Bankless2022 Prediction: DeFi bull market returns, the Layer2 era begins, Ethereum becomes a trillion-dollar network
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Bankless2022 Prediction: DeFi bull market returns, the Layer2 era begins, Ethereum becomes a trillion-dollar network
2022 will be the year of DAOs—DAOs are the simplest way for people to participate in crypto with low risk. With continuous advancements in tools, onboarding, and compensation, DAOs will take off in 2022.
Navigating Web3 tides with focused insightsWritten by: Ryan Sean Adams
Translated by: Alex, TechFlow
Predictions Summary
1. The total market cap of crypto will reach a new all-time high (ATH) at $5 trillion. The bull market is not over. We are still in the long-term bull cycle that began in 2020 and 2021. This doesn’t mean prices will rise nonstop throughout the year, but we will definitely see new ATHs. Reaching $5 trillion in total market cap feels like a conservative estimate… or maybe even more?
2. The Ethereum 2.0 merge will happen. All research is complete, testnets are running—now it’s just debugging. All core researchers believe it will happen this year, and so do we. In 2022, we will say goodbye to Ethereum PoW.
3. Another nation-state will adopt Bitcoin. El Salvador launched as the first sovereign nation to adopt BTC in 2021. The first domino has fallen. Global fiat inflation is hitting countries hard, and central banks will have to seek alternatives. The Turkish lira is experiencing hyperinflation, and even global reserve currencies are reporting inflation of 5% or more. Non-G20 nations are being severely impacted and will look for hedges. BTC is the answer—at least for one country in 2022.
4. Ethereum becomes a trillion-dollar network. The merge, proof-of-stake, EIP-1559—all of these are converging into a perfect storm that will propel Ethereum to join Bitcoin as a trillion-dollar network. We speculate this will finally happen in 2022!
5. Total value locked (TVL) on Layer 2 reaches $25 billion. Layer 2 tokens are coming, and Ethereum gas fees remain an issue—all of which will make 2022 a pivotal year for Layer 2 adoption.
6. NFT sales reach $30 billion. In 2021, total NFT sales reached $15 billion. We expect this figure to double based on Coinbase NFT platform launch potential, OpenSea token speculation, and broader NFT use cases.
7. A DeFi protocol enters the top 10 market cap rankings. Last year we bet two DeFi protocols would achieve this. We were dead wrong. But we think DeFi will rebound this year and displace some weaker projects in the top 10. Potential candidates include: AAVE, UNI, YFI, COMP, SNX, MKR, and stronger DeFi 2.0 projects.
8. DAOs will purchase 8-figure IRL assets. This category is closely tied to ConstitutionDAO. DAOs will mature and find better ways to bid on and acquire real-world items, achieving major wins this year.
9. Michael Saylor buys more Bitcoin. We’re five days into 2022 and he still hasn’t moved.
Bankless Personal Predictions
Ryan Sean Adams – Founder
Layer 2 blockchain networks will perform well.
2021 Predictions Recap
Biggest winner of 2021: AXS
1. ETH burning begins post-EIP1559 – Correct
2. Internet bonds are born – Correct
3. Central banks will acquire Bitcoin – Correct
4. You’ll get texted – Correct
5. Digital yuan launches – Incorrect
6. Stablecoin market cap exceeds $250B – Incorrect
2022 Predictions
Bet on 2022’s biggest winner: Layer 2 blockchain network tokens
1. Crypto exceeds $7 trillion. Bullish on 2022—the crypto market cap will surpass $7 trillion at some point during the year. With that, a second central bank will publicly disclose holding crypto on its balance sheet (following El Salvador).
2. ETH price hits $10,000. Catalysts including the merge and L2 adoption will push ETH above $10,000. As the ecosystem shifts toward L2s, ETH gains the narrative of “exponential asset of L2.”
3. L2 enters top 10. At least two Layer 2 tokens will enter the top 10 largest crypto assets by market cap. At least three Layer 2 networks will surpass Ethereum L1 in active addresses and transactions (“The Great Migration”). At least two new tokens will be launched by Layer 2 blockchain networks.
5. Billions flow through cross-chain bridges. Bridge projects (e.g., Hop, Connext, Across) will launch tokens and achieve multi-billion dollar valuations (“bridging everywhere”).
6. BTC price hits $100,000. BTC gets a second wind and surpasses $100,000 at some point this year.
7. Web3 goes social. Decentralized identity finally shines in a breakout project (DeID). Most major social media platforms will launch NFT features, marking the beginning of their integration with public blockchains.
8. DeFi comes back. Ethereum DeFi tokens gain a second growth catalyst driven by L2 expansion and new use cases. DeFi TVL reaches $500 billion.
9. First crypto bank IPO. At least one cryptocurrency exchange or crypto-native bank will go public on a traditional stock exchange.
10. DAOs get weirder. A DAO makes headlines by purchasing something culturally significant for over $50 million. Politics discovers DAOs, and at least one sizable political DAO is launched. At least one social token or cultural DAO grows in value beyond $1 billion.
11. NFTs add extensions. NFT communities founded in 2021 launch games, TV shows, membership perks, and governance tokens.
12. GameFi builds niche markets. Independent games on L2s have a strong development year with notable breakthroughs.
David Hoffman – Founder
Lucas won’t let me predict ETH as next year’s biggest winner.
2021 Prediction Scorecard
Biggest winner of 2021: MATIC
1. An uncollateralized/algorithmic stablecoin reaches $1B market cap – Correct
2. An uncollateralized/algorithmic USD stablecoin also blows up – Correct
3. Tokenized real-world assets continue underperforming as a sector – Correct
4. UDS yield on Ethereum maintains over 10% APY for most of the year – Correct
5. A major game studio announces plans to integrate NFTs into their games – Correct
6. None of the core blue-chip DeFi protocols get hacked – Correct
7. Yearn loses user funds due to strategy errors – Correct
8. Hype around decentralized staking-as-a-service providers – Correct
9. Discord becomes the primary platform for crypto discussions – Correct
10. Tron adopts XRP's approach, one way or another – Correct
11. Ethereum’s dominance in stablecoins remains unchallenged – Incorrect
12. Social token mania proves unsustainable – Incorrect
13. No significant new L1 emerges – Incorrect
14. PC usage loses dominance to mobile – Incorrect
15. MetaMask continues dominating PC-based DeFi usage – Incorrect
16. Libra (Diem) launches – Incorrect
2022 Predictions
Bet on 2022’s biggest winner: MATIC
1. “Impending bear market” will be frequently discussed until it becomes a meme. The bear market won’t come.
2. New crypto entrants who don’t care about decentralization will continue to scale.
3. The merge will happen. ETH APY will be <17% in the first few weeks, then quickly drop to more sustainable levels (<10%). Staked ETH will exceed 15 million. ETH price will break any previous ATH within 3 months after the event.
4. Ethereum competitors will attempt to fix their monetary supply schedules. Priority one: stabilize their chains.
5. Some Ethereum competitor chains will develop meaningful fee markets. This won’t solve their native assets’ high inflation rates.
6. Optimism and Arbitrum will both grow into thriving metropolises. Gas optimizations and gradual network rollouts attract massive developer attention and user traction, while Ethereum loses ground to competitors.
7. EVM equivalence will give Optimism extra long-term tailwinds to overcome its slower start, possibly making it the dominant form of Optimistic Rollup.
8. NFT flipping will become a craze among degenerates and trend-followers. Flipping becomes a fashion race.
9. RAI gains adoption due to persistent USD inflation.
10. Bored Apes flip Punks, further proving nothing wins by standing still. Punks will still be 100x cooler than they are now.
11. 'Web3' becomes a household term, widely known as a populist reaction against current internet institutions.
12. For similar reasons, the "bankless" meme will also be adopted by a smaller but highly engaged group.
13. Politicians will step forward to defend Web3 protocols to gain support and funding. Some may even defend Web3 because it’s the right thing to do!
14. Bankless will finish the year without missing a single Monday podcast, Tuesday livestream, or Friday weekly recap—just like in 2021. Same goes for newsletters.
Lucas Campbell – Editor
I realize I’m bad at predictions.
2021 Predictions
Biggest winners of 2021: FWB, BAYC
1. Retroactive distributions bring high profits to power users – Correct
2. Uniswap’s annualized trading volume hits $1T – Incorrect
3. Value of crypto art sales exceeds $1B – Incorrect
4. A DAO-related black swan event occurs – Incorrect
5. DPI market cap exceeds $1B – Incorrect
6. DeFi derivatives thrive – Incorrect
2022 Predictions
Bet on 2022’s biggest winner: Music NFTs
1. The flippening happens. Momentum is on the ETH/BTC chart. Combined with the merge, EIP-1559, staked ETH, DeFi demand, and NFT interest, ETH faces a massive supply-side liquidity crisis that propels it to #1. Whether it stays there is another question.
2. Creator economy hype cycle. Last year we saw NFTs and waves of artists launching their own NFT projects. I believe this trend will continue with Music NFTs (watch Catalog and Sound.xyz closely) and a hype cycle around social tokens.
3. Collectors and cultural DAOs go wild. You can launch a DAO for almost anything. We’ll see communities form overnight with eight-figure capitalizations. Constitution DAO, LinksDAO, Gnar Collective—all are on this path.
4. DeFi comes roaring back. Absolutely did not see 2021 as a down year for DeFi. I think we’ll rebound on improved tokenomics (projects adopting veTOKEN models) and a trend of protocol mergers as the industry consolidates.
5. Airdrops keep coming. Airdrops continue. This was the only correct prediction I made last year! This time, though, I expect distribution designs to become more complex/strict—airdrops won’t be as easy or may require unlocking (e.g., providing valuable services to protocols to qualify). Personally, I hope we see airdrops for Layer 2s and PFP ERC20s (BAYC, Cool Cats, etc.) this year.
William M. Peaster – Metaversal
We love jpegs.
2021 Biggest Winner: AXS
Bet on 2022’s biggest winner: RON
1. TVL in Ethereum DeFi will x2. In 2021, TVL in Ethereum DeFi surpassed $100B for the first time. We’ll see that number hit $150B by April 2022 and $200B by year-end.
2. TVL in Ethereum L2 reaches $100B. According to L2Beat, Ethereum L2 TVL currently stands at over $6B. With new token incentives and UX improvements driving a major DeFi migration to rollups, this value is expected to surge nearly 20x in the new year.
3. A top 50 DeFi project goes bankrupt. Amid old and new challenges, a prominent DeFi project will effectively shut down in 2022 as its problems appear insurmountable.
4. U.S. politicians continue warming up to Web3. U.S. lawmakers will increasingly embrace the crypto economy as they recognize its vast potential—e.g., how the stablecoin industry could serve as a force multiplier for the U.S. dollar over the coming decades.
5. NFT sales reach $50B+. By end of 2021, all-time NFT sales had reached $13B per NonFungible. As NFTs go mainstream, this value will grow nearly 5x next year.
6. Cool Cats ranks among top 3 NFT brands. The Creatures expansion pack will be a moment for Meebits / Mutant Ape Yacht Club and spark renewed interest in Cool Cats. This surge will temporarily push Cats (with ~60k ETH in volume to date) into the top 3 most-traded NFT projects of all time, behind only CryptoPunks (~740k ETH) and Bored Apes (~250k ETH).
Ben Giove – Analyst
2021 Biggest Winner: RARI
Bet on 2022’s biggest winner: GMI
1. Five non-Ethereum L1 networks have TVL exceeding $50B. My guesses: Arbitrum, Optimism, ZK Sync, Solana, Terra.
2. Structured products (especially options vaults) become popular in DeFi. Driven by degens seeking alternative yield sources beyond token emissions.
3. Tokens for liquid staking protocols like Lido and Rocket Pool outperform pre-merge. As a result, each will see TVL exceed 11 digits.
4. L2s fundamentally change Ethereum DeFi’s competitive landscape. Native projects and early adopters on L2s outperform and replace existing L1 players.
5. Nearly all major DeFi protocols redesign their tokenomics. Personally, I think many will shift toward CRV-like veModels.
6. More protocols gamify their UI. Following the success of DeFi Kingdoms, others will follow suit, making DeFi more fun.
Michael Wong – Memelord
2021 Biggest Win: Pudgy Penguins
Bet on 2022’s biggest win: Wanderer NFT
1. Core DeFi blue-chip apps enter top 20 crypto market cap, accelerating L2 expansion and adoption. AAVE and Sushi will shine due to multi-chain deployments.
2. Top CEX fiat gateways will offer Ethereum L2 exits. Preference for cheap transaction fees will drive massive user intent and trading volume onto Layer 2!
Carly Reilly – Overhyped Jpegs
2021 Biggest Winner: VeeFriends
Bet on 2022’s biggest winner: Overhyped JPEGs podcast viewership!
1. NFT market sees a sharp downturn—possibly mid-year—and some PFP projects never recover.
2. Digital art and generative art markets surge, taking a larger slice of the contemporary art pie (measurable via auction house sales).
3. Streaming services will buy rights based on NFT IP to produce films or TV shows.
4. New NFT marketplaces emerge and begin competing with OpenSea. (Not necessarily Coinbase)
Frogmonkee – BanklessDAO
2021 Biggest Winner: FWB
Bet on 2022’s biggest winner: GMI
1. 2022 will be the year of DAOs—DAOs become the easiest low-risk way for people to participate in crypto. With improving tools, onboarding, and compensation, DAOs will take off in 2022. This doesn’t necessarily mean their tokens will moon.
2. SubDAOs go mainstream—DAOs will begin spawning working groups as subDAOs. We’ll see interesting tokenomic experiments aligning SUBDAOs with their parent DAOs.
3. Some DAOs will go bankrupt, others will be acquired. In certain DAOs, treasuries or community activity will dry up. We may see larger DAOs attempt to acquire the tech or human capital of dying DAOs, possibly via token mergers.
Best Predictions from Bankless Nation
We’re excited about our predictions for 2022. Let’s grab a drink with Jack. Are you GMI?
Some solid predictions, but not reckless?
Michael Saylor buying ETH? That would be the biggest twist of 2022.
But what if they launch a token with incentive programs?
We're betting on Polymarket.
Bankless HQ Predictions
We hit all our predictions last year… just saying. Here are our 2022 goals:
1. Ray Dalio appears on the Bankless Podcast
2. Bankless Nation grows to 500,000 members
3. Podcast downloads reach 25 million cumulative
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