DQYearly: 2023 Edition
The good, the bad, and the ugly in 2022, and what to expect in 2023
Hey Questers,
2022 was a wild wild ride for the blockchain industry. We saw it all: from record-breaking bull runs to devastating crypto winter, from the rise of NFTs to the fall of crypto kings. It was like a soap opera, but with more code and less drama (or maybe more drama, depending on who you ask).
Let’s start with the highs. We saw a surge in institutional interest in crypto, with big names like Meta, Twitter, Reddit and Starbucks. NFTs became the hot new thing, with digital art selling for millions and even meme tweets fetching a pretty penny. It was a great time to be a crypto millionaire, let me tell you. But just as we were getting used to the good times, the crypto winter hit hard. The Terra-Luna crash wiped out $60 billion in market value and left retail investors feeling burnt. The collapse of 3 Arrows Capital and FTX sent shockwaves through the industry and exposed some unsavory practices by some of the biggest players. It was like watching a house of cards fall apart, but with more maths and less cards.
But let’s not dwell on the past, folks. As the old saying goes, “When life gives you lemons, make a NFT out of them and sell it for a fortune.” And that’s exactly what we’re going to do in 2023. We can expect to see more mainstream adoption of crypto and blockchain technology, as traditional companies start incorporating Web3 elements into their services. DeFi will continue to grow, with permissioned pools and decentralized compliance protocols becoming more popular. And let’s not forget about gaming — it’s going to be a big driver of mass adoption, as more high-quality games hit the market and bring in a wave of new users. So, get ready to see your favorite games go from pixelated to tokenized, and your virtual worlds go from flat to decentralized. It’s going to be a wild ride, folks. Buckle up and hold on to your private keys!
What Happened
22 Trends of 2022
A look at the trends which dominated the year 2022. From DeFi to NFTs, and everything in between, we’ve got the inside scoop on what’s hot (and what’s not). Be ready for the next big thing in 2023!
1. Eth Staking -The year 2022 is remembered as the year of The Merge in Ethereum history, where there was a significant increase in staking on the beacon chain, with almost 7 million ETH deposited and 215,000 validators added, resulting in 13.14% of the entire supply being staked and propelling the network to a successful Merge and relatively seamless switch to proof-of-stake, with Lido remaining the leader in the liquid staking space.
2. Rise of L2 Rollups -In 2022, L2 rollups, such as Optimism and Arbitrum, experienced significant growth, with active addresses and daily transactions increasing throughout the year, reaching 1 million by Q4, and L2s collectively using 3%+ of total gas on several occasions, earning significant revenue, taking computational pressure off L1, saving users gas costs, making DeFi and NFTs more accessible, and is expected to continue in 2023 and beyond as they become an increasingly important part of the ecosystem.
3. Flight to self-custudy -
A recent analysis of crypto assets market revealed that the trust in centralized platforms such as LUNA/UST, Celsius, Voyager, Blockfi, and FTX/Alameda were damaged and led to a flight to safety in non-custodial wallets, but the long-term effects on the Ethereum ecosystem and the broader crypto space is unknown and will need to be monitored in 2023.
4. Bitcoin leaves Ethereum -The trend of Bitcoin leaving Ethereum continued throughout 2022, driven by the largest platform, wBTC, with a market cap dropping from $16 billion in late 2021 to $3.1 billion by the end of 2022, with the current macro environment and widespread calls for self-custody not favoring a return in 2023.
5. NFT Financialization -
2022 saw the growth of NFT lending platforms such as NFTfi, BendDAO, Pine, Arcade, JPEGd, Drops & X2Y2, with market leader NFTfi seeing explosive growth in Q1 and increased competition throughout the year, and the trend of NFT financialization is expected to continue in 2023 and beyond.
6. Investors leave DeFi -Investors withdrew their stables from smart contracts, with the share of DAI, USDC & USDT held by smart contracts plummeting throughout the year with noticeable spikes.
7. OpenSea challenged, retains -In 2022, new competitors emerged in the NFT marketplace space and challenged OpenSea’s dominant position with platforms like X2Y2 and Blur gaining market share and attracting unique users, while OpenSea retained its lead in terms of trades and fees earned.
8. On-chain Leverage -The amount of on-chain leverage significantly reduced in 2022
9. Wash Trading -
In 2022, wash trading accounted for 58% of NFT trading volume, primarily driven by new marketplaces offering token rewards for trading, and this trend is expected to continue in 2023 unless new strategies for incentivizing usage that do not encourage market manipulation are implemented
10. The Rise of Web3 Social -2022 saw a rising tide of web3 platforms using crypto tech for unique social use cases, with user growth on key players like ENS & POAP and new players like Galxe and Lens emerging to diversify the market and make waves in 2023
11. Big Brand Successes -In 2022, big brands like Nike, Dolce & Gabbana, Tiffany, Gucci, adidas and Time Magazine jumped into the NFT game, with some seeing staggering success, making over $185 million in Nike’s case, proving that NFTs are here to stay in 2023 and beyond.
12. Airdrop Failures -Airdrops failed to live up to their promises in 2022, with recipients mostly dumping their tokens and not participating in governance.
13. Centralized Stablecoin Victorious -The year 2022 saw a decline in the use and supply of algorithmic and decentralized stablecoins, with users moving towards more established centralized stablecoins like USDT, USDC, and BUSD, which saw only a 1.6% reduction in supply.
14. Real World Assets -In 2022, DeFi platforms like MakerDAO and Goldfinch Finance started to blend with real world assets, with an increase in investments in treasury and corporate bonds, and loans collateralized by off-chain assets, showing growth throughout the year and could potentially accelerate in 2023.
15. CEX Transparency -Centralized exchanges are becoming more transparent in 2022 by disclosing their wallet addresses as “proof of reserves” in an attempt to regain clients trust, but these steps alone aren’t enough and we hope to see the use of Zero-Knowledge Proofs (ZKPs) from audits to have the full picture of proof of solvency in 2023
16. Music NFTs performed well -
Music NFTs hit the right note in 2022, with platforms like Sound hitting all the right chords and proving that they are here to stay in 2023 and beyond!
17. Sanctions + bans -Privacy took a hit in 2022 as the US government smacked down on Tornado Cash, causing a drop in activity and increase in banned addresses on centralized stablecoin platforms, brace yourself for more government crackdowns and more compliance in 2023
18. ZK Adoption -ZK rollups, which use zero-knowledge proofs for privacy and scalability, had a strong 2022 with record adoption and growth, positioning them to become a major force in 2023.
19. Rise & Fall of move-to-earn -The trend of “move-to-earn” or StepN saw a spike in popularity in 2022, with users participating to earn GST rewards, but the trend saw a decline by the end of the year, with active users dropping by 90% from their peak
20. Perpetual Protocols -Perpetual futures, aka “perps”, became a popular financial instrument in DeFi in 2022, with daily users growing 30–40x and numerous new platforms launching, with Arbitrum emerging as a key player and GMX leading in volume and users, signaling that as DeFi matures, we can expect to see more exotic trading instruments in 2023.
21. DEX activity -Decentralized exchanges (DEXes) had a relatively uneventful year in 2022, with weekly trades and daily unique addresses declining throughout the year, and Uniswap remaining the market leader. Keep an eye out for potential comeback in 2023.
22. MEV Changed -In 2022, MEV activity on Uniswap dropped off but still drove a significant portion of volume and new strategies like JIT liquidity emerged, with Wizards tracking MEV trends into 2023 and beyond.
Special mention
Biggest winner of 2022- Polygon
In 2022, the Polygon network saw significant growth with an increase in smart contracts deployed, contract creators, and unique addresses, as well as partnerships with major companies such as Adobe, Disney, Meta, NFL, NuBank, Reddit, Robinhood and Starbucks, driving mainstream adoption of Web3. The team at Polygon companies also developed new technologies such as Polygon ID, Polygon Supernets, Polygon Avail and Polygon zkEVM to address the next set of challenges in the industry. 2023 is expected to see continued growth and new use cases for blockchain technology, specifically in the gaming industry with a focus on compelling experiences and better user onboarding and experience.
The 10 biggest crypto funding rounds of 2022
1. Yuga Labs: $450M
2. ConsenSys: $450M
3. Polygon: $450M
4. Circle: $400M
5. FTX US: $400M
6. FTX: $400M
7. Animoca Brands: $358.8M
8. NEAR Protocol: $350M
9. Amber Group: $300M
10. Mysten Labs: $300M
What can/will Happen
Predictions and trends of 2023
- DeFi with Real World Assets (RWA)
It seems like the world of DeFi is starting to take baby steps towards integrating with the traditional financial world. Platforms like MakerDAO and Goldfinch Finance are leading the charge in allowing users to take out loans fully collateralized by off-chain assets. This trend is still in its infancy, but it’s definitely one to keep an eye on in 2023 as it could potentially accelerate in the coming year. - Increased Transparency from Centralized Exchanges (CEX)
The crypto industry saw a number of large entities implode in 2022, which prompted several CEXs to disclose their wallet addresses as “proof of reserves” in an attempt to regain clients’ trust. This is a step in the right direction, but it’s not enough. In 2023, we could see more exchanges adopt Zero-Knowledge Proofs (ZKPs) from audits to provide a more complete picture of their solvency. - Music NFTs
Who knew that you could turn your favorite songs into digital collectibles? But that’s exactly what happened in 2022 with platforms like Sound and Catalog leading the charge. This trend may have taken a hit during the bear market, but it looks like Sound is building a solid foundation for 2023 and beyond. - ZK Rollups
Optimistic rollups had a good year in 2022, but their even more cutting-edge cousins, ZK rollups, had an even better one. ZK rollups use zero-knowledge proofs or zk-SNARKS to offer greater privacy and scalability for Ethereum. This is still an experimental paradigm, but platforms like zkSync, StarkNet, and Aztec Network showed strong signs of adoption and product-market fit in 2022. - Perpetual Futures (Perps)
Perps are a financial instrument well known in the world of legacy finance and they’re becoming increasingly popular in the world of DeFi too. We saw a huge growth in the number of users and the launch of several new platforms in 2022, with Arbitrum emerging as one of the key players. As DeFi matures in sophistication, we expect to see more exotic trading instruments like Perps coming online in 2023. - Mobile dApps
With the increasing popularity of smartphones and the convenience they offer, more and more users are accessing the internet and digital services through their mobile devices. As a result, mobile-friendly decentralized applications (dApps) are becoming increasingly important. In 2023, we can expect to see more dApps being optimized for mobile devices and browsers, making it easier for users to access and interact with decentralized services on-the-go. This trend will be especially important for gaming dApps as players will be able to enjoy the game from anywhere, anytime.
Top Crypto Conferences To Attend In 2023
Unleash your inner crypto-nerd and join the blockchain elite at these must-attend conferences in 2023
- World Crypto Conference 2023
Location: Zürich, Switzerland
Dates: January 13–15, 2023 - The Blockchain Event
Location: Broward County Convention Center (Fort Lauderdale, Florida, USA)
Dates: February 14–17, 2023 - NFT PARIS
Location: Paris, France
Date: February 24, 2023 - ETHDenver
Location: Denver Colorado USA
Date: February 24, 2023 - Blockchain Economy London Summit
Location: London, UK
Dates: February 27–28, 2023 - Miami Web3 Week 2023
Location: Miami, Florida
Dates: February 27-March 5, 2023 - Blockchain Economy Dubai Summit
Location: Le Meridien Dubai Hotel & Conference Centre (Dubai, UAE)
Dates: March 8–9, 2023 - Paris Blockchain Week
Location: Paris, France
Dates: March 20–24, 2023 - NFT NYC
Location: New York, US
Date: April 12, 2023 - Consensus 2023
Location: Austin, Texas
Dates: April 26–28, 2023 - Bitcoin 2023
Location: Miami Beach, Florida
Dates: May 18–20, 2023 - Permissionless
Location: Austin, Texas US
Date: September 11, 2023 - TOKEN2049
Location: Marina Bay Sands, Singapore
Date: September 13, 2023
Web3 Gaming & NFTs
Trends for 2022 and 2023
Wow, what a wild ride 2022 was for NFTs & Web3 Gaming! We saw some major ups and downs in the market, with the top 10 NFTs by market capitalization experiencing negative price returns as low as 81%. But despite the dips, NFTs continued to attract a ton of funding, with the NFTs/Gaming vertical raking in a whopping $8.3 billion.
One of the biggest trends we saw in 2022 was the emergence of Alt layer-1 and layer-2 Gaming and NFTs, as developers worked to make the world of Digital aseets more user-friendly.
But despite the challenges, NFTs had a huge year in 2022, with Solana becoming a major player in the NFT market, heated debates over creator royalties, and the rise of storytelling & Music NFTs.
NFT market saw a number of collections generate significant transaction volumes, with the Bored Ape Yacht Club leading the pack with over $1.4 billion in sales despite registering just 6,320 transactions. Otherdeed came in second with over 77,000 transactions, and Yuga Labs maintained its position as the most popular NFT project with more than $3.75 billion in sales. Other notable collections in the top 20 by transaction volume include Azuki, Moonbirds, and Beanz. The impact of the crypto winter was evident, with no collections minted after May making the list. Additionally, January saw the most collections in the top 20, likely due to having more time to generate sales over the year.
As we look ahead to 2023, we’re expecting to see even more innovation and growth. We predict that Web3 games will focus more on game launchers, wallets, and on-chain games, and the metaverse will continue to evolve. But one thing is for sure, the Digital Assets world is never boring and we can’t wait to see what the future holds!
Gaming Trends for 2023
10 trends of Web3 gaming to watch this year
- Deeper, richer gameplay: Many NFT games have felt “flat” in the past, lacking much to do and offering players little in the way of tests of skill. Games that offer a rich variety of tactical and strategic gameplay possibilities, such as Axie Infinity: Origins, will become increasingly popular in 2023.
2. New mobile releases: The mobile gaming market continues to grow, and we will see more NFT games being developed for mobile devices. This will increase accessibility for players, and allow for more convenient gaming on-the-go.
3. Gasless gaming: High gas fees can be a major barrier for players looking to engage with NFT games. Projects such as Pirate Nation, which is built on Polygon, demonstrate how to provide a gasless user experience and will become increasingly popular in 2023.
4. Emphasis on community and social features: NFT games that focus on building and fostering a community of players will be more successful in 2023. Features such as player-to-player trading, in-game chat, and tournaments will become increasingly important.
5. Increased use of NFTs in traditional games: NFTs will be increasingly used in traditional games to provide players with unique, one-of-a-kind items and experiences. This will be done to drive engagement and retention, as well as to increase revenue through NFT sales.
6. More creative and experimental gameplay: Developers will continue to push the boundaries of what is possible with NFT games, introducing new gameplay mechanics and experimenting with new ways to use blockchain technology.
7. More interoperability between games: Players will be able to use the same NFTs across multiple games, making it easier for them to access different gaming experiences and communities.
8. More partnerships between game developers and brands: As the value of NFTs becomes more widely recognized, we will see more partnerships between game developers and brands looking to leverage the technology for marketing and engagement purposes.
9. More focus on sustainability and environmental impact: As the environmental impact of blockchain technology becomes more widely recognized, NFT game developers will focus on creating games that have a positive impact on the environment.
10. Increased use of DeFi in NFT games: Developers will continue to explore ways to integrate DeFi functionality into NFT games to enable players to earn money through gameplay. This will include features such as yield
Deep Dive
Submerge deeper into reports of the trending topics of 2022
- The History of Gaming and its Web3 Future
- 2022 Year End Review: Network Coverage, Layer 1s & 2s
- 2023 Crypto Thesis — New Order
- 2022 Defi Year in Review- DefiLlama
- Understanding Player Types & Motivations in Web3 Gaming
- What We Learned From the Worst NFT Moments of 2022
- The State of Web3 2022: The Year in Review
- 2023 Digital Asset Outlook
2022 was an awesome year for DeQuest! We’ve been hard at work building our reputation-focused gaming platform, and it’s been a wild ride. In 2022, DeQuest has solidified its place in the gaming industry as a leader in web3 gaming and education.
We kicked off the year by announcing our new Realm page, a one-stop-shop for users to engage with DeQuest-related activities and have a chance to win awesome prizes.
One of the highlights of the year was our partnership with Illuvium, which resulted in the most epic Christmas gaming event ever. We also announced strategic partnerships with other exciting projects such as Delysium, Revolve Games, Koakuma, Shatterpoint, SupraOracles, Legends of Elysium, Fabwelt Ecosystem, My Meta Farm, Mine Barons, Zodium, DOPEWARZ, Path of Survival, Alaska Gold Rush, and Synergy Land. These partnerships have not only allowed us to bring entertaining and engaging adventures to our community but also to educate them about the metaverse and the skills to navigate it
We also introduced the DeQuest Ambassador program to help gamers and investors filter through the noise, and launched the MetaPassport, a crucial part of the DeQuest Reputation Layer, identifying a new generation of players who are actually improving web3 ecosystems.
While the crypto industry was stressed this year, DeQuest has been focused on building, we have been working hard to bring entertaining, engaging, and educational adventures to our community, and we’re not done yet! We have many more exciting projects and partnerships in the works, and we can’t wait to share them with you in 2023. We are also planing to launch some more interesting realms, quests, and skill tree paths, to help you level up your metaverse skills.
In a nutshell, 2022 was a great year for DeQuest, and we’re looking forward to an even more exciting 2023!
About DeQuest
DeQuest is the first platform of its kind for Metaverse users who want to understand blockchain gaming concepts, through skill level progression and guided learning. It serves as a bridge to easily track users’ knowledge and skill levels across Metaverse ecosystems, as well as their ability to carry out different jobs in the Web3 world.
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The insights, views and outlooks presented in the report are not to be taken as financial advice. DeQuest Research Analysts are not registered broker/dealers or financial advisors. DeQuest Research Analysts may hold assets mentioned in this report.
