Global Crypto Industry Overview & Trends 2021-2022

Abstract

The year of 2021 is a breakthrough worth being carved on the milestone of the blockchain industry, for blockchain has entered the mainstream instead of thriving within the confined “geek” environment. Blockchain-related news such as the public offering of Coinbase, the announcement of Bitcoin as national fiat currency of El Salvador, and the prevalence of pet-inspired memes have been more frequently seen and mentioned. The emergence of the new Layer 1 chain has become a key highlight in the market. Against this backdrop, we established a scoring model that addresses the vast attention on Layer 1 chains using some vital parameters, such as the number of daily transactions and total transaction fees, etc., in order to discover the intrinsic value and potential of those Layer 1 chains. Based on the result from the model, Solana scored second to Ethereum; Cardano, Polka dot, Terra are most likely to have a brighter future according to the scores

In the Crypto financial market, Bitcoin is becoming more recognized by the significant volume being bought by institutional investors comprising public companies in western countries. On one hand, in DeFi, the ecosystem has expanded to other Layer 1 chains that have spawned chains such as Solana. On the other hand, DeFi 2.0 projects, such as OlympusDao and Abracadabra, emerged as a solution in achieving better liquidity and turnover for funds; on-chain financial derivatives, represented by perpetual contract, options, synthesized assets and interest derivatives, have emerged to target the public.
In the Crypto market, NFT enjoys a high level of awareness among the public, and meme coins have drawn immense interest and attention in the market. In addition, various DAO-formed projects, such as ConstitutionDAO and OpenDAO, have attracted enough attention from the mainstream. What’s more, the word “metaverse” has been second to none in 2021, to the extent that all big names in technology have developed strategic planning on it. Last but not least, GameFi which is based on the “Play to Earn”, model has exemplified “the Return of the King” for blockchain games. 

In terms of Crypto technology, Rollup is becoming commonly recognized as a scaling solution. With the debut of zkEVM, ZK Rollup is expected to dominate the market eventually. Meanwhile, with the emergence of multiple Layer 1 chains with high performance, interactions across chains are in extreme demand. Lastly, at the end of 2021, Web 3.0 was brought under the spotlight. We believe Global Blockchain Industry Overview and Trends 2020-2021 Annual Report that the critical characteristics for Web 3.0 are the individual reigning power over the platform or organization, and the ownership of personal data.

From the view of regulations, according to Huobi Research, over 40 sovereign countries and regions have promulgated 151 regulations and guidance towards the Crypto industry in 2021. This number has increased by 75% year-on-year. Specifically, neutral, positive, and negative regulations account for 59%, 23%, and 18% of the new laws, respectively. In addition, stablecoin, NFT, metaverse and DAO have appeared on the list of “special notice” of regulators.
Looking to the future of the Crypto industry, we hereby make 10 major predictions for the upcoming year of 2022:

1. Global liquidity shrinks, Bitcoin will face bear market
2. DAO will be a major onchain governance form
3. Cross-chain will become the infrastructure under the era of multiple chains
4. DeFi embarks on 2.0 , causing an explosion of on-chain perpetual contract and forward contract
5. CBDC will land steadily, cross-border payment processing will become the focus of
   research
6. Lending market will thrive for institutional participants
7. Explosive growth in NFT
   lending and derivatives
8. New Layer 1 chains will appear, forming a new player structure
9. Insurance market for crypto will thrive
10. Interim mainstream scaling solution will meet the best time for development.

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Authors
Huobi Research:
Flora Li, William Li, Ning Fangpu, Wei Yeyan, Chen Yuxuan, Wang Tianchen, Jiang Mengchu, Han，Xiaopeng, Zhang Zhaorui

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