Retrospective of 2022
BLOCKCHANCE
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If you’ve been in this last year full-time in crypto, you might have started the countdown to finally close 2022 and hope for a better 2023.
We feel nostalgic and relieved to bring closure to this rollercoaster, which might appear like a downward journey. But instead, it resembled a Game of Thrones season, concluding with somewhat of a happy end.
Let us try to recap the year by listing the heroes, the villains, and the best and worst days of 2022.
?? Top 5 Heroes
5.? Michael Saylor
Everyone’s favorite Bitcoin bull was not visibly fazed by this year, even though it gave him a $3.4 billion loss when ? fell more than 63% compared to last year. He has proven to be a resilient Bitcoin hodler, no matter what happens. Even though his investment advice might be questioned by other CEOs, he has been the most shining ex-traditional finance member who changed sides.
When everyone wanted to interview Sam Bankman-Fried in November, he spoke first to the “online-nobody” Tiffany, simply because she sent him a direct message on Twitter. In the sudden role of citizen-journalist, she got an unprecedented open reply from SBF, who shared that he funded both parties, but the Republican Party through black channels, thought that regulation should “fuck off” and that his effective altruist stance was just a marketing vehicle.
Do your friends and family think your crypto-hobby is a scam? Maybe they have been watching the rising YouTube star “Coffeezilla”. On his channel, he debunks scammers and unethical business practices by crypto companies and influencers. His investigation often stems from blockchain analytics, using the tools of transparency against those who want to fool their users and fans.
Like Coffeezilla, ZachXBT is also an online investigator, who anonymously shares his work on Twitter. He/she (?) keeps track of scams on a Notion page, displaying warnings and exposing scams, rug pulls, and unethical business practices across the industry. Such work is courageous, while also risky, but necessary to make crypto a safer and more ethical space.
1.? The Ethereum developers of “the Merge”
The top-heroes were the devs that managed to pull off a seven-year-long promise: switching from Proof-of-Work to Proof-of-Stake.
It's further impressive that the developers Hsiao-Wei Wang, Parithosh Jayanthi, Marius Van Der Wijden, Ben Edgington, Tim Beiko, and Danny Ryan managed to realize this monumental technical achievement without halting the $200B+ network. It’s comparable to switching engines on a plane, while it’s still in the air.
?? Top 5 Villains
5.? Richard Heart
Richard Heart is behind the controversial HEX token, which enabled him to obnoxiously display his crypto-wealth. He sums up the parts of our industry that put legitimate market participants to shame and need of explanation.
4.? Alex Mashinsky
Mashinsky famously wore regularly a shirt reading “bankers aren’t your friend.” It might have been better to have a few bankers on his CeFi-bank because his incredibly poor risk management and excessive risk-taking led to him declaring bankruptcy.
We still expect to see further consequences for Mashinsky and his executives. They withdrew millions in funds in the weeks preceding the halt of withdrawals for customers.
3.? Su Zhu and Kyle Davies
The collapse of 3ACs caused the domino effect of “the contagion” which wreaked havoc on the industry.
Su Zhu and Kyle Davies were pushing the “super-cycle”-narrative to further collect funds, for which they misrepresented their financial position to lenders, while secretly losing billions.
2.? Do Kwon
His downfall was mostly caused by himself: The death spiral of his algorithmic stablecoin happened due to his poor protocol design and reckless risk management, backing his stable coin with Bitcoin when the ? price was falling. Kwon’s toxic online behavior didn't help either. He directed an army of Lunatics toward anyone who dared to criticize him or his project, which might have attracted the enemies that gave his house of cards a push.
1.? Sam Bankman-Fried
This is no surprise: SBF was 2022’s worst villain. He and his team stole $8B, committed one of the worst financial crimes in human history, and caused an incalculable amount of damage to the space.
He is soon to be extradited from the Bahamas to the US, likely going to prison for a long, long time.
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?? Top 5 Worst Moments
5.? Tornado Cash Sanctions
While many of crypto’s most scandalous scammers can walk free, the US justice system arrested the Tornado Cash developer Alexey Pertsev. Tornado Cash was a cryptocurrency mixer enabling the human right to privacy. It could also be used by criminals and instead of hunting them, Pertsev was held accountable. One can understand why Satoshi Nakamoto stayed anonymous.
4.? The Collapse of Terra
With about $60B in combined value, the Terra collapse was one of the largest capital destruction events in history. The implosion is terrible enough, but even worse, it catalyzed ?the contagion“, the credit crisis that wreaked havoc across CeFi.
3.? The Collapse of Three Arrows Capital
Once hailed as legendary traders, the fall of 3AC had a devastating impact on the industry. The hedge fund took many undercollateralized loans to finance its long-term strategy, which was based on the super-cycle illusion.
The massive liquidation of 3AC positions wiped out more than $1T in crypto market cap and toppled CeFi companies such as Celsius, BlockFi, and Voyager.
2.? The Ronin and Wormhole Cross-Chain Hacks
Cross-chain bridges were supposed to be the enabler for an internet of blockchains. However, as a gateway for billions of value, they were attractive honey pots for hackers who exploited their security flaws.
More than $1B were stolen from the two biggest hacks of 2022, which targeted Wormhole, a cross-chain messaging protocol, and Ronin, a layer one that hosted Axie Infinity, a play-to-earn game. Particularly outrageous was the Ronin hack not being that sophisticated, but possible due to improper private key management. All keys were stored on only one device.
1.? The Collapse of FTX
What could be worse? FTX was built on a massive fraud. Customer deposits were used for personal purchases of real estate, invested in venture deals, making political donations, and issuing loans to Alameda Research, his hedge fund, with the special treatment, that none of its positions would be liquidated.
There is one good take-away from this story: it’s a reminder of self-custody and taking care of your own private keys. NOT YOUR KEYS, NOT YOUR COINS.
?? Top 5 Best Moments
5.? Crypto Supports Ukraine
Before any other country sent help, Ukraine could buy bullet-proof vests and other equipment with tens of millions in crypto donations. Including the proceeds of a $6.5M sale of an NFT depicting the nation’s flag.
Crypto has shown that it is a highly effective tool for fast, efficient, and permissionless donations.
4.? More transactions on Layer 2’s than on Layer 1
It was a long anti-blockchain argument “that the transaction throughput doesn’t suffice the business needs.” Layer 2’s, a network on top of the blockchain network, was a solution to increase the average transaction per second (TPS). In October 2022, the TPS of L2 surpassed that of Layer 1. Although we still have a long way to go, Ethereum and other Blockchains are beginning to scale.
3.? Web2 Adopts NFTs
After the NFT hype, the adoption of apes, zombies, and crypto kitties continued with companies such as Reddit, Instagram, TikTok, and Twitter. Your no-coiner friends might not understand them yet, but they are on their journey to be integrated into everyday life.
2.? The Merge
“The Merge” was a monumental technical achievement and another realized solution to another anti-blockchain argument, “that they waste too much energy.”
With the merge, energy consumption and ETH inflation have been reduced by orders of magnitude, while paving the way for future scalability upgrades.
1.? Blockchance growth
Last year, BLOCKCHANCE was just like the blockchain space. With some ups and downs, but on its path to a bright future. We focused on the preparations for the upcoming BLOCKCHANCE 2023 next June, nurturing our team, connecting to our local community, and building the infrastructure to further establish us as the leading blockchain event in Europe. We have some great results to announce with you to share in the next few weeks.
Thanks for being part of the journey. Next, we will share with you our outlook for 2023.
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(Disclaimer: we took inspiration from the Bankless episode ?2022’s biggest moments, source Newsletter and added some of our own takes. Thanks for Bankless great work this year)