DeFi Predictions 2023: How will crypto and blockchain evolve? | cryptopolitan

Without a doubt, 2022 has been a rather depressing year for the crypto world and Challenge in general. Scams, hacks, raffles and other illicit activities have significantly shaken the confidence of the industry. Market sentiment for cryptocurrencies has been significantly weak compared to the previous two years. It has also hampered the progress made by block chain and DeFi protocols.

As we head into the new year, it’s important to review some of the key projections for the industry in 2023 and understand how the market could evolve or transform in the new year.

The positives of 2022

It wasn’t all dark and negative in 2022. We’ve seen blockchain adoption grow across all industries. Specifically, the banking industry has increased its blockchain market share at 29.7% against 11% the previous year. Last month, one of the largest organizations in the banking and financial services industry, JPMorgan has made its first blockchain transaction through the Polygon network. Citigroup has also increased its investment in blockchain this year.

The Adjusted TVL (total value locked) on DeFi protocols has also grown from $60 billion to $142 billion this year. In 2021, Ethereum was the primary blockchain network for all existing and emerging DeFi projects. Although Ethereum’s dominance remained in 2022, the market share of other competing blockchains such as Solana and Polygon also increased this year.

Top DeFi and Crypto Predictions for 2023

Regulation is inevitable

From Celcius to the FTX exchange, today’s industry has been rocked by scams and hacks this year. In the recent FTX Collapse alone, over a billion dollars in user funds were lost. Major crypto investment platforms such as BlockFi have also filed for bankruptcy due to lack of available funds to accommodate user withdrawals.

The continued success of these events in 2023 has inevitably raised concerns about more regulations in the industry. Binance CEO CZ has previously provided a statement supporting the need for increased regulatory oversight for centralized exchanges. US President Joe Biden, along with other G20 countries, is pushing for a comprehensive deal regulatory framework for digital assets and transactions. These movements and current market scenarios suggest that we will see a lot more regulations applied to crypto and DeFi marketing in 2023.

Decentralized exchanges (DEX) will gain traction

The continued failure of centralized exchanges this year has shown that transparency and control are the most critical aspects of this industry. Many users have learned the hard way that trusting centralized exchanges with their funds is not a good idea.

Although DEXs are often complex and require more due diligence from the average user, these platforms offer complete transparency and control. Users do not need to remit their funds to a company, rather they have complete visibility into how their assets are stored or invested within the platform. Therefore, 2023 can potentially be a breakthrough year for DEXs, and we could also see more innovative features coming to DEX apps and platforms.

Stablecoins will be under surveillance

After the monumental failure of Terra LUNA and its stablecoin UST, the market has become extremely wary of stablecoins that lack sufficient auditing mechanisms to validate their assets and maintain their peg to the dollar. Several Tier 2 stablecoins have already failed in 2022 due to lack of user interaction and adoption. Such scrutiny will potentially continue into 2023, as the entry of new stablecoins into the market is expected to remain low. The market will potentially continue to be dominated by USDC and Tether.

Will Ethereum outperform Bitcoin?

In terms of growth and scalability, ETH is on track to surpass BTC in 2023. In September of this year, the long-awaited Ethereum merger finally took place, changing the consensus model of the network to Proof-of-Stake (PoS) power-hungry mining-based proof-of-work (PoW) framework. This not only made the popular blockchain more sustainable, but also significantly reduced the supply of ETH tokens.

This will reflect positively on ETH in 2023, and the wider adaptability of the network will potentially pave the way for Ethereum to outperform Bitcoin.

All in all, 2023 should be a big year for DeFi, blockchain and cryptocurrencies. While market sentiment continues to remain weak, the community is hoping for an improvement heading into the new year.