The Blockchain & Crypto Industry in 2022 | What we are excited for

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POKT Network
Nov 20, 2023
The Blockchain & Crypto Industry in 2022 | What we are excited for

In 2021, Pocket saw tremendous growth in its mission to boost crypto’s multi-chain future, helping build the next generation of infrastructure for the sector. This year brought many more advancements to the industry, from Layer 2 developments to the rise of NFTs. Follow us while reviewing the top trends of the year and discover our predictions for 2022.

Layer 1 and Layer 2 solutions emerge in 2021 to ease the experience of users

Layer 1 and Layer 2 protocols had immense growth in 2021, given the prolonged issues with gas fees and congestion in the Ethereum mainnet, especially amid periods of high interest in DeFi. Nevertheless, Ethereum is still the leading network for DApps, while more Layer 1 and Layer 2 solutions are challenging this position.

On one hand, Ethereum’s transition to a Proof-of-Stake (PoS) consensus amid ETH 2.0 will set it to compete with the emergence of new Layer 1 and Layer 2 solutions, improving the efficiency (e.g., costs, speed) of transactions.

On the other hand, other Layer 1 networks like Solana, Terra, Avalanche, or Fantom are tackling these scalability issues (e.g., gas fees) coming out of the gate with a PoS approach while guaranteeing fast and cheap transactions, even in periods of high demand. Beyond the efficiency of transactions, these networks offer an easy-to-use experience for users, considerably differentiating from Ethereum.

On top of Layer 1 networks, from Ethereum to new protocols, sits Layer 2 solutions offering a way to circumvent problems with more speed and fewer costs.

Challengers like Polygon reached record levels of adoption, crossing 560K active users daily, more than Ethereum in some days of the year. Other protocols like Arbitrum, a layer-2 optimistic rollup solution, crossed $2.5 billion in Total Value Locked (TVL) in a short time of existence. The rapid increase in the adoption of Layer 2 solutions will continue in 2022, given the improved experience for users.

A multi-chain future ahead for crypto with Pocket propelling it

Pocket has been working to connect blockchain networks and non-blockchain apps, easing the transition into a crypto-powered world.

One of the key challenges for crypto is making onboarding simple for users without technical knowledge. For non-crypto insiders, many of the processes required to move from the first time buying bitcoin to DeFi protocols, running on different Layer 1 networks, is a big leap.

On the technical side, creating tools that serve the end-user and work seamlessly regardless of the networks they run is key for crypto’s mainstream adoption. Pocket is working on this mission to streamline the crypto experience for everyone.

In 2021, Pocket integrated with Polygon, promoting the adoption of Layer 2 solutions that improve the efficiency of the crypto industry while having already integrated with Layer 1 alternatives like Fuse, Solana, and others.

Developments made by teams like Pocket will continue to rise in 2022, as it is one of the top issues that crypto needs to solve to ensure its status as a reliable new financial system.

ZK Rollups: Scalability aligned with low transaction costs and more privacy

Layer 2 solutions are betting on fast transactions and lower costs for users wanting to leap into the DeFi space, with solutions like Optimistic Rollups (ORs) working on top of Ethereum to allow scale.

In 2022, we envision the emergence of another type of scalable solution, Zero-Knowledge Rollups (ZK Rollups), doubling down on offering more scalability.

Beyond efficiency, ZK Rollups offer more privacy and security for users transacting in a decentralized fashion, with automatic triggers moving transactions forward instead of manual validators. By employing zero-knowledge proof, users will have more scale, lower costs, and more security.  

Even with the launch of Ethereum 2.0, the infrastructure ecosystem will see more alternatives emerge with different approaches in what should bring a healthy amount of competition to the industry.

The creator economy grows along the Metaverse, with play to earn gaming at the helm

One buzzword that got into the lexicon in 2021 was the Metaverse. However, it is more than just hype. The influence of tokenization in virtual games is increasing, with experts believing it can be a gateway for mainstream adoption.

Many games have the ethos of tokenization already designed into their infrastructure, with users being very comfortable interacting between physical and digital realities. The concept of purchasing in-game tokens has been there before cryptocurrency. However, the interconnection between digital assets and games will lead the sector into another stage.

The rise of play-to-earn games and DAOs (e.g., Merit Circle, My Neighbor Alice, The Sandbox, Axie Infinity) will shift the economics of the gaming industry while providing more opportunities for people and game developers.

At Pocket, we’re excited to see the rise of the creator economy inside the Metaverse, with people making full-time careers from the virtual world (e.g., digital real estate investors).

NFTs mature and go cross chain

NFTs tie with the recent Metaverse trend, becoming the avenue for transactions in the virtual world, beyond reshaping art. The sales volume of NFTs reached record levels in 2021, while 2022 will see the maturity of the segment, with more institutional and retail adoption.

NFT holders will have an increasing range of financial vehicles to put their digital tokens to work, creating even more sub-sectors of investment products based on tokenization.

Auction houses, companies, investors, and art collectors will benefit from the decentralization of the art market, with implications for the overall industry. A common trend for NFTs’ mainstream adoption will be their cross-chain transferability, allowing institutions to hold assets issues across networks.

Solving the scalability issues of DeFi to cross the chasm

With the increased adoption of retail and institutional investors to crypto, the next natural stage is the move into DeFi. Once novel crypto users get acquainted with the ecosystem, after purchasing their first digital assets (e.g., bitcoin or ether), the natural progression is to move into DeFi protocols in a cascade effect.

DeFi’s security, scalability (transaction costs), and usability are key to onboard millions of novel users into the many opportunities of the decentralized ecosystem (e.g., staking, NFTs, DeFi 2.0, etc.).

A common theme among the development of DeFi protocols is the commonality between networks. We’ve seen this with the extension of bridging solutions, allowing users to trade tokens between blockchains. Pocket is at the heart of this change in the crypto sector to solve one of its major challenges, its multi-chain capability.

The emergence of DeFi 2.0

DeFi 1.0 protocols will see a revival once the scalability issues are addressed, aligned with a wave of new users who become more experienced in crypto as the years go on. Even though DeFi 1.0 still faces those issues, they are not undermining the emergence of new solutions - DeFi 2.0 - bringing even more opportunities for investors.

The new rebase token ecosystem from which DeFi 2.0 comes is very recent, but its groundbreaking sustainable liquidity approach will be a game-changer for protocols while offering users even more rewards.

The interest around DeFi 2.0 will continue to grow, attracting people willing to take the risk and reap the benefits of very high rewards. The platforms leading the innovation in this segment - OlympusDAO, Wonderland, or KlimaDAO - will mature in 2022 and bring even more use-cases.

Pocket sits at the cusp of crypto’s adoption for 2022

A common trend among all aspects of crypto development is making it a seamless experience for the end-user. Pocket’s middleware thesis is at the basis of that transformation in crypto to cross the chasm.

In 2021, Pocket integrated with major protocols to propel crypto’s multi-chain future, including Polygon, Solana, Harmony, Fuse, Arbitrum, and many others. We have exciting partnerships to announce in the short future, leading us to become the de facto solution to link the crypto world.

Our growth this year reflects the expansion of integrations. Pocket has over 17K active validator nodes, averaging above 150 million daily relays, and supports over 2000 applications.

Our decentralized node infrastructure allows for more security, more scalability, and fewer costs for protocols while guaranteeing 100% uptime, differentiating itself from current legacy alternatives. At the center of the incentives and payouts of our ecosystem is POKT. In 2022, we’ll have more use-cases for POKT and progress in the Pocket DAO, guaranteeing the suitability of our economics and offering more options in our ecosystem.

We encourage application developers wanting to link to blockchain networks to join the Pocket Portal and start accessing decentralized data. If you’re a node runner, start earning POKT by joining our ecosystem.

Stay tuned for exciting updates soon, and join us in supporting the middleware future of crypto in 2022.

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