We all know that identifying narratives early enough can be profitable in crypto. Just over a year ago, not that many people cared about NFTs. But last year, everything changed for the sector. NFTs exploded, along with the number of people that wanted to own and build infrastructure around them.
Investors, who identified the NFT narrative early, made significant gains.
We want to cover some crypto sectors (narratives) that we think will be popular in 2022. Hopefully, our ideas will help you make wise investment decisions in the upcoming year. A new year means a new opportunity for new narratives to flourish; we’re already seeing evidence of this today.
L222.
“L222” is a term Ethereum fans have started using to refer to a potential boom on Layer 2 next year. They’re hoping that new networks building on top of Ethereum will help on the path to scalability, and many have already started placing their bets on Layer 2 tokens.
Some of the most anticipated Layer 2s— like StarkWare’s StarkNet and zkSync, etc, don’t have tokens yet. You should deploy some ETH on Layer 2 in anticipation of potential airdrops and be prepared to buy hard should any of the strongest projects drop one. Ethereum might be prohibitively expensive to use in its current form, but at least that means the Layer 2 narrative has space to thrive.
Defi 2.0.
“DeFi 2.0,” meanwhile, isn’t exactly a new trend. This caught on last year after projects like Abracadabra.Money, Tokemak and OlympusDAO started gaining traction. Plenty of newer ones have emerged with novel approaches to securing and keeping liquidity, which has helped differentiate them from the so-called blue chips that rose to prominence in 2020.
It’s no secret that DeFi summer era tokens fell on their feet last year, but does that mean DeFi is dead? Absolutely not, fren. It just means the stage is set for DeFi 2.0 to take a lead. In fact, this is already happening now; several DeFi 2.0 projects have held strength against the downtrend.
NFT Infrastructure.
Last year was a great year for NFTs. The number of NFT projects and collections exploded, along with NFT market capitalization and trading volumes. According to DappRadar, NFT trading volume exceeded $23b in 2021, compared with just $100m in 2020.
Despite all of this growth, the NFT market still remains nascent. Price discovery and liquidity remain one major challenge for many NFTs. Very often, there is just no liquidity to execute trades.
Overall, from an infrastructural standpoint, the market remains underdeveloped. However, in 2022 this is likely to change. Infrastructural projects that solve NFT market problems can potentially produce great returns for their investors.
Gaming and Metaverse trends will continue to develop in 2022. Similar to NFTs, this market just started gaining momentum last year. In 2021, many big gaming projects were selling in-game items and lends but did not offer an actual gaming experience for their users.
In 2022, this will change. Finally, besides speculating on in-game items, gamers will have a chance to play actual games. This will likely attract even more people to the gaming sector and crypto in general. We all know the success of Axie Infinity, with over one million daily active users.
If you want to become a blockchain gaming expert, follow the sector, join top gaming guilds, play these games yourself, and we are sure you will find success next year.
We encourage you to look for projects that improve the liquidity and pricing of NFTs. NFTs lending and borrowing can also become a big thing in the upcoming year.
Additionally, look for decentralized marketplaces. On Ethereum, Opensea is the dominant player. Still, we all know that the future is decentralized, so sooner or later, decentralized marketplaces for NFTs will likely become as popular as DEXes in crypto trading.
Cross-chain communication – Interoperability.
We all have seen the explosion of Ethereum alternatives last year. Ethereum scalability issues and expensiveness catalyzed the growth and development of the blockchain sector.
Ethereum dominance fell, and now many teams are building dApps on other chains, as well. However, the problem with such development is that now there are a number of completely separate ecosystems that do not communicate with each other.
Projects that will solve this problem and allow smooth cross-chain communication between chains could become the biggest gainers next year.
The term “composability” the ability of decentralized applications (dApps) and Decentralized Autonomous Organizations (DAOs) to effectively clone and integrate one another, and for software components such as tokens and messages to be interoperable between them. This was one of the main growth factors for DeFi in 2021. Similarly, interchain composability can potentially inspire a new wave of blockchain dApps that work simultaneously on several chains.
Thus, projects that build cross-chain bridges and work on allowing cross-chain smart contracts calls are to be looked at. They are building an essential piece of infrastructure for the crypto market.
While there’s nothing wrong with stacking Bitcoin and Ethereum, you can do very well from finding the next narrative, or as @Cobie recently put it, “trading the metagame.”
If you don’t know where to look, the Kaicho Digital will help you. Subscribe below.
The new year is the perfect time to dive into the next “metagame” before everyone else catches on.
Welcome to 2022.