What A Year — 10 Major Takeaways for 2022

Web3 and the global markets did not have a good year in 2022. 

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Stocks and bonds tumbled wildly, some by as much as 60 percent, while cryptocurrencies had more than 2 trillion wiped off of their peak total market value in 2021.

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Central banks around the world are still hiking interest rates to fight inflation and grinding economic growth, as investors become more risk-off and wary of speculative investing. Growth stocks are put on the back burner, while the keyword ‘value’ has become the flavour of the month.

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Biconomy’s going to build for the next big run, are you?

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What were the year’s biggest takeaways?

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Here’s a quick recap of the rollercoaster of the last 12 months!

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1. Crypto and the Freedom Convoy

In January, truckers in Canada gathered on Parliament Hill in Ottawa to protest COVID-19 vaccine mandates and limitations. The Freedom Convoy, a protest movement, took control of the streets after the government failed to engage in negotiations with them. 

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In response, the Canadian government put a hold on the bank accounts of demonstrators and anybody donating to them under the Emergencies Act. Authorities blacklisted 34 different bitcoin wallets linked to the Freedom Convoy after the protesters started utilising cryptocurrencies. 

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The incident highlighted the censorship-resistant and permissionless characteristics of decentralised cryptocurrencies like Bitcoin and showed how even Western democracies might utilise their financial sectors against their own citizens.

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‍The Takeaway: Not your keys, not your crypto

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‍2. Crypto and the Russia-Ukraine conflict‍

The Ukrainian government made history earlier this year by asking for donations in Bitcoin and Ethereum through its official Twitter account to support war relief efforts. 

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The government's Ministry of Digital Transformation clarified that the request was legitimate after speculation that it was a scam. Within three days, the campaign raised more than $30 million in multiple cryptocurrencies, including BTC, ETH, and DOT, and even received a CryptoPunk NFT as a donation. 

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The Ukrainian government developed an NFT museum in addition to its fundraising initiatives, and it collaborated with UkraineDAO to increase donations and public awareness. Its potential as a borderless and censorship-resistant tool for individuals in need was underlined by the use of cryptocurrencies in the conflict and proved a powerful use case.

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The Takeaway: Never underestimate your community

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3. The US kicks off crypto regulation

President Biden issued an executive order in March tasking US government agencies to create detailed strategies for cryptocurrency regulation and enforcement. 

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The ruling presented authorities with a clear mandate to construct a regulatory framework for digital assets, which was considered a positive move for the industry, especially since it originated from the U.S. Executive Branch.

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Confusion has long resulted from the absence of a consistent set of regulations for cryptocurrencies, with different organisations categorising digital assets as securities, commodities, or others. The executive order was considered a bullish step towards crypto clarity and ruling for the government.

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The Takeaway: Regulations are coming

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4. The Ronin Bridge Hack

The Ronin bridge, which links the Axie Infinity network to the Ethereum mainnet, was breached in March by the Lazarus Group, a state-sponsored hacking organisation from North Korea. 

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The group accessed five of the nine validators on the Ronin chain via phishing emails, and they stole 173,600 Ethereum and 25.5 million USDC, totalling $551.8 million. Due in part to market conditions and the minimal usage of the bridge, the hack went undiscovered for almost a week. 

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The Layer 1 network Harmony and DeFiance Capital founder Arthur Cheong both experienced similar attacks after the Ronin event, which led to the theft of $100 million and a stack of highly valuable Azuki NFTs, respectively. Analytics firm Chainalysis and Binance helped recover some of the funds.

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The Takeaway: >Vigilance = >Security

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5. Yuga Labs’ record-breaking NFT drop

The company acquired Larva Labs, CryptoPunks and Meebits collections, establishing itself as the leading blue-chip NFT business. 

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Then in April, it launched the ‘Otherside’ NFT project, selling 55K virtual land plots in a public mint while existing community members received theirs for free. The insane demand for the virtual land led to a never-seen-before ‘gas war’ which ensured that land was auctioned off to the highest bidders who could afford the transaction costs.

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The deal brought in about 310M for Yuga Labs, making it the largest NFT drop in history. Elitism and speculatory assets aside, the project’s success proved that blockchain technology is here to stay.

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The Takeaway: NFT projects have to change current perceptions, and evolving utility is key

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6. Collapse of UST and LUNA

Following a massive sell-off, the popular algorithmic stablecoin TerraUSD ($UST) death-spiralled into a devastating loss for its holders as it fell to $0.29 in the second week of May. UST was known for its high yield on the Terra lending platform, Anchor Protocol.

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It all started on 7th May when a seller swapped $85 million of UST for USDC on Curve and created an imbalance between the stablecoins held in the pool, causing a bank run that led to the tumbling of LUNA’s value. This kicked off a major and ongoing liquidity crisis for major crypto players.

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The Takeaway: 100% secure decentralised finance has some way to go

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7. A Serious Liquidity Crisis

The Terra ecosystem’s collapse had long-lasting effects, triggering a liquidity crisis that sent shockwaves through the DeFi market. Due to its investments in Terra being insolvent, lending platform Celsius halted withdrawals. 

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Other players like Three Arrows Capital, Babel Finance, Voyager Digital, and BlockFi were hit by this domino effect. The incident also highlighted the risks associated with centralised exchanges and the degree to which custodians should be trusted. 

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Some companies, like Celsius, had terms of service that stated that customers might not be able to get their money back in the event of bankruptcy but also permitted them to use client deposits as loans that could be sold, staked, lent, transferred, and other things.

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The Takeaway: Read the fine print. Then read it again.

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8. A Whirlwind around Tornado Cash

The privacy-preserving Tornado Cash protocol was added to the sanctions list by the US Treasury's Office in August on the grounds that it has been utilised for money laundering by cybercriminals, particularly North Korean state-sponsored hackers. Reports said that the service “has been used to launder more than $7 billion worth of virtual currency since its creation in 2019.”

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In reaction, cryptocurrency firms limited access to Tornado Cash-related Ethereum addresses, while certain decentralised finance (DeFi) protocols blocked wallets entirely. Alexey Pertsev, the main developer of Tornado Cash, was detained on accusations of assisting money laundering in the Netherlands and is still being held, to the anger and disbelief of the crypto community.

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The Takeaway: Complete privacy is responsibility

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9. The Ethereum Merge, Merges

The Merge, a long-awaited upgrade to Ethereum's Proof-of-Stake, was ultimately released in September. The market's slight recovery from the June liquidity crisis was aided by the anticipation of the upgrade, which was expected to increase energy efficiency by 99.95% and lower ETH emissions by 90%. 

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ETH's price also increased by over 100% as a result. The Merge was a success and received high praise as crypto's most significant technological advancement since the introduction of Bitcoin, while its full significance might not become clear for several more years.

More technically, the Merge brought the concept of Account Abstraction (EIP 4337) to the forefront. Account Abstraction introduces the ‘contract account’ which performs most of its operations off-chain, allowing users’ more flexibility in how Smart Contracts interact across chains and payment systems. 

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The Merge made it easier for institutions to embrace Ethereum by enhancing its monetary policy and temporarily rendering it deflationary and possibly positioning it as the catalyst for a fresh bull market.

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The Takeaway: EVMs are the R&D centres of blockchain technology

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10. The Biconomy SDK Launches To Great Success

You thought this was going to be about FTX and SBF? Let’s go bullish fam!

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The Biconomy Team worked hard all year to prepare for the November launch of our Biconomy Software Development Kit, which enables Web3 developers to easily reduce UX complexities and build without limits.

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More than 200+ dApps have integrated with our easy-to-use and composable APIs and widgets, leading to seamless onboarding and retention of users. The key benefits of the Biconomy SDK include:

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✅ gasless transactions

✅ social logins and recovery

✅ intuitive cross-chain experiences

✅ simplifying multi-steps into 1-click transactions

✅ leveraging EIP-4337 for Smart Accounts (greater convenience and security)

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The Takeaway: Simplified and seamless UX will help onboard the next billion users

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To explore our Docs or Book a Demo on the SDK, get in touch here

Read our Docs: Biconomy Developer Docs

Book a Demo: Book-A-Demo | Biconomy SDK

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