Cascading failures, strengthened regulations, NFT disinterest, binary dominance, declining values, Merge Ethereum and serial hacks. Back to a eventful year for the crypto.
The sector of crypto follows cycles. 2022 undoubtedly falls into a so-called episode of bear market, and winter too. This new cycle started in late 2021 and has been extended ever since, with critical episodes triggered and aggravated by big failures.
These industrial failures are for many the consequence of bad practices previous one. Invisible or hidden during the rising market, proved catastrophic as values fell. These wrecks require a transformation deep into this ecosystem.
Earth, 3AC, Celsius…predictable claims?
The winter of cryptocurrencies has been fatal to many of the major players in the market, too exposed. This is especially the case with Capital of the three arrows, placed in judicial liquidation in the month of June. With the fall of 3AC, there are others domino which will then fall, more or less quickly, of which Digital journey (July) or BlockFi (November).
The trigger for it series of failuresit is undoubtedly the collapse of the ecosystem Land. Its algorithmic stablecoin TerraUSD – the third largest stablecoin on the market at the time – did not survive the winter, quickly losing its peg to the dollar and taking LUNA with it. The promise of 10% and 20% returns from these tokens has proved unsustainable. Tens of billions of dollars have gone up in smoke, colossal losses for retail investors and institutions like Galaxy Digital.
But the failures chain they are not just the consequence of a sharp drop in cryptocurrency prices. They also reflect a lack of risk management and bad practices. This is especially evidenced by the Celsius and FTP extension.
FTX, a giant with feet of clay
The unexpected collapse of FTP extension it was the culmination of an already grueling year for digital coin holders. The exchange founded by Fried Sam Bankman it filed for bankruptcy in November and may have more than a million creditors.
The former cryptocurrency star is currently awaiting trial. Accused in particular of fraud and money laundering, he faces a heavy prison sentence.
Valued at more than $30 billion at the start of the year, FTP extension it positioned itself as the second largest cryptocurrency exchange in the world in terms of trading volume. Its sister company, Research Alameda, meanwhile, has been a major market maker in the crypto space. The rout of him caused a drop in liquidityexacerbated by losses suffered by other market makers following the FTX bankruptcy.
Binance: growing but contested domain
With a 80% market share. on traded assets, Binance reign supreme in the market. And the collapse of rival FTX, to which its CEO Changpeng Zhao (Czech Republic) contributed largely by publicly declaring to sell all of its FTTs, it has only accentuated this dominance.
Dominant, the exchange also aims to be on the stable coins. Since September, USDC, TUSD and USDP are automatically converted to BUSDyour token.
But to take on the role of White knightthe cryptocurrency stock market must forget about business, the liberties taken with regulation, and demonstrate transparency. In this regard, Binance is still far from establishing its dominance by setting an example. And in a strong climate challengethe company will have to provide commitments, e more than evidence of reservations according to a disputed method – with which Mazars distances himself.
MiCA: Europe as an example of cryptocurrency regulation
After long discussions and compromises, theEurope finally managed to find common ground on the regulatory framework for crypto-assets. Thus, at the end of June, under the French presidency, the European institutions signed a provisional agreement on MiCA regulation. The finalization will take place a few months later. In October the European Council voted yes on a definitive version of the text.
However, not all tokens are regulated by MiCA. In fact, I’m out of bounds for the moment i NFTs and DeFi. However, the European Commission is now interested in overseeing decentralized finance. From July the European Central Bank it encouraged EU states to bring MiCA into force earlier and to harmonize their legislation. And since the FTX bust, central bankers are raising their voices.
Ethereum makes its PoS revolution with The Merge
This is one of the great sagas of 2022 – the Ethereum merger or The fusion. Two chains have ceased to coexist, one Pow and the other POS. In fact, the second capitalization blockchain network has switched to the mechanism Proof of participation in the month of September. It differs today from Bitcoin, which remains Proof-of-work.
If adopting PoS, Ethereum raises questions about its level of decentralizationHowever, the network has made significant progress on the environmental front. And the blockchain co-founded by the young developer Vitalik Buterin still has updates to finalize, including The Scourge or The Purge.
Ronin – the most devastating hack
Over 600 million dollars. It was a blow to roninthe popular Ethereum sidechain from Sky Mavis, the publisher ofAxie Infinite. The network was a victim in 2022 of a piracy of scale. Cybercriminals seized 173,600 ETH and 25.5 million USDC. The worst hack recorded this year, but not the only one.
2022 was one of the worst years – if not the worst – in the history of cryptocurrencies. And this especially applies to hacks, which are very numerous in the Challenge. The above infographic includes the top hacks that marked out the year. The most important appear in red – see full-size image.
Time jump of 2 years for Bitcoin
It is a step back two years that the bitcoin price in 2022. Today, and for weeks now, the price of the first cryptocurrency is around $16,000.
Last year, bitcoins was racking up records, rising to nearly $70,000. A year later, the trend has radically reversed. Expert BTC several episodes of decline in 2022, most recently in mid-November after the FTX debacle.
Since its all-time high in November 2021, the token has lost approx 70% of its value. By comparison, some altcoins, such as Solana (SOL), are experiencing losses of more than 95%.
The correlation between Bitcoin and traditional stock markets has strengthened this year, making the upheavals of the queen of cryptocurrencies more predictable. Long considered an asset that can serve as a safe haven,” digital gold now it acts more like a well at risk.
End of the NFT hype
With cryptocurrency prices declining, the value of non-fungible tokens of course also decreases. the NFT market really cooled down last spring after the successful land sale of The Yuga laboratoriesthe startup behind the famous Bored Ape Yacht Club collection.
While most speculators ended up capitulating following the price drop and enthusiasm, big brands and companies have continued to explore the possibilities offered by NFTs This year.
Web2 giants like it Half (formerly Facebook), Twitter and Shopify have integrated these tokens into their platforms. Starbucks recently launched an NFT-based loyalty program. Warner Bros, LG, Netflix or even Samsung also see interest.
Many sports brands including NikeEven , Lacoste, Adidas, Puma and Decathlon have dived into this space in 2022. Even luxury houses such as GucciLouis Vuitton and Prada offered token collections this year.
In France, the Casino group has conducted several experiments in this area. For experts, the NFTs they are an opportunity for brands to build their digital independence.
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