2022, put nicely, was a rough year for cryptocurrency. Following the immense bull run of 2021, many had expected to see continued growth in web3 with chants of “we’re all going to make it” ringing throughout social media platforms. 

Instead, we saw a cataclysmic series of collapses that has tested even the most stringent supporters of web3; but as the fallout continues to spread, an even bigger wave looms in the distance. 

Crypto crash

2022 can be summarized with one word - failure. Headlines were made throughout the year of blockchain networks dropping completely in value because of a lack of real-world assets. 

TerraLUNA was the first to be exposed as reports came out questioning the value of its algorithm which subsequently caused the TerraUSD stablecoin to lose its peg and sink into freefall, drastically affecting hundreds of thousands of users worldwide. 

Three Arrows Capital (3AC) was the next major failure to occur during the summer. Following the impact of the LUNA crash, 3AC was forced to acknowledge a series of bad reports and ultimately filed for Chapter 15 bankruptcy with the founders fleeing their headquarters in Singapore. 

Finally, there was the FTX collapse which was sparked by a tweet from CZ claiming that Binance would be selling all of its FTT tokens. The announcement caused a bank run and it became clear that FTX was insolvent. They struggled to remain afloat and ultimately filed for Chapter 11 bankruptcy, with its founder, SBF, being arrested and charged with multiple accounts of fraud. 

NFT bubble burst

NFTs were another hot topic of debate among crypto users and the larger population, too. Arguments were made throughout the year about the demand for NFTs and what problems they solved. 

Many pointed to video games as the answer, but it quickly became clear that neither games nor NFT traders were interested in the reality of blockchain gaming. 

Instead, NFTs quickly spiraled out of control and became assets that depreciated in value within hours and even minutes because utilities were uninspiring and lacked the spark to ignite true value. 

Ultimately, this created an environment rife with gambling that turned many investors away. ROIs were being replaced with IOUs and debates began to flare up over the need for royalties, thus threatening a core motivation for artists.

Though large companies like Starbucks and Reddit are showing signs of interest in NFTs, they are not similar to the trading craze that fueled most of 2021. Instead, we are seeing a slower approach to NFTs that’s quietly onboarding larger numbers of users to web3. 

Technical success

Despite a troubled year with extreme fraud and depressed markets, many obvious accomplishments were made as well, stemming from significant milestones in the Ethereum roadmap to the announcement of the Solana smartphone. 

The biggest news of the year was the Ethereum merge which saw the successful transition of the Ethereum network from proof-of-stake to proof-of-work. This was a major milestone because the work needed to be perfect and any small error would have set the multi-billion dollar network into disrepair. 

Now, with its new consensus mechanism, the Ethereum network is able to operate at much more efficient speeds that is allowing the network to scale and grow at a rate that will be more acceptable for global adoption without the risks of environmental harm. 

What to expect for 2023?

While this has not been the greatest year for crypto, it was a rough event that needed to happen. The crypto market was getting largely saturated with poor projects and bad leadership that caused many regular people to lose their jobs and net worth. 

For web3 to be a success, these bad actors needed to be shaken out and it is a good thing that we can continue within the blockchain industry with fewer fraudsters like SBF steering the ship. 

It is important to note that, despite the various crashes and collapses throughout the year, it was never because of the technology. Poor leadership and human error caused the worst issues that we saw in crypto during 2022, yet the blockchain continued, unaltered. 

Until something extreme happens to the networks themselves, valuable efforts made on the blockchain will be rewarded. Exposure to web3 has never been stronger and many of the most active contributors are positioning themselves for an even greater climb upward out of this current bear market.