Bankless 2022 Prediction: DeFi Bull Market Returns, Layer 2 Era Arrives, Ethereum Becomes a Trillion-Dollar Network

Written by: Ryan Sean Adams

Original Title: “Bankless 2022 Predictions”

Compiled by: Alex, TechFlow

Key Predictions

1. The total market cap of cryptocurrencies will reach a new high of $5 trillion. The bull market is not over yet. We are still in the same long-term bull market as in 2020 and 2021. This does not mean that the entire year will be in an upward trend, but we will definitely see new ATHs. A total market cap of $5 trillion for cryptocurrencies feels like a conservative estimate… but maybe more?

2. The Eth2.0 merge will happen. All research has been completed, the testnet is running, and now it’s just a matter of debugging. All core researchers believe it will happen this year, and we do too. In 2022, we will say goodbye to Ethereum PoW.

3. Bitcoin will be adopted by another nation-state. El Salvador launched as the first sovereign nation to adopt BTC in 2021. The first domino has fallen. Global fiat inflation is starting to hit countries, and central banks will have to look for alternatives. The Turkish lira is experiencing hyperinflation, and it is reported that global reserve currencies have inflated by 5% or more. Inflation is severely impacting non-G20 countries, which will seek to hedge. BTC is the answer, at least for one country in 2022.

4. Ethereum will become a trillion-dollar network. The merge, proof of stake, EIP 1559, all of this is brewing a storm that will bring Ethereum into the trillion-dollar network club alongside Bitcoin. We speculate this will happen in 2022!

5. The total value locked in Layer 2 will reach $25 billion. Layer 2 tokens are coming, Ethereum gas prices are still an issue, and all of this will make for a significant year for Layer 2.

6. NFT sales will reach $30 billion. In 2021, total NFT sales reached $15 billion. We believe this number will double, driven by the potential of the Coinbase NFT platform, OpenSea tokens, and more popular NFT use cases.

7. A DeFi protocol will enter the top 10 by market cap. Last year we bet that two DeFi protocols would reach this status. We were very wrong. But we believe DeFi will rebound this year and replace some of the weaker projects in the top 10. Potential candidates for the top 10 include: AAVE, UNI, YFI, COMP, SNX, and MKR, along with some stronger DeFi 2.0 projects.

8. DAOs will purchase 8-figure IRL projects. This segment is closely related to ConstitutionDAO. DAOs will mature and find better ways to bid on and purchase real-world items, achieving some significant wins this year.

9. Michael Saylor will buy more Bitcoin. We are now on the fifth day of 2022, and he still hasn’t acted.

Bankless Personal Predictions

1. Ryan Sean Adams - Founder

Layer 2 blockchain networks will perform well.

2021 Predictions

2021's biggest winner: AXS

1. After EIP1559 was released, we started burning ETH - correct

2. Internet bonds will be born - correct

3. Central banks will acquire Bitcoin - correct

4. You will receive text messages - correct

5. Digital yuan will launch - incorrect

6. Stablecoin market cap will exceed $250 billion - incorrect

2022 Predictions

Betting on 2022's biggest winner: Layer 2 blockchain network tokens

1. Cryptocurrency will exceed $7 trillion. I am optimistic about 2022, and I believe the cryptocurrency market cap will exceed $7 trillion at some point during the year. With it, a second central bank will publicly disclose cryptocurrency on its balance sheet (following El Salvador).

2. ETH price will reach $10,000. Catalysts for ETH, including the merge and L2 adoption, will push it above $10,000. As the ecosystem shifts to L2, ETH adds "the index asset of L2" to its narrative.

3. L2 will enter the top 10. At least two Layer 2 tokens will enter the top 10 by market cap of crypto assets. At least three Layer 2 networks will have active addresses and transactions exceeding L1 Ethereum (the great migration). At least two new tokens will be released by Layer 2 blockchain networks.

4. Value through cross-chain bridges will reach billions. Cross-chain bridge projects (like Hop, Connext, Across) will issue tokens and exceed billions in value (cross-chain to anywhere).

5. BTC price will reach $100,000. BTC will get a second chance at some point this year, with a price exceeding $100,000.

6. Web3 becomes social. Decentralized identity will finally shine in a breakthrough project (DeID). Most major social media platforms will launch NFT features, marking the beginning of their integration with public blockchains.

7. DeFi makes a comeback. DeFi tokens in the Ethereum ecosystem will gain a second growth catalyst driven by L2 and new use cases. TVL in DeFi will reach $500 billion.

8. Crypto bank IPOs. At least one cryptocurrency exchange or crypto bank will go public on traditional exchanges.

9. DAOs will get weirder. A DAO will make headlines by purchasing something culturally significant for over $50 million. Politicians will discover DAOs, and at least one fairly large political DAO will be launched. At least one social token or cultural DAO will see its value grow by over $1 billion.

10. NFTs will add extensions. NFT community organizations established in 2021 will launch games, TV shows, membership benefits, and governance tokens.

11. GameFi will carve out a niche market. Independent games on L2 will have a special building year with some significant breakthroughs.

2. David Hoffman - Founder

Lucas won’t let me predict ETH as the biggest winner next year.

2021 Prediction Results

2021's biggest winner: MATIC

1. A non-collateralized/algorithmic stablecoin's market cap will reach $1 billion - correct

2. A non-collateralized/algorithmic dollar stablecoin will also explode - correct

3. Tokenized real-world assets as an industry will continue to underperform - correct

4. UDS yields on Ethereum will maintain an annual interest rate above 10% for most of the year - correct

5. A major game studio will announce their intention to integrate NFT assets into their games - correct

6. Core blue-chip DeFi protocols will not be hacked - correct

7. Yearn will lose some users' funds due to strategic errors - correct

8. There will be a lot of hype around decentralized collateral as a service providers - correct

9. Discord will become the main platform for discussing crypto - correct

10. Tron will adopt in the same way as XRP, one way or another - correct

11. All other stablecoin supplies on non-Ethereum blockchains will be an afterthought - incorrect

12. There will be an unsustainable social token craze - incorrect

13. No significant new L1s - incorrect

14. PC usage will lose its dominance over mobile usage - incorrect

15. PC DeFi usage will continue to be dominated by MetaMask - incorrect

16. Libra (Diem) will launch - incorrect

2022 Predictions

Betting on 2022's biggest winner: MATIC

1. "The upcoming bear market" will be frequently discussed until it becomes a meme. The bear market will not come.

2. Indifferent decentralized crypto newcomers will continue to scale.

3. The merge will happen. In the first few weeks, ETH APY will be < 17%. It will quickly decrease to more sustainable levels (<10%), and staked ETH will exceed 15 million ETH. The ETH price will break any ATH within 3 months after this event.

4. Ethereum's competitors will attempt to fix their monetary supply plans. The top priority will be to stabilize their chains.

5. Meaningful fee markets will emerge on some Ethereum competitor chains. It will not solve the high inflation rate of the assets themselves.

6. Optimism and Arbitrum will both develop into thriving metropolises. Gas optimization and the gradual opening of networks will attract many developers and user traction, while Ethereum will lose to other competitors.

7. EVM equivalence will provide Optimism with additional long-term tailwinds to compensate for its slower launch and may be a contributing factor to its dominance as the Optimism Rollup form.

8. NFT flipping will soon become a craze among enthusiasts and those who like to "stay on trend." NFT flipping will become a game of catching fashion.

9. Due to ongoing inflation of the dollar, RAI will gain adoption.

10. Bored Apes will flip Punks, further proving that nothing can win by just standing still. Punks will still be 100 times cooler than now.

11. 'Web3' will become a household name, widely known as a populist response to current internet institutions.

12. For similar reasons, the "bankless" meme will also be adopted by smaller, more engaged crowds.

13. Politicians will step up to defend Web3 protocols for support and funding. Some will even defend Web3 because it is the right thing to do!

14. Bankless will finish the year without missing a single Monday podcast, Tuesday live stream, or Friday weekly summary. Just like in 2021. The newsletter will be the same.

3. Lucas Campbell - Editor

I realize I’m not good at predicting.

2021 Predictions

2021's biggest winner: FWB, BAYC

1. Retroactive distributions will yield high profits for premium users - correct

2. Uniswap's annual trading volume will reach $1 trillion - incorrect

3. The value of crypto art sales will exceed $1 billion - incorrect

4. There will be a black swan event similar to a DAO - incorrect

5. DPI market cap will exceed $1 billion - incorrect

6. DeFi derivatives will thrive - incorrect

2022 Predictions

Betting on 2022's biggest winner: Music NFTs

1. Flipping will happen. Momentum in the ETH/BTC charts. Combined with the merge, EIP 1559, staked ETH, DeFi, and demand for NFTs, this will create a massive supply-side liquidity crisis for ETH, pushing it to the top. Whether it lasts is a different question.

2. Creator economy hype cycle. **Last year, we saw NFTs and a wave of artists emerging with their own NFT projects. I believe this trend will continue with Music NFTs (keep an eye on Catalog and Sound.xyz) and the hype cycles around social tokens.

3. Collector and cultural DAOs will go crazy. You can almost launch a DAO for anything. We will see communities form overnight, with capital reaching 8 figures. Constitution DAO, LinksDAO, Gnar Collective, etc., are on this path.

4. DeFi will make a comeback. I absolutely do not see 2021 as a down year for DeFi. I believe we will rebound with improved token economic models (projects will adopt veTOKEN models) and a trend of protocol mergers as the industry consolidates.

5. Airdrops will continue to happen. Airdrops will keep occurring. This is the only thing I got right in my predictions last year! However, this time I expect allocation designs to become more complex/strict, and airdrops will be less easy or will require unlocking (i.e., providing valuable services to the protocol to receive allocations). Personally, I hope this year’s airdrops will be Layer 2 and PFP ERC20s (BAYC, Cool Cats, etc.).

4. William M. Peaster - Metaversal

We love jpeg

2021's biggest winner: AXS

Betting on 2022's biggest winner: RON

1. TVL in Ethereum DeFi will double. In 2021, the total value locked in Ethereum DeFi projects surpassed $100 billion for the first time ever. We will see this number reach $150 billion by April 2022 and $200 billion by the end of the year.

2. TVL in Ethereum L2 will reach $100 billion. According to L2Beat, the current locked value in Ethereum L2s is over $6 billion. With new token incentives and improvements in user experience leading to a significant migration of DeFi to Rollups, this value is expected to soar nearly 20 times in the new year.

3. A top 50 DeFi project will go bankrupt. With the emergence of old challenges and new ones, a notable DeFi project will effectively shut down in 2022 as its predicament seems insurmountable.

4. U.S. politicians will continue to warm up to Web3. U.S. legislators will increasingly embrace the crypto economy as they realize its many enormous potentials, such as how the stablecoin industry will become a major force multiplier for the dollar in the coming decades.

5. NFT sales will exceed $50 billion. By the end of 2021, total NFT sales reached $13 billion according to NonFungible. As NFTs continue to go mainstream, this amount will grow nearly 5 times next year.

6. Cool Cats will become one of the top 3 NFT brands. The Creatures expansion pack will serve as a moment for Meebits / Mutant Ape Yacht Club and generate new interest in Cool Cats in the new year. This surge will temporarily push Cats (which have reached a trading volume of 60k ETH so far) into the top 3 NFT projects by trading volume, behind CryptoPunks (trading volume of 740k ETH) and Bored Apes (trading volume of 250k ETH).

5. Ben Giove - Analyst

2021's biggest winner: RARI

Betting on 2022's biggest winner: GMI

1. TVL of 5 non-Ethereum L1 networks will exceed $5 billion. My guesses are Arbitrum, Optimism, ZK Sync, Solana, and Terra.

2. Structured products (especially options vaults) will become very popular in DeFi. This will be driven by Degens seeking alternative sources of yield, rather than being driven by token releases.

3. Tokens for liquid staking protocols like Lido and Rocket Pool will perform excellently before the merge. As a result, everyone will see their TVL exceed 11 digits.

4. L2s will fundamentally change the competitive landscape of Ethereum DeFi. Native projects and early adopters will outperform and replace existing participants on L1.

5. Almost all major DeFi protocols will redesign their token economic models. I personally believe many will shift to a veModel similar to CRV.

6. More protocols will gamify their UI. After seeing the success of DeFi Kingdom, protocols will follow suit to make DeFi more fun to use.

6. Michael Wong - Memelord

2021's biggest winner: Pudgy Penguins

Betting on 2022's biggest winner: Wanderer NFT

1. Core blue-chip DeFi applications will enter the top 20 by crypto market cap, with L2 expansion and adoption accelerating. AAVE and Sushi will perform excellently due to their multi-chain footprint.

2. Top CEX fiat on-ramps will all have Ethereum L2 off-ramps. As people take advantage of cheap transactions, this will facilitate a massive influx of willing users and trading volume into Layer 2!

Carly Reilly - Overrated Jpegs

2021's biggest winner: VeeFriends

Betting on 2022's biggest winner: Overrated Jpeg podcast viewership!

1. The NFT market will see a significant downturn—possibly mid-year—and some PFP projects will never recover.

2. The digital art and generative art market will surge, becoming a larger slice of the contemporary art pie (measured by auction house sales).

3. Streaming services will purchase rights to make movies or TV shows based on NFT IP.

4. New NFT marketplaces will emerge and begin competing with OpenSea. (Not necessarily Coinbase)

7. Frogmonkee - BanklessDAO

2021's biggest winner: FWB

Betting on 2022's biggest winner: GMI

1. 2022 will be the year of DAOs—DAOs are the easiest way for people to participate in crypto with low risk. As tools, onboarding, and compensation continue to evolve, DAOs will take off in 2022. This doesn’t necessarily mean their tokens will take off.

2. SubDAOs will become mainstream—DAOs will start to derive working groups in the form of subDAOs. We will see some interesting nomenclature experiments aligning SUBDAOs with their parent DAOs.

3. Some DAOs will go bankrupt. Others will be acquired. In some DAOs, the treasury or community activities will deplete. We may see larger DAOs attempt to acquire the technology or human capital of these dying DAOs. This could happen in the form of token mergers.

Best Predictions from Bankless Nation

We are excited about our predictions for 2022. We will have a drink with Jack. Are you GMI?

Some reliable predictions, but not rash?

Michael Saylor buying ETH? This would be the biggest twist of 2022.

But what if they launch tokens with incentive programs?

We are placing our bets on Polymarket.

Bankless Headquarters Predictions

We achieved all of last year's predictions… for reference. Here are our goals for 2022:

1. Ray Dalio will appear on the Bankless Podcast.

2. Bankless Nation will grow to 500,000 members.

3. Cumulative podcast downloads will reach 25 million.