A Future with Binance: Examining Cryptocurrency Trends in 2022
In many ways, 2021 was an outstanding year for the crypto ecosystem in Africa and the rest of the world. Though still heavily impacted by the pandemic, remarkable growth was recorded on the continent, as well as noteworthy progress with innovation, regulation, and adoption.
As we turn the page to 2022, it is important to take note of possible crypto trends to anticipate and prepare for. Though it may be difficult to provide exact predictions, experts at Binance, the world’s leading blockchain ecosystem, and cryptocurrency infrastructure provider, shared insights into what’s in store for the ecosystem in the coming months:
According to Africa’s Director for Binance, Emmanuel Babalola, one of the biggest predictions for 2022 is that the African blockchain ecosystem will mature with more projects playing on the global field. In short, several blockchain projects on the continent would attract global attention. Other key projections to watch out for include:
1. Decentralized Finance as a Major Market: Experts at Binance highlighted that there would be a continued increase in interest and innovation in Decentralized Finance (DeFi) in 2022. In retrospect, DeFi 1.0 has already seen the establishment of fundamental building blocks like crypto lending, AMM, yield farming, staking, algo stablecoins, and with more than $250B in Total Value Locked (TVL). However, there are still a lot of challenges in DeFi in the below areas:
a. Seasoned Hands: The DeFi space is urgently in need of more experts from the traditional financial service industry. With these experienced hands, it will be possible to build sophisticated financial instruments such as Bond, Fixed Income, Interest Rate Swaps, Assets management, and much more.
b. Liquidity: Another high growth area for DeFi is the need to keep improving liquidity and capital efficiency. For example, the collateral ratio in DeFi 1.0 is very low, and the liquidity pool risk is a little bit high. Some innovation in DeFi 2.0 like Liquidity as a Service is a great place to start.
c. SocialFi/GameFi: Social and Gaming saw massive adoption in crypto starting in 2021. We expect 2022 will follow that trajectory, introducing new opportunities in DeFi (such as NFT, DeFi-like NFT fragmentation, NFT renting, etc.)
2. Meme Coins as a New Status Quo: While 2021 saw an array of new meme coins popping up across numerous blockchains and exchanges, it was not smooth sailing for all participants – particularly novice crypto users.
One notable mention is when many first-time investors were influenced by Elon Musk as he heavily advocated for Doge on Twitter, which led to a 973% increase in Doge prices from Apr 10th to May 7th. The subsequent forking of SHIBA INU stole the spotlight shortly after when the price shot up 2,189% from May 6 to May 10 (Source: Coin Market Cap).
Despite the questionable foundation of meme coins, it appears there is no slowing down the growing number of users looking to make a quick buck. Crypto exchanges would then need to face the conundrum to protect non-crypto native users from the high risks associated with meme coins or provide users with the tokens they want to trade.
3. Compliance as a Differentiator: While the pool of crypto users as compared to traditional finance is still very small, regulations could aid in bringing the people from traditional finance over. Companies such as Binance are committed to growing the global impact of digital assets by acting safely, transparently, and within regulatory frameworks.
As the world’s leading blockchain ecosystem, the Binance team looks forward to engaging further with all policymakers regarding the future of stablecoins. The goal for 2022 is to lead the industry for AML standards and participate more actively in international policymaking and maintain one of the largest networks of international collaboration with Law Enforcement agencies around the world.
4. Doubling Down on Innovation: While the world of blockchain and cryptocurrency is just over a decade old, it is ripe with innovation. Binance Labs identifies, invests, and empowers viable blockchain entrepreneurs, startups, and communities, providing financing to industry projects that help grow the larger blockchain ecosystem.
The specific goal for Binance Labs in 2022 is to become the ‘Y Combinator of the blockchain industry. Bill Chin, the Head of Binance Labs Fund, noted that at the end of 2022, the cryptocurrency infrastructure provider would like to incubate a total of 50 portfolio projects that are world-class and industry-leading.” This is a promising prospect as Binance has a history of being an active participant in its investments by focusing on discovering the top-notch founders and teams with potential