Metaverse, NFTs, DeFi to rule crypto space in 2022

The year 2021 was nothing less than phenomenal for the crypto industry in India and the world. The pandemic had the crypto world thrown into the limelight, and with a global market now realizing the potential and possibilities of blockchain technology beyond their initial skepticism. Almost every day, new projects would surface, solving another real-world use case via cryptos, NFTs, DeFi, etc. And the hype around Web3 and metaverse had taken the online communities by storm.

India was at the forefront of the crypto buzz, with millions vying for their favourite cryptos. India became the second-leading nation in terms of crypto adoption, and given the current purview that seems to be starstruck at the multi-billion opportunity knocking the doors, 2022 might arguably see India leading the world in deriving utilities from the decentralised disruption, provided the government takes a progressive regulatory stance. Here’s my quick run-down of the top crypto trends that should rule 2022.

Enhanced crypto penetration in the rural and semi-urban areas

2021 had not just the Tier-I cities relying on cryptos to hedge their fiat portfolios. Tier-II and Tier-III steadily took the lead in crypto adoption, especially post-pandemic. Around 47% of Indian crypto users entered the crypto space within the last 6 months of 2021, while crypto emerged as a new way to earn online.

Thanks to the increased internet penetration and smartphone access, crypto adoption in the unbanked hinterland boomed in 2021, with over 700% growth in user signups from small cities, like Guwahati, Karnal, Bareilly, spearheading crypto adoption beyond the urban centers. Cryptocurrencies being digital assets, require the basic infrastructure to flourish. As more people get connected to the internet and better understand cryptos, 2022 will continue seeing the rural crypto adoption trend in India.

Besides, the current crypto demographics suggest that more women will be leading the pack in 2022. Age-wise, people below 35 years had a 66% share in the Indian crypto user base in 2021. We can expect more Indians to join the crypto revolution from every gender, walk, and phase of life towards a more equitable wealth distribution and multiple employment cum growth opportunities via cryptos in the coming year.

The rise of DeFi platforms

DeFi was a big hit in 2021, and by March 2022, DeFi contracts will have gathered a combined value of $41 billion. The DeFi and DAO community have enjoyed substantial gains from yield farming, quite popular on DeFi platforms. 2022 will arguably be a seminal year for DeFi and decentralised platforms, like DEXs and dApps, as they would be the underlying infrastructure of Web3.

Most of the platforms are built on Ethereum. Once Ethereum shifts entirely to the PoS consensus in 2022, its network value might increase manifold. Cross-chain networks like the home-grown MATIC Network, Solulab, and others would also prove vital in dividing the load of the DeFi sector.

The online gaming industry is another area heavily disrupted by DeFi and NFTs that helped the industry monetise further while providing a new income stream to gamers who spend considerable time playing online.

Given the influx of DeFi into varied sectors, governance tokens will gain more popularity, giving the DeFi community more stakes and votes in the platform’s governance.

The rise of DeFi platforms has boosted another concept in the Indian crypto circles — stablecoins. More Indians are thronging the stablecoin market, with Tether USDT ruling the scene. As per a recent report, Tether is the second-most traded crypto after Bitcoin.

It would be worth mentioning here that most DeFi companies have tied up with Indian cooperatives to offer peer-to-peer services and are planning to open more branches and even ATMs. In short, DeFi is set to democratise finance in 2022.

The upcoming Web3 economy

The creator economy will see incredible innovation in Web3 iteration that might explode as the ‘new renaissance of entrepreneurship’ in 2022 itself. Web3 startups focused on cryptocurrencies, NFTs, DeFi, etc., should gather momentum with VCs finding long-term value in these startups as the drivers of the next iteration of the web despite the regulatory uncertainty. Early-stage VCs like Antler India are committing to invest and deploy $100-$150 million in over 100 Indian startups in the next three years. The online realm we call the Metaverse (which Bill Gates claims will be the venue of our work meetings within a few years!), DeFi, and NFTs will co-author the next web edition in Web3 platforms.

NFT vogue to gain momentum

Let’s discuss the vogue that NFTs became in 2021 after the Beeple artwork sale back in March. NFTs seem to have crash-landed into every sector that holds the potential to be tokenised. The NFT craze is gathering up and would arguably reveal the best of it in 2022 beyond the in-game collectibles, artworks, and sports memorabilia, and grow over 1000% in 2022 alone, as per a Forbes prediction!

Notably, the maximum attention on NFTs will come from athletes, artists, and celebrities, besides in-gaming and sports collectibles. The recent sale of the Amitabh Bachchan NFT collection garnered close to $1 million. Times are not far when we’d be carrying home sports and celebrity NFTs instead of physical souvenirs.

Metaverse Boom

Facebook’s move towards rechristening itself as ‘Meta’ and global tech giants including Microsoft, Snap, Nvidia, Tencent, etc., backing the Metaverse hype, could have 2022 writing a new chapter in the Metaverse history. AR/VR upholstered by blockchain technology already lends an immersive experience to the Metaverse audience.

Though Nvidia is ready to launch its AR/VR headsets, an AR-based social media startup Flam based in India is developing a social networking mobile app for a Metaverse-equivalent AR experience sans the AR/VR gears. The discussion cannot be complete without mentioning Shiba Inu’s initiatives to integrate metaverse and NFTs in their gaming firm, Shiba Games. The developers have many plans in the pipeline to find more use cases for the dog token via incorporating rising industry niches within the Shiba ecosystem.

Crypto regulations: Work-in-progress

Talking of 2021, we have made commendable progress on the regulation front, and 2022 might bring more clarity on this issue. From the widespread crypto ban rumors in January to the finance minister making remarks about the ‘need for a calibrated approach to tackle crypto’ earlier this year, to the public consultation by the parliamentary standing committee, and finally, the prime minister calling for crypto regulations in November, the possibility of an impending ban could be ruled out.

The bill, in all probability, might fail to go on floors in the winter session of parliament yet again (winter session ended without the cryptocurrency bill being tabled). This simply means we are a work-in-progress nation as far as regulations are concerned. We have already come across several hints and assumptions, such as these:

The government might allow a limited number of exchanges to operate, which explains the consolidations Indian crypto exchanges are seeking to undergo.

The exchanges might be asked to appoint a grievance officer for ensuring a local point-of-contact, on the lines of IT rules for social networks.

Indian exchanges are already enforcing self-regulatory codes of conduct as part of the IAMAI-BACC initiative. Progressive crypto regulations can help India spearhead the crypto revolution (just like the IT boom). The crypto community is doing a great job furthering crypto education among the masses.

One may call 2021 the giant leap of faith for the crypto industry, and surely it was one. But come 2022, we will be in for a bigger treat as this leap continues into strides and jumps towards building a better world powered by blockchain and cryptos. Exciting times!


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