend since the market crash that occurred in May.

Chainalysis to the rescue

Chainalysis is a blockchain data analysis company that’s renowned for its crypto tracking services that help companies interact with dynamic networks safely. Its clientele includes leading banks, governments, cybersecurity, insurance companies and crypto enterprises such as exchanges that regularly face compliance and transparency issues.

Tracking billions of dollars worth of illicit cryptocurrencies is the name of the game and, in 2022, the company received a bump to its valuation following a Series F funding round. The fundraising event that took place in May saw a capital injection of $170 million and caused the company’s value to rise to $8.6 billion. The jump in valuation was a positive surprise that signaled increased investor confidence in the company as it continued to work on high-profile cases.

Chainalysis helped authorities to seize tens of millions of dollars in stolen crypto in 2022. In September, the company helped the authorities to track and impound crypto assets worth $30 million. The funds were part of the $600 million stolen from the Ronin Network.

The company is currently tracking cryptocurrencies pilfered from the FTX cryptocurrency exchange.

Chainalysis is currently facing some increased competition from competitors such as CipherTrace, Elliptic, Scorechain and Coinfirm, which are each coming up with their own unique range of services.

Sinking Three Arrows into the Voyager

Voyager Digital and Three Arrows Capital (3AC) are two companies that were greatly affected by the May crypto market slump. Their downward spiral was fueled by contagion after a sharp market pullback sparked by the Terra meltdown.

Voyager became embroiled in the mayhem after it lent out about $650 million to the Three Arrows Capital hedge fund. 3AC used the money to make risky bets based on the presumption that the cryptocurrency market would continue to climb in the medium term.

However, the Terra collapse was an unexpected development that dragged the company into losses. 3AC had reportedly invested about $200 million in LUNTC, the value of which dropped by over 99% in days. 3AC filed for bankruptcy in July and failed to pay back its loan to Voyager. This added to Voyager’s liquidity problems, forcing it to suspend customer withdrawals and also file for bankruptcy.

A big surprise? Not so much

2022 was a tumultuous year for the crypto industry and tested the crypto market’s resilience against repeated knockdowns. Tough lessons were learned that would make crypto enterprises more accountable in the future. Some events in 2022 also demonstrated that some practices, such as the use of leverage in trading are risky and can lead to significant losses in the event of sudden market movements.

Besides this, 2022 revealed that the crypto sector had the capacity to provide a wide range of innovative fintech and investment opportunities that continue to appeal to different types of investors.

Models and fundamentals: Where will Bitcoin price go in 2023?

The rapidly evolving cryptocurrency ecosystem is entering a new phase in 2023, with incoming regulations in the U.S. and European Union.

Bitcoin (BTC) had a bumpy ride throughout 2022, along with the rest of the digital asset market. The cryptocurrency began the year exchanging hands around $46,700 and is currently trading over 64% down at $16,560 at the time of writing. Consequently, the coin’s market capitalization took a tumble from around $900 billion on Jan. 1, 2022 to end the year at around $320 billion.

Bitcoin Price Trend in 2022

While Bitcoin’s drop in price could be attributed to the extraordinary circumstances that the entire cryptocurrency market has been through this year, it is important to reevaluate the 2022 price predictions made by various market entities. One of the most popular predictions was that of analyst PlanB’s Bitcoin Stock-to-Flow (S2F) model. 

The S2F model predicted BTC to be at nearly $110,000 as of December 2022. The cryptocurrency finished the year trading at almost 85% off target, which raises questions about the validity of the price model. Stock-to-flow models are generally used to price commodities in the traditional markets, as they account for two variables related to an asset: stock and flow. “Stock” refers to the total existing supply of the asset, and “flow” refers to the new supply of the asset created each year.

Antoni Trenchev, co-founder and managing partner of Nexo — a digital asset management platform — shared with Cointelegraph his thoughts on the validity of the S2F prediction model:

“There are many factors that can influence the price of Bitcoin, including market demand, regulatory changes and technological developments. The S2F model is one tool that can be used to make projections about the future price of Bitcoin, but it is important to keep in mind that it is based on certain assumptions and is not a definitive guide to the future.”

Besides S2F, other models have been used to attempt to predict the price of Bitcoin in the near and distant future. Two popular ones are Elliott Wave Theory and Hyperwave Theory. While both also find their roots in traditional financial markets, their success in predicting the price of BTC has been relatively limited as well.

Price models fail as a new year for Bitcoin ushers in

Considering that Bitcoin only began its journey as an asset just over a decade ago, it is safe to say that the cryptocurrency is still in its nascent stages of price discovery when compared with commodities like gold or silver and other leading technology stocks like Apple and Microsoft. Thus, while there are various BTC price predictions, it is essential to remember the limited availability of cyclical data to factor into these models.

Trenchev added that there are many different models and approaches that can be used to try to predict the price of Bitcoin. Some people use technical analysis, which involves studying historical price and volume data to identify patterns and trends. Others use fundamental analysis, which involves evaluating the underlying factors that can affect an asset’s demand and supply. No single model or approach is universally considered to be the most reliable for predicting the price of Bitcoin, and it is crucial to consider a range of factors when making any investment decisions.

Related: The Three Most Controversial Bitcoin Price Models and What They Predict

Alex McCurry, CEO and co-founder of blockchain solution provider Solidity.io, agrees with Trenchev, telling Cointelegraph, “Bitcoin is a completely unpredictable asset. The only thing one can be certain of when it comes to Bitcoin is the underlying fundamental value of the Bitcoin network and the value it presents to holders and investors. Because of this, one can predict long-term adoption and value in the macroeconomic climate over time, but perfectly timing an exact price is impossible.”

However, one important aspect could change the trends for the price of Bitcoin: utility.

Since Bitcoin is not a smart contract-compatible network, the asset’s utility has been limited to a payment rail. That is slowly beginning to change, with Bitcoin now finding more utility than ever before, supported by the Lightning Network.

LN is a layer-2 payment protocol built on top of the Bitcoin network that enables fast, seamless peer-to-peer transactions. It helps improve the scalability of the network enormously. Most recently, Michael Saylor’s MicroStrategy announced that it plans to release Lightning Network-powered software and solutions in 2023.

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MicroStrategy also continues adding Bitcoin to its treasury. Between Nov. 1 and Dec. 21, 2022, the company acquired 2,395 BTC at an average price of $17,181 for a total of $42.8 million. For tax reasons, it sold 704 BTC at $16,776 per coin for a total of $11.8 million on Dec. 22. As a repurchase, the company bought 810 BTC on Dec. 24 for $13.6 million in cash. According to data from BitcoinTreasuries, this puts the firm’s holdings at 132,500 BTC, worth around $2.2 billion at the time of writing.

Global investment manager VanEck released 11 crypto predictions for 2023, among which it claimed that BTC will drop to $10,000–$12,000 in Q1 “amid a wave of miner bankruptcies” and will bounce back up to $30,000 in the second half of 2023.

McCurry agreed with this prediction, stating, “I believe Bitcoin will bounce back in 2023, and I feel that by 2024, Bitcoin will achieve a new all-time high significantly higher than the 2021 peak of $69,000.”

Trenchev added, “It is possible that the price of Bitcoin could rebound to $30,000 in the second half of 2023, but it is also important to keep in mind that the price of Bitcoin is highly volatile and can be affected by a wide range of factors.”

Derivatives market and BTC price discovery

Despite the unpredictable, volatile nature of Bitcoin’s price, the asset’s derivatives market is an important indicator of its current and future sentiment.

According to data from Coinglass, the Bitcoin futures market currently has an open interest (OI) of over $9 billion. At the same time, the open interest of the Bitcoin options market stands at $3.4 billion, with over 76% of the OI on cryptocurrency derivatives exchange Deribit.

Luuk Strijers, chief commercial officer of Deribit, spoke with Cointelegraph about what options data for 2023 reveals about the market’s price sentiment for Bitcoin. He said:

“The overall put-call ratio for June 2023 is 0.24, which is rather low. This typically implies bullish sentiment, as there are three times more calls outstanding than puts. Max pain is at $19,000, also showing upside potential. Investors are positioning at the larger strikes ($20,000, $25,000 and $30,000). The premium for the higher strikes is much lower, obviously, so these could be seen as an upside bet, or used for yield generation by call sellers.”

The max-pain price is the price point at which the largest number of options are in loss. Strijers also added that “since the FTX implosion, investors seem to be on the sidelines, waiting for news about the industry, but also macroeconomic news. We have experienced new lows in the implied volatilities, and the short term is currently trading in the low 30s. We’re even having dailies seen trading below 30%. At the same time, liquidity is currently lower than normal.”

Market uncertainty aside, incoming regulations in 2023 — namely, the European Union’s Markets in Crypto Assets bill and the United States’ Lummis-Gillibrand and Warren-Marshall bills — could bring stability to the market, as investors who feel the space is provided with more oversight will likely feel more confident.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Defying expectations: After an uncertain year, DeFi has high hopes for 2023

DeFi had several key moments through 2022, but how is it expected to evolve in 2023?

Decentralized finance (DeFi) is defined as any product or service offered by the Web3 world that helps users conduct financial activities such as payments, borrowing, lending, investing, trading and staking. 

Several Web3 use cases, including DeFi, GameFi, SocialFi and nonfungible tokens (NFTs), emerged through the last bullish cycle. DeFi has been the largest market cap activity within Web3, with a peak total value locked (TVL) of over $175 billion at the peak of the 2021 bull market.

DeFi: The primary use case for blockchain?

Things have not been the same since the Bitcoin genesis block was created. Thanks to the rise of Ethereum that followed, DeFi has seen product market fit. Through the previous Bitcoin (BTC) bull market, DeFi TVL rose from $600 million in January 2020 to $180 billion in December 2021. 

The TVL within DeFi has held on to over $39 billion despite the market crisis in 2022. DeFi has democratized access to financial services, as it doesn’t need a centralized organization to onboard users. Apart from the democratization, DeFi has also opened up new models like automated market making.

All these innovative elements have catalyzed the growth of DeFi protocols and applications. This has also helped other adjacent use cases such as NFTs and GameFi to grow. For instance, lending models with “NFTs as collateral” have seen good uptake. Additionally, DeFi-based models and marketplaces for gaming NFTs have emerged, allowing gaming guilds to tap into them.

Despite these interesting developments, DeFi shrank to a mere $39 billion in 2022. Let us see what transpired in 2022 and what we can expect in 2023 for DeFi.

Fall from grace

The year 2022 started with a broader market fall. Within the Web3 ecosystem, Solana’s Wormhole bridge was hacked leading to $310 million worth of crypto assets being stolen. Thanks to a few projects on the Solana ecosystem, they managed to emerge out of this abyss.

However, in March, rumors about the credibility of the Terra ecosystem and its algorithmic stablecoin started to emerge. As the market took a further fall through April and May, the network collapsed leading to a broader market sell-off.

Following the Terra episode, the markets recovered through the summer, only to be dragged back down by the FTX debacle. While the FTX situation cannot be categorized entirely as a DeFi issue, as it was the result of alleged misconduct at a centralized exchange, some have noted the effect FTX and its associated firm, Alameda, had on the ecosystem.

Despite the bloodshed, the DeFi industry has quietly kept building and innovating. 2022 was also marked by several institutional DeFi headlines that could yield benefits over the coming years.

The Bitcoin network is starting to see utility as the Lightning Network allows projects to build on top of it. Cash App integrated the Lightning Network for faster Bitcoin transactions. There are several other payment applications that could potentially change the “store of value” narrative for the apex asset.

The DeFi TVL on the Ethereum network before the previous bull run started was a few hundred million dollars. The DeFi TVLs on several layer-1 and layer-2 networks, namely Avalanche, Solana, Polygon and Arbitrum, are at a few hundred million dollars each. As the next Bitcoin halving comes around, all these ecosystems should see DeFi growth.

While market sentiment has not been positive, there have been a huge number of positive developments within DeFi, so what does 2023 hold for DeFi? 

Security and DeFi 

Hackers ran rampant in 2022, causing DeFi crypto investors to lose considerable amounts of money. As regulations ramp up and institutional adoption shows promise, there would have to be a few key developments in this space.

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The crypto industry has lost close to $3 billion across 125 hacks as of October 2022. This hurts the reputation of the space and is a huge hurdle in attracting institutional capital. In response, the DeFi ecosystem has already started creating applications that inform wallet holders of what a smart contract intends to do before the user signs it.

However, more needs to be done to address security vulnerabilities around oracles and cross-chain bridges. More decentralization of cross-chain bridges is a good step forward. Also, DeFi platforms will start considering insurance products more seriously to protect user funds. Firms like CertiK and Hacken offer specialized cybersecurity solutions to Web3 platforms.

DeFi and self-custody

The failure of several prominent centralized exchanges and platforms in 2022 has already helped shift volumes to DeFi platforms. However, DeFi is still largely reliant on centralized platforms to onboard new users and convert fiat to cryptocurrencies and vice versa. This trend is being challenged and could change in 2023.

As more users choose DeFi over centralized financial solutions, on-ramping infrastructure into the crypto world should improve. Wallets will have on-ramp plugins like MoonPay and Ramp that will connect to users’ credit cards, Apple Pay or bank accounts to convert fiat to cryptocurrencies and vice versa.

Another key on-ramp feature that has emerged is wallets that do not need users to manage private keys. As user experience starts taking center stage, DeFi solutions could see more first-time users.

Web3 gaming 

2022 saw a number of gaming projects with DeFi integrations trying to find market share. In 2023, these projects will continue maturing and growing with DeFi as a strong pull factor. 

Web3 gaming has found itself in a unique position in the entire ecosystem and could be the growth hack that Web3 has been looking for. While the games still struggle with playability, ecosystem-specific earning models, staking and farming will provide unique offerings and value propositions that traditional games lack.

Can regulators be far behind?

With catastrophic failures from marquee companies and loss of user funds, central banks and regulators will start having a greater say in DeFi. 

While counter-intuitive to the ethos of what Web3 stands for, central banks will start creating regulations and legislation for consumer protection. If United States regulators crack the 90-year-old Howie Test whip and deem most cryptocurrencies as securities, that will most certainly affect this space in the short-to-medium term.

However, some regulation has helped the space gain more credibility. Know Your Customer and Anti-Money Laundering (AML) controls, as well as conduct rules for labeling DeFi-related financial products could bring certainty to the space and encourage investors.

Institutional DeFi on the rise

Institutional interest in DeFi has picked up over the last year. Payments, custody and AML solutions have particularly seen interest from large banks and financial institutions. 

Barclays bought a stake in Copper, an institutional crypto custody firm, while Standard Chartered’s innovation arm partnered with investment management firm Northern Trust to launch Zodia, a cryptocurrency custodian for institutional investors.

Bank of New York Mellon, the world’s largest custodian bank, partnered with Chainalysis to help track and analyze cryptocurrency products.

Financial services firms such as BlackRock and Citigroup invested over $1 billion each in DeFi platforms through 2022. As these firms see more institutional clients interested in the crypto asset class, they will be compelled to create offerings to support their clients.

With more central banks rolling out plans for their own digital currencies, banks will need to prepare themselves for the on-chain world.

Source: Blockdata

On-chain banking would be the next phase of digital banking where transaction finality and reconciliation would be instantaneous, giving rise to new business models and financial products. 2023 would see key steps in this direction.

In summary, DeFi is poised to mature and stabilize through 2023. Any new technology has its ups and downs. Having seen a strong bullish phase and a grueling bearish slump, the time is ripe for stable growth based on wisdom gained through the experiences of 2022.

Crypto makes history in 2022: Five instances of governments embracing digital assets

Even amid the market breakdown and repetitive public attacks on the industry, some of the officials found the courage to embrace the innovation.

The year 2022 wasn’t the best one in terms of crypto reputation among regulators and policymakers. However, even amid the market breakdown and repetitive public attacks on the industry, some of the officials found the courage to embrace the innovation. Some of the names are not new, while others showed progress significant enough to include them in this listicle. The United Arab Emirates and El Salvador continued to push their crypto agenda and the United Kingdom showed great effort to lay the regulatory foundation, while Brazil and the Central African Republic legally recognized the cryptocurrencies. 

Brazil

2021 might have been a year of mass adoption in Brazil, but it was 2022 when the country finally got its own regulatory framework. Before leaving his office, Jair Bolsonaro, the former president of Brazil, signed a bill legalizing the use of crypto as a payment method within the country. The bill doesn’t make cryptocurrencies legal tender, as in El Salvador, but it still introduces the legal definition of digital currencies and establishes a licensing regime for virtual asset service providers.

The bill came in about time. The number of companies holding cryptocurrency in Brazil has reached new record highs — the country’s taxation authority recorded 12,053 unique organizations declaring crypto on their balance sheets in August 2022.

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In May, Brazilian Stock Exchange confirmed its intention to launch the first official product aimed at the cryptocurrency market — Bitcoin (BTC) futures trading. In contrast to the United States, currently, institutional and retail investors trade 11 exchange-traded funds (ETFs) with exposure to cryptocurrencies on Brazilian Exchange.

The United Kingdom

Great Britain surely didn’t have an easy year. In 2022, Queen Elizabeth II passed away after serving the nation for 70 years. Two Prime ministers — Boris Johnson and Liz Truss — resigned. But when it comes to crypto, the turbulent government never stopped working on regulation. And even if the fruits of this work could be more impressive, the United Kingdom still makes an important case for a national regulatory framework.

The Financial Services and Markets Bill, introduced in July, reasserted the U.K.’s intention to become a global cryptocurrency hub. It broadened regulations of stablecoins and coined a new term — Digital Settlement Assets (DSA). The bill will authorize the Treasury to regulate DSAs, including payments, service providers and insolvency arrangements. The Economic Crime and Corporate Transparency Bill, introduced in May, proposed “creating powers to more quickly and easily seize and recover crypto assets” to mitigate risks for individuals targeted by ransomware attacks.

Related: Indonesia’s crypto industry in 2021: A kaleidoscope

This year, the British Web3 community celebrated an important legal precedent. The High Court of Justice in London, the closest analog to the United States Supreme Court, has ruled that nonfungible tokens (NFT) represent “private property.”

In a time when everyone is poking on unhosted wallets, Treasury scaled back its requirements for gathering data from both the senders and recipients of crypto sent to unhosted wallets unless the transaction poses “an elevated risk of illicit finance.” And, by the end of the year, it made a great present to all the investors by qualifying the transactions of “designated crypto assets” for the Investment Manager Exemption.

El Salvador

The nation of El Salvador, whose main breakthrough occurred in 2021, deserves to be included in this listicle, at least for its persistence. Once revealing the plan to issue “Bitcoin bonds,” the government of Nayib Bukele has been trying to execute it ever since. The first delay came in March, then repeated in September. In November, economy minister Maria Luisa Hayem Brevé introduced a bill confirming the government’s plan to raise $1 billion and invest them into the construction of a “Bitcoin city.” However, no news about the success of the bill has occurred since.

Still, the country remains a crucial laboratory for Bitcoin adoption. According to Salvadoran Tourism Minister Morena Valdez, the tourism industry in El Salvador has surged more than 30% since the adoption of the Bitcoin law in September 2021. At the beginning of 2022, a study conducted by the National Bureau of Economic Research (NBER) showed that 20% of businesses have started accepting BTC as a payment method.

In May, El Salvador welcomed 44 central bankers from developing countries around the world to tackle financial inclusion and discuss Bitcoin at a three-day conference. The event was visited by central bank delegates from Ghana to Burundi, Jordan to the Maldives and Pakistan to Costa Rica.

The Central African Republic

In April, the 5-million-populated Central African Republic (CAR) became the first nation on the continent to legalize the use of cryptocurrencies in the financial markets. The cryptocurrency bill, unanimously approved by lawmakers, allowed traders and businesses to make crypto payments and also make way for tax payments in crypto through authorized entities. In July, the local central bank digital currency (CBDC), Sango Coin, was launched to raise nearly $1 billion over the next year. So far, however, only $1.66 million worth of the coin has been sold.

The country had also announced a plan to allow foreign investors to buy citizenship for $60,000 worth of Sango Coins. However, this initiative was blocked as unconstitutional by the CAR’s top court.

Mamadou Moustapha Ly explains Sango Coin to Cointelegraph’s Joseph Hall

Adoption drew pushback from the Bank of Central African States (BEAC), which warned about the “substantial negative impact” that the legislation will have on the monetary union of Central Africa.

United Arab Emirates

The United Arab Emirates took a strategic approach to crypto and moved steadily to create a regulatory environment and attract global investors. Perhaps that’s why the country makes it to the Cointelegraph listicle for the second time in a row.

In March, Dubai established a legal framework for crypto aimed at protecting investors and “designing much-warranted international standards” for industry governance. A newly formed Dubai Virtual Asset Regulatory Authority (VARA) got enforcement powers in the Emirate’s special development and free zones with the exception of the Dubai International Financial Centre. The now-bankrupt crypto exchange FTX was among the first to obtain the same license.

Another emirate, Abu Dhabi, came up with draft recommendations for NFT trading. They marked NFTs as intellectual property rather than “specified investments or financial instruments” and allowed multilateral trading facilities (MTFs) and Virtual Asset Custodians (VAC) to operate NFT marketplaces.

In July, Dubai launched the Dubai Metaverse Strategy, which aimed to turn the Emirate into one of the world’s top 10 metaverse economies. It includes research and development (R&D) collaborations to enhance the metaverse’s economic contributions, utilizing accelerators and incubators to attract companies and projects from abroad, and providing support in metaverse education aimed at developers, content creators and users.

The country even opened its first city in Metaverse. Dubbed Sharjahverse, it was described as a “photorealistic, physics-accurate” metaverse that encompasses the emirate’s 1,000 square-mile surface area. The virtual city will support the local tourism industry and potentially create new metaverse jobs.

All in all, 2022 wasn’t so bad in terms of friendly regulation. And the next year is going to be even more interesting, with the race to the first comprehensive crypto framework in the U.S. and potential liberalization in Hong Kong and South Korea.

Rewind 2022: A crypto roundup of the year and stepping into 2023

While 2022 proved catastrophic for investors across traditional and crypto markets, the crypto ecosystem’s potential has shined through the cracks of inflation and centralized custody of assets.

Stepping into the year 2023, it’s time to pause and reflect on the accomplishments and struggles the global crypto community witnessed over the last 365 days. Starting from the very beginning of 2022, no investment strategy could help recover the falling portfolios across traditional and crypto ecosystems. January 2022 inherited a slightly collapsing market, wherein investments made on 2021 all-time high prices resulted in immediate losses. 

For many, especially the new entrants, falling crypto prices were perceived as an end game. But what went widely unnoticed was the community’s resilience and accomplishments against a global recession, orchestrated attacks and scams and an unforgiving bear market.

As a result of falling prices, 2022 also inherited the 2021 hype around nonfungible tokens (NFTs), the Metaverse, iconic all-time highs for Bitcoin (BTC) and other cryptocurrencies.

Economies worldwide suffered massive inflation as the most influential fiat currencies succumbed to the ongoing geopolitical pressures. The fall of investor confidence in traditional markets seeped into crypto and the fall of ecosystems only aided the sour sentiments.

A year full of disruption

Amid poor market performance, the crypto community focused on strengthening its core. This meant releasing blockchain upgrades and introducing faster, cheaper and more secure features and capabilities — all driven by the consensus of the respective communities. As a result, 2022 was a milestone year for leading crypto ecosystems.

Bitcoin received a highly requested improvement for its layer-2 protocol Lightning Network (LN) protocol. The LN got improved privacy and efficiency thanks to a November 2021 upgrade called Taproot. Bitcoin’s Taproot upgrade saw various protocol-level implementations for improved privacy and efficiency. It also helped lower the database sizes, an essential factor in slowing down the exploding Bitcoin ledger size.

By May 2022, Bitcoin was already halfway to the next halving, an event that reduces the mining rewards by half, the only way new Bitcoin gets released into supply. The reward for confirming Bitcoin transactions gets slashed by half every 210,00 blocks. The last Bitcoin halving event occurred on May 11, 2020, back when it traded at the $9,200 mark.

The total supply of Bitcoin is limited to 21 million by design. Therefore, a halving event further reduces the amount of Bitcoin that gets released into the market. A resultant scarcity due to the halving event historical worked in favor of Bitcoin price.

Adhering to the expectations of industry experts, Bitcoin rallied for several months to mark its all-time high by Nov 2021 and was able to retain its value well above $15,000 until the end of 2022, confirms data from Cointelegraph Markets Pro.

Bitcoin price during the last halving event. Source: CoinMarketCap

The Ethereum community welcomed the highly anticipated Merge upgrade, which saw the Ethereum blockchain’s transition from proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism. The upgrade’s most significant impact was a drastic energy consumption reduction. The wider crypto community counts on this lower energy usage to reignite the interest in Ether-power sub-ecosystems, such as NFTs.

Crypto resilience vs. traditional markets

History proves that two factors play a crucial role in crypto market performance — the price of Bitcoin and investor sentiment. Both factors seemed to lack throughout the year.

Crypto events timeline against market capitalization. Source: CoinGecko

The crypto ecosystem was plagued with a series of attacks, unprecedented sanctions and bankruptcy filings, which multiplied the impact of the global recession on the market. In addition to poor price performance, some of the most prominent scars for 2022 investors include the fall of FTX, 3AC, Voyager, BlockFi and Terraform Labs, wherein investors lost access to all their funds overnight.

Amid this commotion, entrepreneurs once loved by the masses ended up breaking the trust of millions, namely former FTX CEO Sam Bankman-Fried and Terra co-founder and CEO Do Kwon.

Despite the added hurdles, the Bitcoin and crypto ecosystem not only survived but also displayed a never-seen-before resilience. Traditional store-of-value investments such as gold and stocks too suffered a similar fate. Between January-December 2022, gold investors realized a net loss of 0.3%.

Major company stocks also performed poorly this year, which includes Apple (-25%), Microsoft (-29%), Google (-38%), Amazon (-49%), Netflix (-51%), Meta (-65%) and Tesla (-65%).

Yearly performance of traditional market goliaths. Source: LinkedIn

Bitcoin started strong with a $47,680 price point in Jan. 2022, but dwindling investor sentiment — driven by year-long rising inflation, energy prices and market uncertainties — managed to bring the prices down by over 60% by December.

Setting the stage for a stronger foundation

Time after time, bear markets have taken the responsibility of weeding out bad actors and offering a chance for promising crypto projects to display their true value to investors beyond the price point.

The noise around price fluctuations could not stop the Bitcoin network from strengthening its core against double-spending attempts, i.e., 51% attacks. Thanks to the widespread mining community, hash rate and network difficulty — two important computational power-based security metrics — reassured Bitcoiners that the blockchain network was well-protected. Throughout the year, the Bitcoin network consistently recorded new hash rate all-time highs and ended the year between the 250-300 Exahashes per second (EH/s) range.

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Other prominent players in the crypto ecosystem also released the system and feature upgrades as they gear up for 2023. For Polygon Technology, an Ethereum-based Web3 infrastructure, it was the launch of zkEVM or zero-knowledge Ethereum Virtual Machine, a layer-2 scaling solution aimed at reducing transaction costs and improving scalability. Decentralized finance (DeFi) aggregator 1inch Network launched the Fusion upgrade for delivering cost-efficient, secure and profitable swaps for crypto investors.

El Salvador’s legalization of Bitcoin did not go unnoticed, especially considering that the country’s Bitcoin procurement from 2021 shared the same fate as other crypto investors. Regardless, El Salvador President Nayib Bukele doubled down on this decision as the country announced purchasing BTC on a daily basis from Nov.17.

One of the immediate impacts of this move is a reduction in El Salvador’s average buying price. A planned purchase of Bitcoin dips combined with a subsequent market recovery makes the country well-positioned to offset the unrealized losses.

In countries with high inflation, Bitcoin helped numerous individuals retain their purchasing power.

Expect a return of the hype

While 2023 will not be fortunate enough to witness the upcoming Bitcoin halving, it will play a crucial role in the crypto ecosystem’s comeback. With aggressive blockchain upgrades, updated business strategies and investors’ attentiveness back on the menu, the ecosystem is now gearing up for the next wave of disruption.

For investors, 2023 will be a year of recovery — from losses and mistrust to self-custody and informed investments. “Making it” in crypto is no longer just about becoming an overnight millionaire; it is about creating, supporting and preaching a fresh take on the future of money.

Which celebrities joined and left crypto in 2022?

Sports players, movie stars, models, musicians; the gang’s all here, with more celebrities entering the blockchain space with each passing month. Will that trend continue in 2023?

The crypto world is still developing at lightning speed. The adoption of projects built on blockchain technology has increased tremendously in 2022, and this is partly due to the celebrities who have contributed to it. Thanks to these well-known people, crypto-related projects have reached a large audience, through their social media accounts and the many news outlets that wrote about them.

The developments in cryptocurrencies, nonfungible tokens (NFTs) and metaverse platforms have led to new ways people can make money and alternative methods to consume art and entertainment. They have also led to innovative ways people can communicate and interact with one another online. For example, people can even connect with their idols in this digital meeting place. But are there any celebrities left in the crypto world? In this article, you can discover all the celebrity activities in 2022.

Are NFTs hype or still in demand?

Many celebrities were active in the field of NFTs in 2022. This digital proof of ownership of unique items recorded on the blockchain was used for various purposes. For example, Muse, an English band, released an NFT album, with only 1,000 NFTs available. In addition to NFTs representing musical property, celebrities mainly focus on digital images as NFTs.

For example, in 2022, boxer Floyd Mayweather launched his NFT collection Mayweverse, which comprises 5,000 unique NFTs. In addition to launching their own NFT collections, many celebrities were also used to promote other collections. For example, the Lucky Block NFT collection was promoted by model Jamie Jewitt and boxer Dillian Whyte.

In addition, Cristiano Ronaldo partnered with Binance in 2022. The Portuguese star soccer player will launch his own NFT collection on the exchange’s NFT marketplace. This collection captures Ronaldo’s legacy on the blockchain, and it is not excluded that more collections will be launched in the future.

Celebrities and their interest in BAYC NFTs

The Bored Ape Yacht Club (BAYC) NFT collection launched in 2021 and grew into a very popular project in a short period of time. This was partly because many celebrities invested in the project. Even in 2022, it was found that celebrities are still willing to pay hefty sums for a JPEG. For example, Brazilian soccer player Neymar bought two BAYC NFTs in the first month of 2022.

He was not the only celebrity, as Paris Hilton also managed to get a copy from the collection in the same month. However, hodling is not in every celebrity’s dictionary, as some celebrities also sold their BAYC NFT in 2022. For example, American football player Andrew Sendejo sold his BAYC NFT in February 2022, and Shaquille O’Neil followed suit a few months later by selling his Mutant Ape.

Is the metaverse still popular in 2022?

In the fall of 2021, there was a lot of hype surrounding metaverse platforms as Mark Zuckerberg announced that Facebook was being rebranded as Meta and the company was focusing on the next iteration of the internet. As a result, various metaverse-related cryptocurrencies skyrocketed and interest among celebrities rose along with the price.

The metaverse, also known as the virtual world, is an increasingly popular concept where people can move and socialize in digital environments. In 2022, several celebrities were found to be active in the metaverse and have created their own unique digital avatars.

Click “Collect” below the illustration at the top of the page or follow this link.

In addition, investing in the metaverse also continues to interest several celebrities. Phil Jones, a Manchester United English defender who has barely seen the soccer field for over three seasons, invested in the metaverse in 2022. Together with the media platform Antourage, the footballer launched his own metaverse project.

David Beckham, another English soccer player, who also played for Manchester United, has found his way into the metaverse. David Beckham became a 2022 ambassador for DigitalBits, a blockchain platform that focuses on various blockchain applications.

Sergio Kun Agüero, another famous soccer player, entered the metaverse in 2022. The former footballer of Manchester City, Atletico Madrid and the Argentina national team has launched his own metaverse experience. This was done in collaboration with The Sandbox (SAND). Agüero’s metaverse, called the Kuniverse, is a perfect opportunity for fans to meet their idol. There are also special NFTs that you can use in this metaverse, with the collection totaling 9,320 Kun NFTs.

Concerts in the metaverse

The metaverse is a unique venue for fans and artists to interact. As a result, concerts in the metaverse are immensely popular, with numerous concerts and other activities featuring celebrities in 2022.

An example of one such celebrity is pop star Taylor Swift, who held her own digital concerts in the metaverse in 2022. Fans can create their own avatars and go to the virtual concerts to listen to Taylor and interact with other fans.

Popular gaming platforms, such as Roblox and Fortnite, are also keeping up with technological developments and regularly host concerts. For example, Charli XCX filmed a concert at Roblox on June 17, 2022. The British singer and songwriter, who was born Charlotte Emma Aitchison in 1992, has become known for her electronic music and has released several successful singles and albums.

In addition, there have been several Hypetype Metaverse Concerts in 2022 attended by many celebrities. These concerts included performances by Dimitri Vegas & Like Mike, Wolfpack and Thai rapper BamBam.

What celebrities were involved in cryptocurrencies in 2022?

Despite the crypto market being hugely bearish in 2022, there are still celebrities who are confident in cryptocurrencies. For example, Mike Tyson, the famous boxer and former world heavyweight champion, has expressed his interest in cryptocurrency and blockchain technology. He has joined the Solana Foundation, a nonprofit organization dedicated to Solana development and adoption, and advertises several projects built on the Solana blockchain.

On the other hand, plenty of celebrities also got rid of their crypto investments in 2022. For example, Tesla, Elon Musk’s company, sold a large amount of Bitcoin in 2022. Back in March 2022, Musk said he was not going to sell Bitcoin (BTC), but a few months later, he sold 75% of his Bitcoin holdings.

Because second-quarter profits were down and the Shanghai factory had to be closed, Musk did not want to take any chances. Both the developments at Tesla and the falling price of Bitcoin meant that Musk saw no other way out but to sell much of the position.

These developments are in stark contrast to the events of 2021, where Musk turned the crypto market completely upside down. In early 2021, he announced that Tesla had purchased $1.5 billion worth of Bitcoin. This news caused Bitcoin’s price to explode. In addition to the positive effect on Bitcoin’s price, Musk was also one of the causes of the hard fall a few months later. His criticism of the energy consumption of the proof-of-work (PoW) consensus system that Bitcoin runs on caused the price to drop by half.

The next co-founder to leave Ethereum

Not only did celebrities sell their cryptocurrencies, but a well-known person within the crypto landscape also announced his departure. Anthony Di Iorio is one of the co-founders of Ethereum and has announced that he is leaving the crypto world.

However, in the fall of 2022, Di Iorio announced his new challenge in blockchain technology. With his company, called Andiami, he wants to promote decentralization through hardware. This makes Di Iorio the next co-founder to leave Ethereum. In the past, Charles Hoskinson, Gavin Wood and Joseph Lubin preceded him. They founded Cardano, Polkadot and Infura, respectively.

What celebrities are involved in the FTX debacle?

Not only did Musk partially withdraw from the crypto market but so did a group of celebrities who were ambassadors for the FTX exchange. Big names, such as Stephen Curry and Tom Brady, were associated with the bankrupt FTX exchange. Brady and his partner, Gisele Bündchen, even invested in FTX.

In addition to Curry, Brady and Bündchen, Naomi Osaka, Larry David, Udonis Haslem, David Ortiz, William Trevor Lawrence, Shohei Ohtani and Kevin O’Leary were also involved with the exchange as FTX ambassadors. FTX has been a sponsor of several sporting events, so the link to a lot of top athletes is also quickly established.

Whether these celebrities will leave the crypto world behind cannot be said with complete certainty. However, O’Leary has made it known in the past that he invests in cryptocurrencies. In addition, Curry has released his own NFT collection and also owns a BAYC NFT.


5 altcoin projects that made a real difference in 2022

This year was tough on crypto prices, but ETH, LDO, MATIC, DAI and ATOM all made a positive impact on the industry.

Bitcoin (BTC), Ether (ETH) and the rest of the crypto market had a rough 2022 from a price perspective, but traders are hopeful that 2023 will include bullish developments that push prices higher. 

Despite the marketwide downturn, a handful of altcoins continued to make a positive contribution to the crypto space and thanks to Ethereum, the term altcoin is no longer a derogatory term.

Let’s explore the top altcoins that made a difference over the past 12 months.

Ethereum fundamentals shone in 2022

Ether’s price hit a yearly high at $3,835 on Jan. 2 and has struggled to regain footing amid the bear market and other macro factors. The Ethereum network is the top project in 2022 not because of Ether’s price action, but for its fundamentals and for completing the long-awaited mainnet upgrade. The Ethereum merge was completed on Sept. 15, and while many feared the Merge to proof-of-stake (PoS) could cause issues, the transition was flawless.

The main advantage of PoS is that it is much more energy-efficient than proof-of-work (PoW), because it does not require expensive and energy-intensive hardware to validate transactions. This reduces usage costs for the end-user and makes it a more sustainable and scalable solution for Ethereum’s long-term growth. The Merge also reduced the Ethereum network’s energy consumption by over 99.9%.

Some analysts are bullish on Ether post-Merge due to its emissions schedule becoming deflationary. Although daily active users have increased for the network, emissions have remained inflationary and Ether price is still down from yearly highs.

In 2023, investors are hopeful that increased transactions on the network creates higher demand for Ether and that this translates to a boost in the altcoin’s price.

Lido (LDO) brought Ethereum network staking to the masses

Lido’s makes it easy for users to participate in Ethereum PoS as validators by providing a simple interface without them having to reach the high threshold of 32 ETH the network normally requires for staking.

Since launching, Lido has earned $158.8 million in fees from its staked Ether protocol. At the peak, Lido saw 823 daily active users on Sept. 17.

Cumulative Lido fees and daily active users. Source: TokenTerminal

With the Ethereum network’s Shanghai hard fork scheduled for March, Lido will have a busy first quarter and all the Ether staked on the platform will have the option of being withdrawn. Aztec Connect, the creator of Lido protocol, also recently secured a $100 million fundraising round to build an encrypted blockchain.

Polygon partnerships show long-term resiliency

Mass adoption requires traditional companies and brands to get involved in crypto. Polygon (MATIC) has a major focus on partnerships and some of the relationships developed in 2022 include Warner Music, JP Morgan, Instagram and Nubank, a neobank backed by Warren Buffett.

These partners use Polygon in various ways, including integrating the Polygon network into their infrastructure and using Polygon to offer distributed ledger technology (DLT) for their products and services.

Notable companies, including Cointelegraph, also chose to launch NFTs on Polygon. In addition to Cointelegraph, former President Donald Trump, Reddit, DJ Deadmau5 and Nike all launched NFT collections on Polygon.

Some traders expect a 200% upside swing from MATIC due to on-chain metrics showing traction and a bevy of future partnerships. Despite all of Polygon’s growth, the Ethereum network still intakes more fees.

Daily fees comparing Polygon (Orange) and Ethereum (Green). Source: TokenTerminal

Polygon’s focus on Web3’s core principles combined with their partnerships earned them a spot as a top altcoin project in 2022.

Collect” below the illustration at the top of the page or follow this link.

MakerDAO’s DAI proves resilient

In a year that saw algorithmic stablecoins de-peg and perish, Dai (DAI) has shown resilience. Unlike centralized stablecoins, DAI is a decentralized stablecoin that provides transparency, censorship resistance and the ability to operate outside traditional financial systems.

While DAI is not new to the crypto space, the decision to increase its exposure to low-risk assets such as Treasurys and corporate bonds earns them a spot as a top altcoin. According to an analysis from Sebastien Derivaux, a crypto scholar, this decision generated 75% of all DAI revenues ($600 million.)

Cosmos upgrades attract institutional investors’ attention

In 2022, Cosmos (ATOM) focused on solving the interoperability and communication challenges that exist between different blockchains. On Jan. 1, Cosmos had 74 active developers and this figure ha more than doubled, reaching a peak of 154 on Nov. 30.

In a year plagued with cross-chain casualties, Cosmos’ inter-blockchain communications protocol (IBC) has so far seemingly weathered the storm. The success caught the eye of Delphi Digital’s research arm and fund managers at VanEck.

Cosmos fees and developer activity. Source: TokenTerminal

Overall, Cosmos has the potential to be an important infrastructure layer for the crypto ecosystem, helping to facilitate the exchange of value and information between different blockchain networks and enabling a more interoperable future.

While 2022 is a year most crypto investors would like to forget, positive factors in mass adoption arose. The altcoins with a focus on building will continue to propel crypto’s future in 2023 and beyond.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

What to expect from the crypto market in 2023: Watch The Market Report

On this week’s episode of The Market Report, Cointelegraph’s resident experts discuss what we can expect from the cryptocurrency market in the new year.

This week on The Market Report, the resident experts at Cointelegraph discuss what investors can expect from the cryptocurrency market in 2023. Will this bear market carry on, or will we see the beginning of the bull market? Also up for discussion is what projects have the potential to make a splash in 2023.

We start off this week’s show with the latest news in the markets:

4 ‘emerging narratives’ in crypto to watch for: Trading firm

Despite an eventful year fraught with crypto collapses and price drops, Steven Goulden, a senior research analyst at crypto trading firm Cumberland, has pointed to several “green shoots” to break the surface in crypto in 2023. Make sure to listen as our experts go over which industries have the potential to break out in 2023.

Crypto community expresses Christmas market sentiments: ‘No Santa rally’

Traders looking forward to a rally during Christmas were disappointed as the markets turned out to be steady as many celebrated the holidays. A community member pointed out that the lack of movements may be because of the controversies surrounding centralized exchanges. Were you expecting a Santa rally like many others? Let us know by tuning in and having your voice heard in the YouTube chat.

Bitcoin exchange withdrawals sink to 7-month low as users forget FTX

Bitcoin (BTC) exchange users have forgotten all about the FTX scandal this Christmas, data shows. According to on-chain analytics firm Glassnode, exchange outflows have now hit their lowest levels in over six months. After seeing an overwhelming surge in light of the FTX meltdown, BTC withdrawals from exchange wallets have entirely reversed the spike, which began around six weeks ago. Are people getting too comfortable with keeping their coins on exchanges once again? Should everyone really move to offline storage? 

CZ addresses reasons behind Binance’s recent FUD

Binance CEO Changpeng “CZ” Zhao took to Twitter on Dec. 23 to share his perspective on the reasons behind the recent fear, uncertainty and doubt (FUD) surrounding the crypto exchange. According to CZ in the thread, Binance’s FUD is primarily caused by external factors — not by the exchange itself. Is it all the recent bankruptcies or the fact that the community hates centralization? Our experts break down everything CZ had to say.

Our experts cover these and other developing stories, so make sure you tune in to stay up-to-date on the latest in the world of crypto.

Next up is a segment called “Quick Crypto Tips,” which aims to give newcomers to the crypto industry quick and easy tips to get the most out of their experience. This week’s tip: Crypto cards.

Market expert Marcel Pechman then carefully examines the Bitcoin and Ether (ETH) markets. Are the current market conditions bullish or bearish? What is the outlook for the next few months? Pechman is here to break it down.

Lastly, we’ve got insights from Cointelegraph Markets Pro, a platform for crypto traders who want to stay one step ahead of the market. Our analysts use Cointelegraph Markets Pro to identify two altcoins that stood out this week, so make sure to tune in to find out which ones made the cut.

Do you have a question about a coin or topic not covered here? Don’t worry — join the YouTube chat room and write your questions there. The person with the most interesting comment or question will have a chance to win a $50 gift voucher to the Cointelegraph swag store.

The Market Report streams live every Tuesday at 12:00 pm ET (5:00 pm UTC), so be sure to head on over to Cointelegraph’s YouTube page and smash those Like and Subscribe buttons for all our future videos and updates.

Xmas dinner table: What to tell your family about what happened in crypto this year

Christmas dinner could get awkward for crypto advocates who were adamant about their families investing last year — Cointelegraph compiled a small recap of what happened in crypto this year.

After a lackluster rise of crypto in 2021, which saw many new crypto millionaires and several crypto startups attain unicorn status, came the dramatic fall in 2022. The industry was plagued by macroeconomic pressures, scandals and meltdowns that wiped out fortunes virtually overnight. 

As 2022 comes to a close, many crypto proponents are perplexed about the state of the industry, especially in light of the recent FTX collapse and the contagion it has caused, taking down several firms associated with it.

Many who couldn’t stop talking about crypto and recommending their family to invest in it last year at Christmas dinner could see the tables turn this year, with them having a lot of explaining to do about the state of crypto today. While as awkward as that conversation is going to be, Cointelegraph prepared a small recap to help ‘crypto bros and sisters’ explain what really happened to crypto in 2022 when market pundits were expecting the rise to continue throughout the year.

The downfall was universal, but crypto turned it into a contagion

The start of the crypto downfall was triggered by external factors, including growing inflation, rate hikes from the United States Federal Reserve and the international conflict between Ukraine and Russia that shook investor confidence in the market, leading to a sell-off in traditional and crypto markets.

The external market conditions, aided by the unchecked centralized decision-making process, claimed its first big player of this bull cycle in Terra. The $40-billion ecosystem was reduced to ruins within days. More importantly, it created a crypto contagion that claimed at least half a dozen other crypto players, mainly crypto lenders that had exposure to the Terra ecosystem.

The collapse of the Terra ecosystem had the greatest impact on lenders, bankrupting Three Arrows Capital and many others. Celsius paused withdrawals due to extreme market conditions, causing crypto prices to fall, and then declared bankruptcy. BlockFi had to be bailed out by FTX with a $400 million cash injection.

Cryptocurrencies, Cryptocurrency Exchange, FTX, New Year's Special

At the time, FTX seemed too eager to bail out several troubled crypto lenders. But, just a quarter later, it turned out FTX was not as liquid and cash-rich as it claimed to be. In fact, the crypto exchange was using its native tokens and in-house, non-existent projects as leverage against multi-billion-dollar valuations and loans. Its sister company, Alameda Research, was found to be involved in building a house of cards that eventually came crashing down in November.

The FTX crypto exchange and its founder, Sam Bankman-Fried, have built a philanthropic outlook for the world, turned out to be outright fraud and stole customers’ funds. The former CEO was found to be misappropriating customers’ funds and was eventually arrested in the Bahamas on Dec. 11.

Related: FTX collapse: The crypto industry’s Lehman Brothers moment

Bankman-Fried was extradited to the United States on charges of securities fraud and misappropriation of funds. However, the former CEO managed to secure a bail plea against a $250 million bond paid by his parents who put up their house to cover his astronomical bail bond.

While the arrest of Bankman-Fried and his trial in the U.S. have given some hope to FTX users, the chances of many customers getting back their funds are very slim as lawyers have predicted that it might take years and even decades to get the funds back.

Cryptocurrencies, Cryptocurrency Exchange, FTX, New Year's Special
SBF in handcuffs during his extradition to the U.S. Photo: Royal Bahamas Police

Two back-to-back crypto contagions caused by a series of bad decision-making and the greed of a few, might not be an easy thing to explain to the family. So, own up — everyone makes mistakes in the bull market, thinking they are doing the right thing by getting their family involved. However, one can always talk about the bright sides and the lessons learned from the mistakes, and the 2022 crypto contagion is no different.

Centralized exchanges and coins may come and go, but Bitcoin will stay

Terra ecosystem’s collapse was a significant setback for the crypto industry —both in terms of value and how the outside world perceives it. Crypto managed to bear the brunt of the collapse and was on its way to redemption, only to face another knock in the form of FTX. The FTX saga is far from over but it highlighted what corruption and hefty donations can do to your public image even when you have robbed people billions of their money.

The mainstream media frenzy saw the likes of the New York Times and Forbes write puff pieces for the criminal former CEO before the charges were framed against him. Bankman Fried was portrayed as someone who was a victim of bad decisions when FTX and Alameda were involved in illicit trading from day one, as mentioned by SEC in their charges.

Related: Regulators face public ire after FTX collapse, experts call for coordination

The FTX downfall and the crypto contagion are being portrayed by many as the end of trust in the crypto ecosystem. U.S. regulators are warning that it is only the start of the crypto crackdown, with SEC chief Gary Gensler comparing crypto platforms and intermediaries to casinos.

However, any crypto veteran will tell you that the industry has seen much worse and has always bounced back to its feet. While the collapse of the third largest crypto exchange (FTX) is definitely significant, it doesn’t come close to the Mt. Gox hack from the early days of crypto exchanges.

Mt. Gox was once the biggest external factor that cast doubt on the cryptocurrency industry, especially Bitcoin (BTC). When the exchange was hacked in 2014, it account for more than 70% of BTC transactions at the time. The hack did have a wild impact on the price of BTC at the time, but the market shot back up again in the next cycle.

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Years later, the FTX collapse once again reminded users of the risks involved with centralized entities, triggering a significant movement of funds from centralized exchanges to self-custody wallets.” Self-custody wallets allow users to serve as their own bank, but the trade-off is that wallet security also becomes their sole responsibility.

Crypto users are withdrawing their funds from crypto exchanges at a rate not seen since April 2021, with nearly $3 billion in Bitcoin withdrawn from exchanges in November, moving them to self-custody wallets.

New data from on-chain analytics firm Glassnode shows that the number of wallets receiving BTC from exchange addresses hit almost 90,000 on Nov. 9. The movement of funds away from exchanges are usually a bullish sign that BTC is being “hodled” for the long term.

Every other token might look lucrative in a bull run, as evident from the last one where the likes of LUNA, Shiba Inu (SHIB) and Dogecoin (DOGE) broke into the top 10. But today, these projects be it Terra-LUNA or meme coins are either obsolete or far from their bull run hype.

Cryptocurrencies, Cryptocurrency Exchange, FTX, New Year's Special

Bitcoin, the original cryptocurrency, has seen downfalls of several major exchanges over the past decade and yet has come up on top of each of those collapses in the next cycle. This is the reason most early crypto investors and Bitcoin proponents often advocate for self-custody and hodling BTC over investing in new altcoins that might seem lucrative in a bull run, but there is no guarantee that they would make it to the next bull run

The collapse of these centralized entities in 2022 could also prompt policymakers to eventually come up with some form of official universal regulations to ensure investor security.

The bottom line

The core technology of decentralization and Bitcoin, the OG cryptocurrency, is here to stay regardless of the crypto entities involved in facilitating different use cases and services on top of them. 2023 could see a new wave of crypto reforms, with more aware users who believe in self-custody rather than letting their funds sit on exchanges. Also, it’s better not to give out financial advice to anyone, especially in a bull market.