At the beginning of 2021, countries had been struggling to cope with the pandemic. Despite this, life went on, although much of it has been turned online. Meanwhile, many physical businesses were forced to shut down. Against the economic meltdown, central banks around the world have relied on a series of QE (quantitative easing) policies.
It was also in 2021 that the crypto industry recorded new exponential growth: Bitcoin and Ethereum continued to reach historical highs; the total market cap of crypto assets is now close to $3 trillion; plenty of traditional investors have forayed into the crypto world. Meanwhile, as technologies and infrastructures continued to advance in 2021, crypto professionals and developers never stopped in their pursuit of new business models and innovative categories, thus giving rise to a series of crypto trends.
Today, we will take you through the top 10 crypto keywords of 2021 and check out the hottest trends of the crypto community during the past year.
1.New public chains
According to Defi Llama, as of December 30, the total TVL of DeFi exceeded $312.5 billion, which is evidence of the vigorous growth of the DeFi ecosystem. However, with its current performance, Ethereum is unable to carry such a demanding load, which may strangle the development of DeFi.
As a result, many new public chains were created to replace Ethereum, making public chains one of the most trending crypto categories in 2021. Last year, we witnessed the rise of many new public chains such as BSC, Solana, Terra, and Avalanche, all of which now rank top 20 in terms of market cap. Although Ethereum’s TVL still accounts for more than 60% of the total TVL of all public chains, many believe that powerful public chains will thrive in the future and that the sector may achieve further growth.
2. Layer 2
Confronted with the challenges of many new public chains, Ethereum developers did not slack off. The top concern for every Ethereum developer and user before the Layer 2.0 upgrade is how to lower the network’s high transaction fees and improve its scalability. In this regard, Layer 2 is now one of the most feasible and effective solutions.
As such, Layer 2 projects like Optimism, zkSync, Arbitrum, and Polygon became the most popular crypto trend in the summer of 2021. At the same time, thanks to Gitcoin’s donation and support for zkSync’s payment link, zkSync achieved extensive adoption. In 2021, Optimism and Arbitrum launched their mainnet and listed Uniswap on their chain. As a result, the TVL of Layer 2 projects had been comparable to that of leading public chains such as BSC and Solana. As the Layer 2 system continued to grow, there also emerged Layer 2 projects like Immutable X that focus on games.
3. MEME
When asked about their first impression of cryptos in 2021, many people would mention two phenomenal coins: DOGE and SHIB. In the first half of last year, plenty of new users had been focusing on the crypto market. Many of them were drawn to DOGE, a coin with an adorable image and a unique style. Driven by Elon Musk’s “promotion” of DOGE, retail investors who are against the establishment and Wall Street showed great passion for MEME coins. Meanwhile, the market saw the emergence of many animal coins, which kicked off a boom of MEME projects.
However, most of the MEME coins, such as PIG, Yooshi, and LowB, quickly diminished after receiving short-lived popularity. DOGE and SHIB, the only survivors, built a dynamic community-based culture. Despite this, the MEME culture did not perish because of the declined popularity of animal coins. On the contrary, along with the growth of DAOs, the MEME culture thrived once again, a large number of emerging MEME coins such as PEOPLE.
4. NFT
In March 2021, three years after CryptoKitties first put a spotlight on NFTs, the NFT work named Everydays: The First 5000 Days by Beeple was sold at Christie’s auction house for $69.346 million, which attracted global attention. In December 2021, Pak’s NFT project titled Merge was put on sale and was eventually sold for nearly $91.81 million. Such an exorbitant price once again reshaped our understanding of NFT artworks.
As a result of the many NFT works with whopping prices, NFT became one of the most influential crypto categories in 2021. Organizations like Microsoft, Twitter, Disney, Nike, Sony, Time Magazine, and CNN, as well as many celebrities, artists, entrepreneurs, and KOLs all started to issue and sell NFTs. Powered by its expanding influence that started from the crypto community, NFT quickly reached consumer and cultural fields and changed the relationship between creators and fans, thus enabling more effective brand promotion, as well as the creation of more well-rounded IP characters.
5. GameFi
On July 31, 2021, Axie Infinity’s 24-hour revenue exceeded $40 million, while the average daily revenue of Honor of Kings, one of the world’s most profitable mobile games, stands at $9.2 million. Thanks to the staggering revenue of Axie Infinity, GameFi and Play-To-Earn entered the spotlight.
The financialization of game assets has always been one of the most trending categories out there. With inherent financial attributes, in-game assets can be combined with a number of financial products. For example, a game could feature such financial scenarios as asset trading, collateralization, leasing & renting, and lending & borrowing. Therefore, GameFi allows investors to profit from gaming while enabling the average gamer to have fun. In other words, GameFi turned gaming into a type of investment. Along with the boom of Axie Infinity, the concepts of Play-To-Earn and GameFi have rapidly expanded to the traditional game industry, and traditional game makers including Ubisoft and Sony also joined the race.
6. SocialFi
Following the boom of DeFi and GameFi, people had been looking for the next crypto trend to get prepared in advance. Amidst the expanding social networking sites, the market saw the gradual emergence of the concept of SocialFi, which refers to the fact that users could monetize the value their social behaviors brought to social platforms. For example, content released by creators on YouTube, TikTok, and Facebook bring them user traffic, which allows these SNS platforms to profit from advertising. However, many creators didn’t receive a fair income from the process, thus triggering the appearance of SocialFi, which aims to change the existing model.
Right now, SocialFi projects such as Mask Network and Torum are not as popular as GameFi projects, and their models are not as mature as those of DeFi and GameFi. Despite this, along with Facebook’s commitment to the metaverse and the boom of Web3.0, the relationship between creators and platforms will be reinvented, and SocialFi will also develop more mechanisms.
7. The Metaverse
In 2021, the metaverse became the most trending term in the Internet sector. Facebook even changed its name to Meta, repositioning itself from SNS to the metaverse. Naturally, the crypto industry, which is closely bound with the metaverse, will not miss this trend.
In the past year, two virtual land platforms, The Sandbox and Decentraland, became the most popular metaverse projects. Partnering up with The Sandbox, Adidas also announced its plan to march into the metaverse. Moreover, big-name singers such as Snoop Dogg and JJ Lin either purchased land in The Sandbox and Decentraland or suggested that they are users of the platforms. Last year, Decentraland held virtual galleries in collaboration with partners like Sotheby’s. Compared with other Internet companies that only temporarily announced their strategic plans for the metaverse, virtual land platforms seemed to be at a more advanced position in terms of the construction of Metaverse. As a result, our imaginations about the metaverse in the COVID-19 era were first put into practice by the crypto industry in 2021.
8. Cross-chain applications
In 2021, a large number of new Layer 1 public chains, as well as Ethereum’s Layer 2 ecosystem, thrived, each with a substantial TVL. In light of this background, the conversion between assets of different ecosystems became a major concern, which requires infrastructures that could provide interoperability between different Layer 1 chains and Layer 2 chains, increase the crypto productivity, and diversify the application of crypto assets. Many developers agree that cross-chain applications are critical infrastructures for the blockchain space.
In today’s crypto market, there are already cross-chain solutions with different verification mechanisms, including Anyswap Bridge, Optics Bridge, and Hop Protocol. However, the cross-chain ecosystem still has a lot of room for improvement. In particular, the security and speed of the existing cross-chain solutions are yet to meet the basic user demand.
9. Web3.0
In 2021, the issuance and airdrops of ENS (Ethereum Name Service) once again put the concept of Web3.0 into the spotlight. Compared with the Web1.0 era where users could only read content and the Web2.0 era where content could only be read and published, the Web3.0 era aims to return the ownership of content to creators themselves.
As a leading Web3.0 blog, Mirror gained more extensive adoption in 2021, and a large number of high-quality creators in the crypto community wrote their views on Mirror. As the development of Web3.0 infrastructures and applications progress slowly, the market has maintained its high expectation for decentralized identity domain names and account systems thanks to ENS. At the US hearing that took place in December, senators also paid attention to the concept of Web3.0, which became the recognized ideal model of the Internet for the next era.
10．DAO
Looking back at the crypto keywords of previous years, if 2020 was a year of DeFi, then the first half of 2021 was dominated by NFT, and the middle period of the year was captured by MEME, while then the keyword of the end of 2021 must be DAO. Although the concept of DAO was proposed many years ago, it was only gradually improved last year. In the last few months of 2021, we witnessed the emergence of ConstitutionDAO, which auctioned a copy of the U.S. Constitution, CityDAO, which aimed to achieve blockchain-powered urban governance, and OpenDAO, which was created to compensate OpenSea users. All of these projects earned extensive market recognition.
The many basic tools have facilitated the development of the DAO sector, allowing the community to directly govern the project via collaboration. This echoes the user-led concept emphasized by blockchain and Web3.0. We believe that DAO will become one of the key organizational structures in social governance.
Looking back at 2021, we can tell that in a world afflicted by COVID-19, the crypto industry has achieved exponential growth. Moreover, the number of new crypto categories has been growing, and there have been more applications for crypto assets. In 2022, we look forward to the emergence of more innovative models, better GameFi/SocialFi mechanisms and models, the continued advancement of cross-chain applications, new Layer 1 public chains, and Layer 2 infrastructures, as well as gradual implementation of Web 3.0, the metaverse, and DAO. We are confident that 2022 will be a brand new year for the crypto industry.
