The product manager of Coinbase, the global cryptocurrency exchange platform, has revealed the predictions of the Web3 and cryptocurrencies for this year. Based on his experience, what we can expect from this sector is the following:
1. Eth scalability will improve
As we welcome the next hundred million users to the crypto market and Web3, the scalability challenges for Eth are likely to increase. «I am optimistic about improvements in Eth scalability with the appearance of Eth2 and many L2 rollups.”
The traction of Solana, Avalanche and other L1 networks shows that in the future we will live in a multi-network world. We will also see new L1 chains emerge focused on specific use cases, such as gaming or social media.
2. There will be significant usability improvements in the L1-L2 bridges
As L1 networks gain traction and L2 networks get larger, the industry will desperately seek improvements in the speed and usability of the bridges between L1 and L1-L2. We are likely to see interesting developments in bridge usability in the coming year.
3. Zero knowledge proof technology will have higher traction
In 2021, it was seen how protocols such as ZkSync and Starknet They were starting to gain traction. As L1 chains get stuck with increasing usage, the ZK-rollup technology will attract attention from both investors and users.
«We will see new privacy-focused use cases emerge, including privacy-safe applications, and game models that have privacy built into the core. This may also make regulators pay more attention to cryptocurrencies, as KYC/AML could be a real challenge in privacy-focused networks.”
4. Defi regulated and appearance of KYC certification in the chain
“Many Defi protocols will adopt the regulation and create separate KYC user groups. Decentralized identity and on-chain KYC certification services will play key roles in connecting the real identity of users to Defi wallet endpoints. We will see greater acceptance of ENS-type addresses, and new cross-chain name resolution systems will emerge.”
5. Institutions will play a much bigger role in Defi engagement
Institutions are increasingly interested in participating in Defi. For starters, institutions are attracted by above-average interest-based returns, compared to traditional financial products. In addition, the reduction of costs in the provision of financial services through Defi opens up interesting opportunities for institutions.
«However, they remain hesitant to participate in Defi. Institutions want to confirm that they only transact with known counterparties that have completed a KYC process. The growth of regulated Defi and on-chain KYC certification will help institutions gain trust in Defi”.
6. Defi insurance will emerge
As Defi proliferates, they also become the target of security hacks. According to London-based company Elliptic, the total value lost from Defi exploits in 2021 was more than $10 billion. To protect users from hacks, viable insurance protocols will emerge in 2022 that guarantee user funds against security breaches.
7. NFT-based communities will provide the necessary competition to Web 2.0 social networks
NFTs will continue to broaden their perception. It will be seen how creator tokens or hobbyist tokens take a more prominent place. NFTs will become the next evolution of users’ digital identity and their passport to the metaverse. Users will gather in small, diverse communities based on the types of NFTs they own. User-created metaverses will be the future of social media and will begin to threaten the ad-driven, centralized versions of social media today.
8. Brands will start to actively participate in the metaverse and NFTs
Many brands are realizing that NFTs are great vehicles for brand marketing and establishing brand loyalty. Coca-Cola, Campbell’s, Dolce & Gabbana, and Charmin launched NFT collectibles in 2021. Adidas recently launched a new metaverse project with the Bored Ape Yacht Club. We are likely to see more exciting brand marketing initiatives using NFTs.
NFTs and the metaverse will become the new Instagram for brands. And just like on Instagram, many brands may start out as native NFTs. We will also see many more celebrities jump on the bandwagon and use NFTs to boost their personal brand.
9. Web2 companies will wake up and try to get into Web3
«We’re already seeing it with Facebook trying to transform itself into a Web3 company. Other big Web2 companies are likely to dive into Web3 and the metaverse by 2022. However, many of them are likely to create closed-net, centralized versions of the metaverse.”
10. It’s time for DAO 2.0
We will see how the DAO’s they become more mature and dominant. More people will join DAOs, causing a change in the definition of employment: never receiving a formal offer letter, accepting tokens instead of or alongside fixed salaries, and working on multiple DAO projects at the same time.
DAOs will also face new challenges in terms of figuring out how to conduct mergers and acquisitions, manage payroll and benefits, and coordinate activities in ever-larger organizations. We will see a host of tools emerge to help DAOs perform efficiently. Many DAOs will also discover how to interact with traditional Web2 companies. We are likely to see regulators take more interest in DAOs and make an attempt to educate themselves on how DAOs work.
