Article Brief
The second-largest crypto after Bitcoin, Ethereum has been dominating the altcoin market since its creation. In the highly anticipated Ethereum 2.0 upgrade, we expect to see significant progress by 2022. This year may not only bring Ethereum 2.0. There are also DAOs, ERC20 tokens, DApps, NFTs, and Defi platforms on the blockchain, all of which may surprise us soon.
To Begin — In its highly-anticipated update, Ethereum 2.0, the altcoin giant and second-largest crypto are set to change its consensus algorithm immensely. It is unlikely that Ethereum 2.0 will be the only highlight of the Ethereum blockchain in 2022, as Ethereum is also home to many DAOs, ERC20 tokens, DApps, NFTs, and Defi platforms, all of which may present us with surprising developments in the coming months.
Integrating Ethereum 2.0: a step in the right direction
The most anticipated event of the year for the entire crypto market will be Ethereum’s move forward with Ethereum 2.0. This upgrade could lead to Ethereum overtaking Bitcoin, a phenomenon known as “The Flippening.”
In Ethereum 2.0, there will be a change of consensus algorithm: Ethereum will go from Proof of Work to the more environmentally-friendly Proof of Stake consensus algorithm. Aside from lowering environmental costs, this switch will also make the network faster and cheaper because it will increase Ethereum’s TPS (transactions per second) by about 10,000, from its current 30 to 10,000. This improvement will likely reduce Ethereum’s high transaction fees, thereby solving the network’s congestion issue.
This altcoin giant is going to take some time to upgrade, but we’ll see it taking a step forward in its plan this year. As the name implies, this step is called “The Merge” and is scheduled for the first half of 2022. It will “merge” Ethereum’s mainnet with Beacon Chain.
On December 1, 2020, Beacon Chain was launched, and this merger is the final step that will allow Ethereum to transition to PoS while also preparing it for staking and shard chains.
The power of ERC20 tokens
In the Ethereum blockchain, the Ethereum Request for Comments 20 — ERC20 short-token standard is a technical standard for smart contracts used for implementing tokens. Until ERC20, cryptocurrency exchanges built ad hoc bridges to allow tokens to be exchanged across platforms. If smart contracts wish to run on the Ethereum blockchain, a system that enables interoperability within smart contracts, they have to comply with the ERC20 standard, which is comprised of six rules.
As long as a smart contract complies with the 6 rules of ERC20, it can launch its token on the blockchain, which will allow third parties and applications to access the whole related infrastructure and be able to execute transactions, connect wallets, and access information. By adhering to the ERC20 standard, smart contracts will behave predictably, and there will be no need for bridges between platforms.
The number of ERC20 tokens in circulation is 486,408, and their popularity is rising.
Tokens that power the smart contracts behind DApps and DeFi platforms will also play a significant role in accelerating the adoption of blockchain technology through DApps and DeFi platforms. Ethereum’s use cases are likely to expand even further with ERC20 tokens starting in 2022, especially in everyday life.
The focus will be on DAO and DeFi
In 2022, we are likely to hear terms such as DAO and DeFi a lot. An Ethereum-based community owned by its members, based on decentralized leadership and code-based rules, is referred to as a DAO (Decentralized Autonomous Organization). Smart contracts are digital representations of classic contracts, self-enforcing and self-enforcing.
A smart contract for the DAO will only be able to be altered once it has been put into operation on the Ethereum blockchain. All proposed changes must be put to a vote. As DAOs are decentralized, all decisional power rests with the members, whose votes determine whether changes will be made to the network.
There have been a lot of DAOs appearing on the Ethereum network and today they’re seen as an alternative to traditional organizations, as well as traditional businesses and work models. Some believe DAOs could even change the way companies operate as we know it.
Due to the transference of power from the internet to users, many decentralized applications (DApps) rely on Ethereum as well. In order to create DApps, we have to combine smart contracts, a cryptocurrency, a blockchain, and an app. Decentralized applications (DApps) are playing an important role in the development of DeFi. Even though DApps are new, they are already disrupting traditional finance by offering financial services through cryptocurrency, such as lending, borrowing, and executing transactions and earning.
There are many uses for decentralized applications that go beyond decentralized finance: you could install a DApp on your laptop, smartphone, social media, browser, game, job platform, etc. It wouldn’t be surprising for Ethereum in 2022 to follow DApps and DeFi’s upward trend.
The rise of Ethereum and NFTs
NFTs have been the talk of 2021, and this trend is not about to slow down anytime soon. The NFT world continues to attract famous artists and personalities: for example, Eminem recently purchased a Bored Ape for 123.45 ETH, which translated to $462,00 at the time of purchase. Several NFT marketplaces are hosted on the Ethereum blockchain, including OpenSea, the largest market in terms of trading volume, which was founded in 2022 with a whopping $300 million in funding.
In addition to changing the landscape with their application to digital art, NFTs can also serve as a means of representing ownership of any digital asset, and Ethereum is betting on them to influence the future of decentralized finance, for example through NFT-backed loans and fractional ownership, with the latter currently under construction.
The NFT hype is not expected to slow down in 2022, and we can expect NFTs to play a prominent role in expanding Ethereum’s mainstream adoption during the months to come.
Final Thoughts
Although Ethereum is still regarded as the biggest altcoin, it will likely face some serious competition in 2022 from Solana, Near Protocol, and Polkadot. Since Ethereum is a blockchain, it is also a popular smart contract platform for DApps and DeFi.
These other blockchains are capable of providing a higher number of transactions per second and lower transaction fees than Ethereum even without Ethereum 2.0 and Proof of Stake yet to become official. Despite Ethereum having the greatest number of active developers, blockchains are increasingly establishing themselves as viable alternatives and we might see a strong challenge to ETH’s dominance by 2022.
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