Cointelegraph Consulting: Crypto events of 2021 in retrospect

The
year
2021
is
coming
to
a
close,
and
if
there’s
one
way
to
describe
how
the
cryptocurrency
industry
fared
in
the
past
12
months,
it
would
be
momentous
growth. 

Major
cryptocurrencies
shattered
previous
records,
adoption
grew,
new
sectors
sprouted
and
novel
blockchain
use
cases
made
significant
breakthroughs.

The
Market
Insight’s
latest
edition
recalls
the
events
covered
in
past
issues
as
well
as
deep-dive
topics
in
Cointelegraph
Research’s
industry
reports.

DeFi
and
Altcoins

Two
of
the
top
gainers
of
2021
were
Solana
(SOL)
and
Terra
(LUNA).
SOL
gained
9,500%,
while
LUNA
gained
13,000%.
Significant
investments
and
ecosystem
growth
catalyzed
the
immense
gains
for
the
two
tokens.
One
could
also
argue
that
the

two
being
billed
as
potential
“Ethereum
killers”

had
a
part
in
contributing
to
their
massive
rallies.

In
the
decentralized
finance
(DeFi)
scene,
the
two
tokens
sit
among
the
top
five
in
total
value
locked
(TVL).
Solana
is
at
No.
5
with
$11.45
billion,
and
LUNA
has
recently
surpassed
Binance
Coin
(BNB)
for
the
No.
2
spot
with
$18.9
billion,
according
to
Defi
Llama.
Moreover,
the
emerging
ecosystems
of
Solana
and
Terra
deserve
a
deeper
look,
which
is
why
they
are
the
subject
of
Cointelegraph
Research’s
upcoming
reports.


DeFi
followed
a
similar
growth
trajectory
as
the
broader
crypto
market
in
2021. 

Competition
has
undoubtedly
increased
for
Ethereum.
Its
TVL
share
was
97%
in
January
but
is
currently
down
to
62.54%,
per
Defi
Llama.
The
next
phase
of
development
for
the
sector
comes
into
question
in
2022,
especially
since
the
growth
of
DeFi
this
year
has
been
so
substantial
that
authorities
have
switched
from
denying
the
industry
to
grappling
with
ways
to
deal
with
it. 

The
DeFi
market
capitalization
remains
a
small
fraction
of
the
overall
cryptocurrency
market
cap,
but
it
underwent
the
same
growth
trajectory.
Some
believe
that
integration
with
legacy
banking
could
be
one
of

the
main
focuses
for
DeFi
in
2022
.

NFTs

Nonfungible
tokens,
or
NFTs,
found
their
breakout
year
in
2021
despite
existing
since
2014.
The
bulk
of
sales
came
in
the
past
12
months,
surpassing
$14
billion
in
December.
Digital
art
collections
and
digital
collectibles
dominate
91%
of
these
sales
volumes,
which
is
one
of
the
key
data

revealed

in
this
report.

The
sales
in
the
first
half
of
the
year
were
driven
primarily
by
individual
artists
joining
the
space
with
their
respective
collections
and
some
high-profile
sales,
while
the
second
half
brought
in
more
mainstream
brands.

For
instance,
Coca-Cola

auctioned
a
wearable
bubble
jacket
skin
in
Decentraland
,
and
Visa

purchased
its
first
NFT
.
Such
participation
from
these
brands
enabled
the
NFT
market
to
come
into
full
bloom.
The
report
also
revealed
that
the
most
profitable
NFT
collection
in
2021
was
“CryptoPunks.”
A
“CryptoPunk”
NFT
offers
a
better
all-time
average
return
on
investment
compared
to
NFTs
on
other
popular
collections,
such
as
“CryptoKitties”
and
“Bored
Ape
Yacht
Club.”

NFTs
have
also
disrupted
the
gaming
industry
and
become
key
to
fully
realizing
the
concept
of
metaverses
through
their
blockchain
properties.
However,
some
critics
doubt
that
the

parabolic
surge
in
2021

will
play
out
in
2022,
especially
with
more
regulatory
scrutiny. 

Nonetheless,
this
year’s
amount
of
venture
capital
investments
funneled
into
NFT
companies
is
beyond
sizable.
NFT
funding
in
2021
is
already
at
$2.1
billion
as
of
Q3,
yet
nearly
40%
of
VC
deal
activities
involve
only
a
single
firm
in
Andreessen
Horowitz,

according

to
PitchBook.
Therefore,
as
sales
and
interest
for
NFTs
continue
to
grow,
it
may
be
difficult
for
firms
with
a
thirst
for
high
growth
potential
to
resist
NFTs.

Regulation

2021
has
been
progressive
in
the
cryptocurrency
regulatory
front.
The
117th
United
States
Congress
has
introduced
35
bills
that
focus
on
cryptocurrency
regulation,
blockchain
policy
and
central
bank
digital
currencies.

Federal
Reserve
Chair
Jerome
Powell
expressed
his
views

that
cryptocurrency
is
not
a
significant
threat
to
the
U.S.
financial
market’s
stability.
However,
a
likely
discussion
that
could
seep
into
next
year
is
the
regulation
on
stablecoins.

The
President’s
Working
Group
on
Financial
Markets
has

stated

in
a
report
that
stablecoins
could
be
a
beneficial
alternative
payment
option
but
are
“subject
to
appropriate
oversight.”
Currently,
there
are
no
regulations
on
stablecoins,
even
as
their
market
capitalization
passed
$162
billion
as
of
this
writing,
but
a
bill
proposed
by
Wyoming
Senator
Cynthia
Lummis
could
be
a
step
in
that
direction.

Lummis
plans
to

introduce
a
comprehensive
bill
in
2022

that
will
provide
regulatory
clarity
on
stablecoins,
guide
regulators
around
asset
classes
and
offer
consumer
protections.
Cryptocurrency
regulation
will
be
a
talking
point
in
2022
and
will
also
be
a
topic
that
the
Cointelegraph
Research
team
will
be
examining
further.

GameFi

It
is
almost
certain
that
everyone
in
the
space
agrees
that
Axie
Infinity
revolutionized
gaming.
The
play-to-earn
model
was
a
massive
hit,
as
it
added
real
income
potential
to
playing
video
games.
Data

shows

how
play-to-earn
decentralized
applications
(DApps)
dominated
the
latter
half
of
2021
in
terms
of
connected,
unique,
active
wallet
addresses.
And
since
September,
gaming
tokens
such
as
The
Sandbox
(SAND),
Axie
Infinity
(AXS),
Enjin
(ENJ),
Illuvium
(ILV)
and
Ultra
(UOS)
have
even
beat
out
Bitcoin
in
gains,
as

revealed
in
this
newsletter’s
previous
issue
.

The
gaming
sector
took
the
helm
from
DeFi
that
saw
the
most
addresses
connected
in
the
first
seven
months
of
the
year.
The
two
DApp
categories
birthed
a
new
sector,
GameFi,
which
is
believed
to
be
the
next
logical
step
in
blockchain
development.
Crypto-based
games
already
enable
users
to
have
control
over
their
in-game
assets
via
NFTs,
but
the
elements
of
DeFi
could
take
it
to
another
level.
Incorporating
DeFi
would
mean
that
features
such
as
staking
would
be
available
to
users
where
they
can
earn
interest
in
their
tokens.

Yet,
the
sector
is
still
in
its
early
stages,
but
its
appeal
lies
within
its
attractiveness
to
users
who
may
not
necessarily
be
cryptocurrency
holders.
Attracting
such
users
could
further
contribute
to
more
cryptocurrency
adoption,
which
will
likely
be
its
focal
point
for
GameFi
in
2022.

Adoption

With
the
developments
in
2021,
cryptocurrencies
were
able
to
captivate
a
much
broader
audience
compared
to
the
year
before.
In
just
the
second
quarter,
global
adoption
has
grown
880%
since
2020,
Chainalysis
data
shows.
And
the
key
events
mentioned
above
are
likely
contributing
factors
to
cryptocurrencies
going
more
mainstream.
The
NFT
venture
capital
activities
stated
earlier
represent
only
7%
of
the
$30
billion

poured

into
crypto-related
investments
in
2021.

But
despite
the
apparent
growth,
cryptocurrency
ownership
remains
relatively
low.
TripleA
estimates
the
global
cryptocurrency
ownership
rate
to
be
at
an
average
of
3.9%.
Ukraine,
Russia
and
Venezuela
are
the
top
countries,
with
at
least
10%
of
their
population
owning
cryptocurrencies.


Despite
growing
adoption,
cryptocurrency
ownership
remains
relatively
low
worldwide. 

The
low
ownership
rates

imply

substantial
room
for
growth,
which
is
why
a
CAGR
of
60.8%
from
2021
to
2026
for
the
cryptocurrency
market
may
have
some
merit.
This
year,
the
value
of
the
cryptocurrency
market
has
already
grown
from
$364.5
billion
last
year
to
more
than
$2.5
trillion

a
586%
surge.
And
in
the
coming
year,
the
new
sectors
in
GameFi
and
perhaps
assets
related
to
Web3
could
possibly
be
new
avenues
for
continued
growth. 

Tokenization
of
certain
securities
could
also
happen
on
a
much
larger
scale,
and
it
is
even

predicted
to
be
the
norm
by
2030
.
Furthermore,
the
prevalence
of
cryptocurrencies
for
payments
could
also
be
another
area
with
untapped
potential,
which
will
be
explored
further
in
another
upcoming
report.

Predicting
what
sectors
in
2022
are
poised
for
the
same
breakthrough
that
NFTs
had
this
year
would
be
difficult,
if
not,
impossible.
However,
reports
that
carefully
study
and
go
in-depth
about
certain
topics
would
offer
a
better
way
of
understanding
the
nuances
of
a
specific
sector.


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