Web3 Wrapped: A Review of the Year 2022.

A thorough look back at the good, the bad and the FUD.

Image Credit: Web3 Wrapped 2022

So far, Web3 has remained as intriguing, fast-paced and disruptive as it started. 2022, better remembered as Crypto’s Coldest Winter ushered us into a new wave in the evolution of the third web. Coupled with a war, global inflation, economic instability leading to massive layoffs across major industries, a bear market and over $8 billion lost in hacks, 2022 was surely one for the books.

A lot of companies went under, many scams were exposed, the crypto river still runs red and now at almost every turn, you are sure to see a “Web3 is dead” banner flying high for the world to see. As painful as 2022 might have been for Web3 enthusiasts, thrilling as it was for long-time unbelievers and as disappointing as it was for upcoming scammers, Web3 still shows no signs of slowing down. And we’re all still struggling to catch up.

For us to understand where Web3 is heading, we have to find out where we currently are and how we got here. On your behalf, I’ve picked out some of the most interesting stories, characters, companies, numbers and plot twists of 2022. Feel free to mourn any losses, make predictions and look up any characters.

Disclaimer: No part of this article was written by an AI, not even ChatGPT. This was entirely written by a human with absolutely no help from any AI.

Now that that’s out of the way, let’s dive in.

2022: The Year In Review

The market started off pretty strong with a total market cap of a little over $2.2 trillion. As you can see from the chart below, things got pretty rocky down the road. But this wasn’t always the case. At the start of 2022, artists were making millions off NFT-based royalties, and everyone was bullish so much so that many major Web2 companies were trying to get a piece of the action by creating Web3-based products.

The joy was short-lived when the series of bankruptcies and hacks began, plunging the total crypto market down to $795.3 billion by the end of the year, 65% lower than the $2.2 trillion that brought 2021 to a close. According to data compiled by Anadolu Agency, the crypto market lost over $1.4 trillion in 2022.

Since the crypto market’s all-time high of $3 trillion back in November 2021, over $2.2 trillion has been completely wiped out.

Image Credit: Coinmarketcap

Amidst rumours of an imminent recession, Bitcoin failed to live up to expectations as a hedge against inflation due to the market collapse during the second quarter of 2022. The dominance of Bitcoin in the crypto market dropped as low as 40% and this collapse strongly affected other cryptocurrencies. Bitcoin climbed to an all-time high of $48,163 by the end of March last year but quickly dropped by 66% ending the year at $16,558.

The second largest cryptocurrency, Ethereum, closed the year with $1,198, 68% down from its 2021 finish of $3,677. Although Ethereum hit an all-time high of $3,889 at the start of 2022, it has dipped 69% since.

A major reason for this massive decline in the market includes the Luna crash, FTX fraud and the series of hacks/bankruptcies.

The Luna Crash: A firesale was ignited in the crypto market due to the instability of several crypto exchanges. This caused the market to lose $1 trillion in just 5 weeks leading to Bitcoin’s drastic $29,000 dip. TerraUSD, a stablecoin pegged to $1 dropped to $0.26 which sparked the first phase of FUD (fear, uncertainty and doubt) amongst crypto die-hards.

Luna, a sibling token for UST, was burned in huge amounts to support the tumbling token and help it adjust its supply. All efforts were in vain as Luna soon lost over 95% of its value in a matter of days and in a desperate move to gain control of the situation, the Singapore-based company sold a whopping $2.1 billion worth of Bitcoin in less than 2 weeks. The entire operation tanked after that.

FTX Scandal: This was definitely one of the most important events of 2022. Formerly a leading cryptocurrency exchange, FTX played a major role early on in 2022 by bailing out several crypto exchanges battling bankruptcy. This was long before it fell into a liquidity crisis in early November last year. After Binance, its major competitor backed out from a buyout deal, FTX collapsed.

This sent the crypto market into a cold winter as Bitcoin dropped below $16,000 in the same month. Things got messier when the SEC charged former billionaire CEO of FTX, Sam Bankman-Fried with fraud. On the 13th of December, two close associates Gary Wang, former CTO and co-founder and Caroline Ellison, former Alameda Researcher plead guilty to charges of commodities fraud, conspiracy, wire fraud and securities fraud.

After an interesting social media uproar mainly on Twitter, Sam Bankman-Fried was finally arrested and taken from the Bahamas to the District Court in the US. Although he is facing eight charges, Sam Bankman Fried was released on $250 million bail and his next court hearing is scheduled for tomorrow, January 3rd at the Manhattan Court.

Bankruptcies and Hacks: According to Chainanalysis, 2022 was the biggest year of hacks in crypto history with over $3 billion lost across 125 hacks. In October alone, $718 million was stolen from several DeFi protocols across a series of eleven well-executed hacks making it the highest month with hack activity.

Image Credit: Chainanalysis

From multiple online scams, hacker witch hunts, bankruptcies and fraudulent activities by CEOs, DAOs and global celebrities, the crypto community experienced the highest level of FUD in its short history.

Many cryptocurrency exchanges including FTX, 3AC, BlockFi and Celcius went under. On the 3rd of July, crypto hedge fund, Three Arrows Capital took the first hit and went bankrupt despite all efforts to keep its head above water. Its fall initiated a domino effect amongst other crypto exchanges and companies. A month later, renowned crypto lending firm Celsius also filed for bankruptcy. Many others followed, including digital asset lender BlockFi on the 28th of November shortly after announcing its exposure to FTX.

Other interesting highlights from 2022 include:

• Major VC funding included companies like POAP ($10M), Aztec ($17M), Near ($150M), OpenSea ($300M) and others with over $800 million raised in January alone.
• Frog Nation’s real founders were exposed as a criminal known as Michael Patryn.
• LinksDAO raised $10 million to buy a golf course.
• Robinhood launched its wallet and had 1 Million people signup for the waitlist.
• Twitter launched NFT profile pictures.
• FTX raised the third-biggest crypto fund ever with $2B.
• Ukraine got $15 million in crypto donations in support of the invasion back in February.
• Luna raised $1 Billion.
• Sequoia created a $500 million crypto fund to support the next big players in the crypto space.
• The biggest Ethereum conference, ETH Denver kicked off with a bang.
• Coinbase’s commercial dominated the Super Bowl.
• $325 million was stolen in the 2nd largest hack of all time from the Wormhole protocol.
• The Creators of Bored Ape Yacht Club, Yuga Labs acquired the NFT heavyweight collection, the Cryptopunks and Meebits.
• Stripe partnered with FTX and Nifty gateway to enable crypto-powered payments.
• Massive FUD amidst bankruptcies, hacks and scandals.

If there’s one thing the entire crypto community learned from 2022 which turned out to be a confirmed trend, it’s “Not your coins, not your crypto”.

Top 5 personalities in Web3 2022

From L-R: Sam Bankman-Fried, Elon Musk, Changpeng Zhao and Vitalik Buterin.

1. Sam-Bankman Fried aka SBF: Formerly dubbed “Crypto’s White Knight” early in 2022 when he pledged to offer a lifeline in the form of a few billion dollars to failing crypto companies, Sam Bankman-Fried is undoubtedly the star hero and villain of 2022. His saviour streak came to a surprising end when FTX went bankrupt and he was indicted for fraud. Two of his former co-workers pleaded guilty to all federal charges and SBF was eventually arrested. The trial for the former prince turned rogue begins tomorrow.
2. Changpeng Zhao aka CZ: The Binance Boss also popularly known as CZ is a well-respected personality in the crypto space. At the start of 2022, CZ became the richest person in crypto with a net worth crossing $96 Billion back in January before the bear market. His crypto exchange company, Binance has the largest community globally and his passion for inclusion and diversity as well as his funny tweets make him a community favourite.
3. Elon Musk: Although the Tesla titan is not directly involved in crypto, he was a very popular influencer in the niche early in the year, mainly on Twitter. His sense of humour, love for Dogecoin and larger-than-life personality on the social media platform not only earned him a cult-like following but also encouraged more crypto-centred conversations and the frequent use of his classic tagline ‘To the Moon’.
4. Vitalik Buterin: The Ethereum founder remained a favourite throughout the year by offering insights into the state of affairs regarding crypto and heralding the highly anticipated Ethereum merge.

Major Web3 Companies that progressed in 2022

Despite the multiple losses that Web3 has endured this year, a lot of strong projects were able to wither the storm. Companies like Binance, Mara, ThirdWeb, TheMilkRoad, Hashnode, The Graph, Polygon, Lens and Alchemy amongst many others were able to keep BUIDLing despite the massive dip.

DAOs were not left out of the action as well. Many scam DAO projects were uncovered and the entire DAO community was shaky. However, DAOs like DeveloperDAO, WomenBuildWeb3, LearnWeb3DAO and Vector DAO continued to provide value-driven services and accomplished major feats in their respective communities all year long.

2023 Predictions for Web3

1. Focus on community-driven companies: The broader Web3 ecosystem will continue to build out niche communities. Last year, Binance held a couple of events aimed at supporting its diverse community globally. Many web3 companies are also hiring more community-oriented roles like Developer Relations, Developer Operations and Community managers. I expect this trend to continue in 2023.
2. Expansion of decentralized infrastructure: I expect to see more decentralized projects outside finance this year. Last year we saw some DeFi projects on decentralized science and decentralized social media. Although still quite early, other projects such as decentralized storage and decentralized computing networks are expected to gain more ground.
3. Greater emphasis on security and privacy: 2022 had the highest amount of FUD in crypto history and with good reason. With the alarming number of hacks, scams and fraud across the ecosystem, the rise of more stringent and regulated security protocols should be expected. Third-party security audit firms will gain more traction as they will serve as a beneficial and effective line of defence against cyber-attacks.
4. Bigger Venture Capital activity: 2022 was a hub of VC activity for Web3 despite the cold winter. This trend is expected to continue as more industries adopt Web3 technology and more decentralized products go mainstream.
5. Development of more user-friendly & intuitive interfaces: As more developers continue to adopt and build in Web3, decentralized applications (dApps) will gain more traction. This will also bring a focus on the need for user-friendly interfaces.

Historically, 2022 will always be remembered as a turning point for decentralized technology and cryptocurrency. The industry is still picking up the pieces of a brutal year and many are still hopeful for the year ahead.

Muna Menuga is a note-worthy content strategist & writer in Web3, tech and finance. With a focus on decentralized technology and Web3, Muna is keen on sharing helpful resources and telling quality stories on the third web.