Coinbase's 10 predictions for Web3 and the crypto economy in 2022

On the last day of 2021, Coinbase Chief Product Officer Surojit Chatterjee released 10 predictions for Web3 and the crypto economy in 2022, including the scalability of Ethereum will increase, the availability of L1-L2 cross-chain bridges will be significantly improved, and zero knowledge Proving that technology will gain attention...

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2021 proved to be the year of breaking the game for cryptocurrencies. The price of BTC has risen by nearly 70% year-on-year, and the amount of DeFi locked up is $150B, and NFT has become a new category. Here are some of my views on 2022:

1. The scalability of Ethereum will increase, but the new L1 public chain will still grow substantially

When the next billion-level users enter the encryption industry and Web3, Ethereum's scalability challenges may increase. With the emergence of Ethereum 2.0 and many L2s, I am optimistic about the scalability improvements of Ethereum.

The development of L1 public chains such as Solana and Avalanche shows that we will live in a multi-chain world in the future, and there will be new L1 public chains that will emerge, focusing on specific use cases, such as games or social media.

2. The usability of L1-L2 cross-chain bridge will be significantly improved

With the development of more and more L1 and L2 networks, our industry will strive to seek improvements in the speed and usability of L1-L2 cross-chain bridges. We are likely to see interesting developments in cross-chain bridge usability in the coming year.

3. Zero-knowledge proof technology will gain more attention

In 2021, protocols such as ZkSync and Starknet began to receive attention. When the L1 chain is congested due to increased usage, ZK-rollup technology will attract the attention of investors and users.

We will see the emergence of new privacy-centric use cases, including privacy and security applications. This may cause more attention from regulators to the encryption industry, because KYC/AML may be the real challenge faced by privacy-centric networks.

4. Supervised DeFi and on-chain KYC proofs will appear

Many DeFi agreements will be supervised and separate KYC user pools will be created. Decentralized identity and on-chain KYC authentication services will play a key role in connecting users' real identities with DeFi wallets. We will see more people accepting ENS-type addresses and at the same time see new systems from cross-chain solutions.

5. Institutions will play a greater role in participating in DeFi

Institutions are increasingly interested in participating in DeFi. First, compared with traditional financial products, institutions will be attracted by higher-than-average interest rates. In addition, the cost of using DeFi to provide financial services has been reduced, providing interesting opportunities for institutions.

However, they are still hesitant to join DeFi. Institutions want to confirm that they only trade with known counterparties who have completed the KYC process. The growth of regulated DeFi and on-chain KYC certification will help institutions gain confidence in DeFi.

6. DeFi insurance will appear

With the proliferation of applications, DeFi will become a target for hackers. According to data from London-based Elliptic, the total value of losses from DeFi vulnerabilities in 2021 exceeds $10B. In order to protect users from hacker attacks, a viable insurance agreement will appear in 2022 to protect users' funds from security breaches.

7. NFT-based communities will bring substantial competition to Web 2.0 social networks

NFT will continue to expand their use cases. We will see creator tokens or fan tokens play a greater role. NFT will become a passport for users' digital identities and meta universe. Users will gather in different small communities based on the type of NFT they have. The metaverse created by users will become the future of social networks and will threaten today's centralized social networks.

8. Brands will begin to actively participate in Metaverse and NFT

Many brands realize that NFT is an important tool for brand marketing and building brand loyalty. Coca-Cola, Campbell’s, Dolce & Gabbana and Charmin will release the NFT collection in 2021. Adidas recently launched a new Metaverse project with Bored Ape Yacht Club. We are likely to see more interesting NFT brand marketing plans.

NFT and Metaverse will become the brand's new Instagram. Just like on Instagram, many brands may start with NFT. We will also see more celebrities join this trend and use NFT to enhance their personal brands.

9. Web2 company will awaken and try to enter Web3

We have seen Facebook trying to reinvent itself as a Web3 company. We are likely to see other large Web2 companies dabble in Web3 and meta-universe in 2022. However, many companies may create a centralized and closed web version of the metaverse.

10. The era of DAO 2.0 is coming

We will see DAO become more mature and mainstream. More people will join the DAO, prompting changes in the employment relationship: there is no formal acceptance letter, accept tokens instead of fixed wages, and work in multiple DAO projects at the same time.

DAO will also face new challenges in conducting mergers and acquisitions, managing compensation and benefits, and coordinating activities in larger and larger organizations. We will see the emergence of a large number of tools to help DAO run efficiently. Many DAOs have to figure out how to interact with traditional Web2 companies. Regulators are likely to be more interested in DAO and try to understand how DAO works.

Thanks to our customers and ecosystem for bringing an incredible 2021, and we look forward to building the infrastructure for Web3 in the new year.