Cryptocurrency Will "Start to Devour the World" Jump Capital's Top 10 Predictions for the 2022 Crypto Market

Author: Jump Capital

Source: Jump Capital

Compiled by: BitpushNews

According to Bitpush News, Peter Johnson, a partner at investment firm Jump Capital, stated that 2022 will be another significant year for crypto, with the overarching theme being widespread adoption, including the broad adoption of stablecoins, DAOs, high-speed chains, L2, and cross-chain applications. As crypto becomes more widely accepted, traditional companies and investors will adapt to the embedding of crypto across various industries, and most investors will participate in the future of the crypto market in some way.

For 2022, Jump Capital has made 10 predictions across 5 major crypto themes, all related to the overall tone of widespread adoption.

Theme 1: Stablecoins Lead Crypto Growth

1. Stablecoin Supply Reaches $500 Billion

At Jump Capital, we have always believed in the adoption of stablecoins, incorporating the growth of stablecoins in our predictions for both 2020 and 2021, when the supply was approximately $6 billion and $30 billion, respectively. Now that the supply has exceeded $140 billion, we have yet to see signs of a slowdown in stablecoin adoption and believe that there will ultimately be trillions of dollars in stablecoins.

In 2022, we are particularly excited about the growth of stablecoins for non-trading use cases. Historically, stablecoins have primarily been used for trading, but 2022 will see their use for cross-border payments and as a safe-haven asset in countries with unstable currencies becoming more apparent and a significant growth driver.

2. USDC and UST Capture Market Share from Tether

In the stablecoin market, we believe that most of the growth will come from USDC and UST, as they establish themselves as the dominant centralized and decentralized stablecoins. As USDC and UST grow, the market share of USDT (Tether) will decline significantly.

Theme 2: Development of DAOs and DAO Infrastructure

1. DAOs as Coordination Tools Experience Exponential Growth

Decentralized Autonomous Organizations (DAOs) can leverage blockchain-based governance to achieve global coordination among individuals. DAOs can be used for various purposes, including managing the operations and capital of blockchain projects (MakerDAO), managing investment capital (The LAO), managing the use of gaming assets (YGG DAO), coordinating cultural circles (Friends With Benefits), or coordinating asset purchases (Constitution DAO).

We believe that Constitution DAO is a watershed moment for DAOs, as it raised over $40 million, demonstrating that thousands of people can coordinate their funds and efforts to achieve a common goal. By 2022, we believe that DAOs will gain significant traction as a next-generation method for coordinating global investments and communities. The attempt to purchase a copy of the U.S. Constitution is just the beginning; in 2022, there will be multiple DAOs raising over $100 million, targeting larger goals.

2. Maturity of DAO Governance Design and Infrastructure

As crypto networks have been iterating governance models to manage network decisions and communities, we are in the early stages of defining and recognizing the full scope of DAOs.

We believe that by 2022, many crypto networks will make significant progress in their decentralization journeys, with governance models gradually maturing to enable effective management of these DAOs, a maturity that will be realized through the enhanced DAO tools and infrastructure we expect to see this year.

Theme 3: High-Speed Chains, L2, and Cross-Chain Applications Drive Widespread Adoption

1. High-Speed Chains Continue to Grow and L2 Takes Off

2021 witnessed the early launches of high-speed/low-cost blockchains like Solana, Terra, and Avalanche, Ethereum sidechains like Polygon, and Ethereum L2 scaling solutions using Optimistic and Zk rollups.

We are optimistic about all these solutions as transactions increasingly migrate from L1 Ethereum, creating space for various winners (at least in the short term) in the exponentially growing "cake." The enhanced user experiences provided by these high-speed chains and L2 are key components for achieving mainstream adoption and will be central to the cryptocurrency narrative in 2022. Ultimately, who the winners (and losers) will be will be determined, but in 2022 we are betting on robust growth across the board.

2. Cross-Chain Usage Becomes Seamless

Currently, L1 and L2 blockchain ecosystems are quite isolated, with bridges between ecosystems often being either complex or reliant on centralized exchanges. By 2022, solutions like Wormhole will make significant strides in enabling seamless movement of assets and information across blockchains, with applications smoothly transmitting transactions to the optimal blockchain for their purposes.

Theme 4: Every (Innovative) Company is a Crypto Company

1. Financial Institutions, Advisors, and Fintech Companies Offer Crypto Products

Cryptocurrency has become too big for financial institutions, financial advisors, and traditional fintech companies to ignore, and 2022 will be the year they launch crypto products for their clients. Allowing the buying and selling of cryptocurrencies will become the norm, and more forward-thinking companies will also offer crypto-backed loans, high-yield savings accounts, and other products leveraging cryptocurrencies.

As more financial institutions offer crypto products, we also expect the product offerings to mature, with particular optimism about the growth of the options market, which allows market participants to take more nuanced hedging or speculative positions and to create structured products. Options currently account for less than 2% of crypto derivatives trading volume, and we expect this percentage to grow significantly in 2022.

2. Game Studios Fully Embrace Crypto

2021 saw the rise of crypto-based "play-to-earn" games led by Axie Infinity, where players can derive real economic value from their gaming activities. The success of Axie and other blockchain-based games has led to a surge of crypto games—many of which are not particularly compelling and are unlikely to have lasting power.

However, we believe that the concept of true ownership in gaming will form the foundation of the future of gaming. In 2022, we expect traditional game studios to enter the crypto gaming space, launching a new generation of crypto games that not only provide economic incentives and true ownership but also top-notch gameplay.

3. Crypto Begins to Dominate the World

Early adopters of the internet were referred to as "internet companies," but as internet adoption crossed the adoption curve, those monikers fell out of use.

Similarly, over time, most companies will adopt crypto technology in some form—whether by offering crypto products, utilizing stablecoins as payment channels, enabling Web3 wallet logins, leveraging NFTs, cultivating tokenized communities, or various other use cases. By 2022, we expect widespread adoption of crypto technology across many industries, and we anticipate that this trend will accelerate further in the coming years.

Theme 5: Every VC is a Crypto VC

1. Record Amount of VC Funds Deployed into Cryptocurrency

In the first nine months of 2021, crypto startups received $15 billion in investment, nearly five times the total investment in crypto startups for 2020. While this seems substantial, it only accounted for about 3% of total venture capital during that period.

In 2022, we expect venture capital investment in crypto to increase significantly as traditional VC funds are eager to allocate to crypto-native projects and are attracted by the convergence of crypto with various other industries. The increase in crypto venture capital funding will also be driven by the recent announcement of multiple crypto funds exceeding $1 billion, with more crypto funds expected to be announced soon. In this capital-rich industry, the most successful investors will not be limited to just providing capital but will also include helping to build products, providing liquidity, recruiting talent, scaling organizations, developing communities, attracting users, and participating in governance.