“The cryptocurrency and blockchain industry experienced explosive growth in 2021, particularly in its decentralized finance (DeFi) and nonfungible token (NFT) sectors. The year was also marked by continued price volatility, baffling behavior from China, a grand experiment in Central America, escalating institutional interest, and the rise of some faster smart-contract networks — all of which is reflected in this year’s list of industry “winners and losers.”
- Kazakhstan – When China effectively banned Bitcoin (BTC) mining operations in May 2021, Kazakhstan rushed in to fill the vacuum. By July 2021, Kazakhstan’s average monthly hash rate share stood at 18.1% — that is, it accounted for nearly a fifth of the world’s Bitcoin mining output, second only to the United States (42.7%), and a stunning increase from only 1.4% in September 2019.
- Coinbase – Coinbase Global became the first crypto company to list on a U.S. stock exchange when it debuted on April 14 on Nasdaq. Coinbase’s listing was widely viewed as another sign that crypto had gone mainstream, with more public offerings to come.
- Solana et al – A tide of new smart contract-enabled networks emerged on the scene in 2021. The largest and fastest-growing among them was Solana.
- El Salvador – El Salvador made history in 2021 — becoming the first country to declare Bitcoin (BTC) legal tender. Only time will tell whether all this amounts to a clear economic “win” for El Salvador’s people, but Bukele arguably, through buying the dips, brought some 21st-century innovation and luster to a poor Central American land whose economy is heavily dependent on remittances.
- Beeple / NFTs – When art house Christie’s put up for auction in February a digital collage — the first major auction house to offer a purely digital work with a unique NFT – the work “Everydays: The First 5000 Days” by Mike Winkelmann (aka Beeple) sold for $69.3 million, and the art industry may never be the same. Sales of NFTs skyrocketed through 2021, and in late November, “NFT” was declared “word of the year” by dictionary publisher Collins.
- FTX – By the end of 2021, FTX had become the second-largest crypto derivatives exchange, according to CoinGecko, trailing only Binance (Futures). Messari called FTX “the fastest-growing company of all time,” noting that Bankman-Fried had built a $25-billion enterprise in less than three years with fewer than 100 employees.
- OpenSea – OpenSea, a first mover in the NFT art sector and the leading marketplace, emerged as one of the year’s biggest winners. Through part of November, revenues exceeded $235 million YTD.
- ProShares ETF – A barrier of sorts was surmounted in mid-October with the launch of the first Bitcoin exchange-traded fund (ETF) sanctioned by the United States Securities and Exchange Commission. The ProShares Bitcoin Strategy ETF (BITO) made a dramatic debut on the New York Stock Exchange as the second-most heavily traded opening-day fund on record, with some calling it “a watershed moment for the crypto industry.”
- Meta (Diem)
- Central Bank of Nigeria
- Virgil Griffth
- Iron Finance (TITAN)“
“Tech executives and engineers are quitting Google, Meta, Amazon and other large companies for what they say is a once-in-generation opportunity with crypto.
It’s the perfect storm. The momentum we’re seeing in this space is just incredible.
But beyond the speculative mania, a growing contingent of the tech industry’s best and brightest sees a transformational moment that comes along once every few decades and rewards those who spot the seismic shift before the rest of the world. With crypto, they see historical parallels to how the personal computer and the internet were once ridiculed, only to upend the status quo and mint a new generation of billionaires.
People are interested in working at crypto firms for more than just money. Some are drawn to the ethos of web3, which strives to decentralize power and decision making.
Back in 2017 or so, people were mostly in it for the investment opportunity. Now it’s people actually wanting to build stuff.
There is a giant sucking sound coming from crypto. It feels a bit like the 1990s and the birth of the internet all over again. It’s that early, that chaotic and that much full of opportunity.”
“Where Li sees correlations breaking down isn’t between macro assets and, say, bitcoin but between bitcoin and other cryptocurrencies.
Between bitcoin and ether, the 90-day correlation coefficient is at a very high 0.80 even though ether trounced bitcoin’s returns in 2021, as did many others. Li holds that those correlations will fall as well as other smart-contract platforms see more adoption. And there’s one more contributing factor he sees: ‘In centralized and dexes [decentralized exchanges] we are seeing more volumes in the stablecoin pairs instead of the BTC or Ethereum pairs.’
Perhaps, then, 2022 will be the year altcoins become more uncorrelated with bitcoin which, in turn, is uncorrelated with macro assets. In that case, we could be seeing a world where traditional portfolio managers will have to give the alts a once-over at the bare minimum just to have a diversified portfolio.”
“We (and others) believe that, in the near future, end-users will conduct the majority of their activity on L2. However, some applications need specific tailoring that may better be served by a new and separate layer: Enter L3!
L3 relates to L2 just as L2 relates to L1, where the compression benefit of L2 proofs is multiplied by the compression benefit of L3 proofs. In other words, if each layer achieves, for example, 1000X in cost reduction, L3 can reach 1,000,000X reduction over L1 — while still retaining the security of L1. Imagine, transactions for a fraction of one gas!
L3 promises hyper scalability, better control of the technology stack for various needs, and privacy, while maintaining the security guarantees provided by Ethereum (L1). The recursive concept it employs may be extended to additional layers for fractal layering solutions.”
“The recently proposed tokenomic changes are going to turn Yearn into a black hole for its own tokens, massively rewarding token holders and governance participators through what looks to be an incredibly strong flywheel. Under a current governance proposal which we expect to pass, 4 tokenomics revision stages have been laid out.
Yearn has already begun to use protocol fees accrued to the treasury to purchase YFI tokens from the market. These tokens will be used to reward YFI stakers under an xYFI model, which is stage 1 of the tokenomics revisions. This finally addresses the criticism surrounding a lack of value accrual to token holders, but this is only the beginning.
Stage 2 introduces a Curve-esque vote escrow model, wherein YFI token holders are incentivized with rewards in exchange for locking their tokens, with rewards increasing with the amount of time that tokens are locked.
Stage 3 introduces Vault Gauges. These gauges allocate rewards on a vote based system, and introduce the likelihood that veYFI token holders may earn external voting incentives. Stage 4 allows veYFI holders to earn even more rewards for “useful work” or contributing.
If this proposal passes, YFI has a clear pathway to rapid value appreciation driven by value accrual and simple supply and demand market dynamics.”