Several projects across the Defi ecosystem are running integrations to make their networks compatible with Ethereum Virtual Machines (EVMs). Due to this, interoperability is becoming one of the main themes for the cryptocurrency market in 2022.
This has also created a need and new market for multi-(block)chain bridges. MultiChain (MULTI) is one of the top volume cross-chain bridges. It faciitates cryptocurrency transfers and exchanges across blockchain networks. The blockchain space is set to be transformed from an “interesting new technology” to a multi-/cross-chain solution.
InsurTech and particularly DeFi insurance protection have come out as another essential trend for 2022.
2021 proved to be a great year for international cryptocurrency marketing as well as the blockchain ecosystem says Brian Colombana. The capitalization smashed all other records that came close to $3 trillion, and there was a dramatic price increase. That aside, El Salvador was the first country to say yes to Bitcoin as a legal tender.
Are you wondering what can you expect for the year 2022? In this article, we will talk about the top 5 DeFi growth trends by Brian Colombana and other experts.
1. Bitcoin Stays King
Even though the dominance of Bitcoin went down by 20% in 2021 and the investors started to check out other options such as Polkadot, Solana, and Ethereum, Bitcoin to date is the “heavy” asset. The Bitcoin dominance gets calculated as the ratio of the market capitalization and the overall crypto market cap. Even Altcoin prominence went up to 30% to 60% between the years January 2011 and January 2022.
The long-term holdings in Bitcoin went up by 16% during 2021. Simultaneously, the short-run holding supply went down by about 32%. The outcome is what is known as “Sovereign Supply,” which went up to a maximum of 13 M BTC. And it is this macro consolidation that had raised the optimism in Bitcon.
2. Interoperability and Cross-Blockchain Bridges
Cross-chain bridges connect various blockchains and enables the users to send the cryptocurrencies from a single chain to the other. At the time of writing, there are about 20+ popular bridges in existence. Also, the cross-blockchain link protocols like Rune will always enable increased peer-to-peer swaps. And as of now, the majority of bridges get connected to the Ethereum network because of the Ethereum Virtual Machine (EVM) compatibility, such as the Binance Smart Chain Bridge, Tezos Wrap Protocol Bridge, Avalanche Bridge, Solana’s Wormhole Bridge and the Telos-AnySwap Bridge. The Telos-AnySwap bridge is looping the revolutionary Telos EVM (tEVM) into a network of top EVM chains. AnySwap is an industry leader in bridging technology and at the time of writing the most utilized bridge in crypto. Anyswap has recently been rebranded to Multichain (MULTI).
AnySwap/ MultiChain’s Architecture
Source: Mochi.Market / Medium
In totality, the possibilities for the cross-blockchain is anticipated to play an effective role says Brian Colombana. The multi-blockchain projects and the interoperability will also become essential elements of the DeFi industry.
“According to experts, there will be increased use of cross-chain bridges in 2022 between layer-1 and layer-2 blockchains. – Paso Robles Daily News”
3. Auditing, DeFi Insurance & Transactional Privacy
Code auditing, extra layers of insurance, protection & security as well as improved transactional privacy initiatives need to become the norm in 2022.
“Numerous auditing firms have established their presence, including CertiK, SlowMist, and others. An audit can help uncover any bugs or issues before smart contracts are deployed in a live environment. As auditing firms become better funded, they will help eliminate more risks in the blockchain industry. However, it remains up to developers and coders to get their code vetted, and not everyone will do so.
Insurance protocols may provide an extra layer of protection and security. Several such protocols exist in DeFi today, and they primarily focus on mutual fund pools or financial derivatives. Unfortunately, their growth is hampered by high fees, KYC requirements, no cross-chain support, and inefficient capital use. Nevertheless, per the report, attracting institutional players will require better and more efficient insurance protocols.
A final aspect to consider is transactional privacy. Public blockchains provide pseudonymity, but not privacy or anonymity. Even the privacy computing protocols – Manta, Oasis, zkSync, etc – sacrifice decentralization in favor of computing power. Demand for transactional privacy will increase as the broader blockchain and cryptocurrency grows, requiring more and better privacy computing initiatives. – BeInCrypto”
Uno Re (UNO), the world’s first DeFi insurance protection program provides excellent layers of DeFi insurance for end users and dApps. They recently partnered with Telos (TLOS) becoming the preferred insurance provider for projects building on the Telos platform and assets held by nodes operating on the Telos EVM (tEVM).
As Douglas Horn, the white paper author and chief architect of the Telos blockchain just shared today “Blockchain insurance is a new frontier in DeFi that can make other types of DeFi safer and more profitable….” .
Blockchain insurance is a new frontier in DeFi that can make other types of #DeFi safer and more profitable. Get a jump on this by checking out @UnoReinsure on @HelloTelos https://t.co/HiyDXnP94c
— Douglas Horn (@Douglas_Horn) March 1, 2022
4. Liquidity And DeFi
The objective of DeFi is to offer financial services without any centralized intermediaries via the automated protocols on the blockchains. This centers around two crucial elements: protocols for lending, trading, and investing and stablecoins. And, this has ample potential and can get used to complement conventional finance. In 2021, the DeFi ecosystem increased sevenfold on an annual basis, with a market dominance of close to 17%. Also, the number of users resorting to dApps increased by 592%. The Inflation-Adjusted Total Value Locked in the DeFi space is close to $150 billion.
The Inflation-Adjusted Total Value Locked is calculated by calculating the total volume of tokens locked into a dapp, but locking all token prices relative to USD over the previous ninety days. – DappRadar
5. Regulation
According to Brian Colombana, as the market for cryptocurrencies continues to grow rapidly that might avert institutional investors as the asset class could be seen under a “legal investment scope”, even though the full-fledged regulations are still there. One could say that the bank-like regulatory set-up for the stablecoin issuers might get revised in the year 2022.
Hence in totality, we can anticipate there will be a wider adoption of the blockchain technologies. There will be a scope for tracking, digitizing, and monitoring several procedures, including medical data usage, attributes, identities, authenticating suppliers, money transfers, code auditing, transactional privacy and more. Hence, the scopes are multi-layered and endless using this technology.
Via this site: Investing in Cryptocurrency – The Essential Predictions for 2022 by Brian Colombana
