The year 2022 was rich in events, to say the least. At the mere beginning of the year, both traditional and crypto markets started showing signs of collapse. Economies all over the world began to experience the consequence of the COVID-19 halt, resulting in severe inflation reaching over 10% in some regions. That also marked a point when some investors started to have disappointing results in traditional markets and turned their attention to crypto, to utilize the earning mechanisms available for hedging against inflation.
Nevertheless, it’s difficult not to mention the shocking collapses that the crypto industry suffered. They include the fall of Terra ecosystem, Three Arrows Capital, and FTX. In every bear cycle, the market reveals bad actors and clears the industry of underperforming companies. As a result, the projects that stay afloat, that have proved their value and security, can continue contributing to the industry and making the ecosystem healthier and more mature.
Focus on development
Despite the whole economic turmoil and market hurdles, the digital asset ecosystem not only survived but used this time to build and strengthen. The year 2022 saw new long-awaited milestones reached. An example of this is the highly anticipated Ethereum Merge upgrade – the transition of the Ethereum blockchain to the Proof-of-Stake consensus mechanism. Also throughout the year, we saw the Bitcoin network’s new hash rate hitting all-time highs.
At Scalable Solutions, we have never stopped building and releasing new features. 2022 was marked by a trend in Perpetual Futures. December 2022 saw $310,95bn Spot trading volumes on exchanges, while on BTC Futures alone it was $343bn, so the volume on the BTC Perps market was bigger than the aggregated Spot volume!
Hence, we introduced Perpetual Futures to open up new monetization opportunities for our clients. One of our clients, FMFW, saw a 15% increase in monthly revenues in the first month after launching Perpetual Futures. Currently, crypto futures generate 30% of the total revenue for FMFW.
Trends to watch for in 2023
The year 2022 has shown us that we can’t predict anything in crypto. Nonetheless, there are some trends to keep an eye on.
- The adoption of crypto and blockchain will grow
Right at the beginning of 2023, it was reported that Tether (USDT), the leading stablecoin, has outperformed Visa and Mastercard by volume of processed transactions. Also, many social networks and messengers, such as Facebook, Instagram, Twitter, and Telegram started to roll out blockchain-related features, which will also contribute to mass adoption.
Scalable is excited to be part of the driving force behind digital asset adoption. Our cutting-edge technology was built to handle the demands of the growing market, and we are eager to help our clients develop sustainable and scalable products.
- The market will further develop and welcome new entrants
2022 has seen many cases of sizeable institutional adoption. Revolut, Fidelity, Nasdaq, Mastercard, and Visa are some institutions that came into the space.
As a result, the blockchain market is expected to further grow in 2023 and beyond. The spending on various blockchain solutions (market volume) is forecasted to increase to $23,3 bn in 2023 from $ 12,2bn in 2022.
- We will see new regulatory frameworks
The collapse of major projects, such as FTX and Terra, has evoked disputes around regulations with renewed vigor. Many countries are taking a coordinated approach to regulation through international organizations such as the Financial Action Task Force (FATF). At the same time, some countries are taking a more hands-off approach, recognizing the potential benefits of cryptocurrencies and blockchain technology in facilitating financial innovation. Regardless of the approach, the regulation of cryptocurrencies is likely to continue to be a major focus in the coming year. Hopefully, it will make the crypto ecosystem more stable and attractive to invest in.
- Security will be taken more seriously
The year 2022 has shown us that any company can collapse no matter how stable it seems. That’s why precautionary and risk-management measures are likely to increase in popularity. Some of the most efficient methods include security audits and penetration testing, necessary for financial services. Scalable’s technology is audited and SOC-2 certified and conducts penetration testing regularly.
Also, following the FTX fall, we have noticed a trend in crypto projects providing proof of reserves – a verification that a company has enough assets to match users’ deposits. Some of the industry-leading exchanges and lending platforms have already provided their proof of reserves. We hope that this practice will improve the industry and strengthen investors’ trust.
If you’d like to know more about how to secure a crypto exchange, check out these two articles: Cryptocurrency Exchange Hacks and How to Secure a Cryptocurrency Exchange.
- More Central Bank Digital Currencies (CBDCs) will appear
In 2023, it is expected that more CBDCs will be introduced. As the world becomes increasingly digital, central banks are exploring the potential benefits of issuing their digital currencies, including increased financial inclusion, improved monetary policy transmission, and reduced dependence on physical cash. The launch of several pilot programs and proof-of-concept (such as the Chinese digital Yuan) in recent years has shown the viability of CBDCs, and many central banks are now in the process of developing and testing their versions. So, it is likely that the number of CBDCs will continue to grow this year.
The outgoing year was harsh not only on the digital asset space but on the financial market as a whole. Nevertheless, the ecosystem has shown signs of improvement and becoming a healthier space for investors to join.
Scalable Solutions is committed to making the transition to the digital asset world as smooth as possible for our clients, and providing substantial growth opportunities for those already in the industry.
If you’d like to learn more about our products, get in touch with our team.