2022 crypto was not a year to remember. Certainly the Bear Market was quite predictable. Everything that goes up fast (2021) goes down just as fast. There is no asset that can go up indefinitely. Big Bear Markets had already been there in 2014, 2018 and now 2022. Bull Markets happened in 2013, 2017, 2021 (Bitcoin ATH). It won't be the end of everything because FUD and negative events have happened in the past as well. However in this 2022 many scandals have taken place. Let's review the year.
THE WONDERLAND SCANDAL (JANUARY 2022)
The concept of Treasury and DAO was born with Olympus, the platform created by Zeus. Several forks were born from this platform, including Wonderland. This platform guaranteed 60,000-90,000% APY. Obviously not sustainable, however the idea was to give more and more tokens to those who bought the bonds. The price was certainly falling more and more but the quantity of tokens should have made up for the dilution of the price. The scandal that decreed the end of the platform was the discovery that the treasury was managed by a criminal: Sifu (incorporated in another scandal in 2019: the Quadriga CX exchange exit scam. A film was also shot on Netflix because according to rumors the founder has devised an exit scam, pretending to be dead. Sifu was the right-hand man of the CEO of the exchange, who then suddenly disappeared). All the infrastructure that should have also included Abracadabra and Popsicle (and integrate Sushiswap) collapsed with the end of Wonderland.
WAR AND DONATIONS TO UKRAINE (FEBRUARY 2022)
Russia's invasion of Ukraine after years of conflict and friction demonstrated the bestiality of human beings. However, also the importance that crypto could have in the future. Ordinary Russian users have had their funds blocked both in banks and on exchanges, however this problem has been partially stemmed by using cryptocurrencies through on-chain payments. Ukraine has also received (anonymous) donations using cryptocurrencies.
IS THE BLOCKCHAIN IMMUTABLE? (MARCH 2022)
Even if we don't talk about a famous protocol, March will be remembered for the crazy prop 16 on the Juno Network. This proposal aimed to "take" funds out of a wallet of an entity called Game via a fork. Juno was airdropped to Atom stakers in a 1:1 ratio up to a maximum hard cap (50,000 Atom). However, the Game validator created several dozen Wallets each containing 50,000 Atom, receiving 50,000 Juno on each wallet. How did he know about the airdrop? Juno's airdrop was one of the first in the Cosmos world and in those months we still didn't know about the custom of the new protocols to reward Atom stakers. Was it just a coincidence? It's not important. Prop 16 aimed to fork the chain and leave the whale Game with only 50,000 Juno. Does it remind you of the Ethereum fork that led to the chain breaking into ETH and ETC?
KYC FOR NON-CUSTODIAL WALLETS? (APRIL 2022)
In the European Parliament, this bill is being drafted to combat money laundering: to identify all non-custodial wallets using KYC. Do you withdraw from an exchange to Metamask? You must prove that the withdrawal address is yours. A simply insane proposal that aims to create large data databases that if hacked would expose customer data to criminals and hackers. Just think how many scams could be done... phishing on emails and SMS, calls, even physical attacks and threats. All your balance would be public.
THE COLLAPSE OF LUNA, UST AND ANCHOR (MAY 2022)
May will always be remembered for having seen one of the most prosperous and important ecosystems disappear: Terra. Luna and algorithmic stable Ust went to 0. Ust was created through a seigniorage system that provided: mint of 1 Ust leads to $1 burn of Luna and vice versa. Ust had already lost its peg in 2021, however the ecosystem was increasingly mature. Ust had been listed everywhere and Anchor had now become the main lending platform. Anchor guaranteed 19% on Ust through the classic lending/borrowing system. The collaterals (bLuna and bETH) were staked to boost returns up to 19%. When Ust lost the peg due to the incessant withdrawals on Anchor: the ecosystem of an algorithmic stable based on its own native token (Luna) showed all its limits. Luna went to $0 within a few days. Attack of the Luna Foundation itself? Was it Do Kwon who decreed the end of his own creation? There are doubts but the certain thing is that the Terra is gone and with them several tens of billions of dollars.
BANKRUPTCY OF CELSIUS NETWORK AND 3AC (JUNE 2022)
Probably also deriving from the collapse of Luna and Ust, some lenders have entered into crisis. First Celsius Network, then 3AC. In the following months, other centralized lending platforms went into crisis: Hodlnaut, Voyager, BlockFi, even Genesis and Gemini.
Interest too high? Too aggressive strategies of these lenders to guarantee APY close to 10%? Bad faith? Infection? Surely it is a mixture of all these hypotheses.
INSIDER TRADING ON COINBASE (JULY 2022)
It's definitely not the news of the century. We can easily imagine that exchanges profit from the listing of new tokens and can pass insider information outside. If you know that a token is about to be listed, you have a big advantage and can buy it the previous months (the pump is 100% sure). Some who used to work for Coinbase are accused of passing some of this information to acquaintances or outsiders. This deserves attention because Coinbase is transparent as it is listed on the stock exchange.
THE TORNADO CASH ISSUE (AUGUST 2022)
Tornado Cash is a mixer that guarantees anonymity since after using this dapp the "memory" of the transactions is lost and can no longer be linked to each other. The protocol was created to guarantee privacy but obviously it can also be used to launder money. In the USA, all addresses that have interacted with Tornado Cash have been blacklisted by the exchanges. The lead developer has been arrested. Is this the solution? I would say no. Should knives also be outlawed? You can use them in the kitchen but also to kill. Shall we arrest whoever invented knives?
ETHEREUM MERGE (SEPTEMBER 2022)
Not all months of 2022 have been negative. The most important event of the year arrives in mid-September: Ethereum switches from Proof Of Work to Proof Of Stake (merge). No more mining. Surely this makes Ethereum a more sustainable and non-polluting blockchain. What's the downside? Greater centralization and risk of censorship. In the crypto world there are always compromises.
FALSE HOPE (OCTOBER 2022)
In general, almost all of 2022 was negative in terms of events and price action. However, October saw a recovery across all markets with BTC and ETH making gains of +6 and 20%. Dead cat bounce? Yes, the storm was around the corner.
THE FTX COLLAPSE (NOVEMBER 2022)
Together with the collapse of the Terra ecosystem, it is surely the negative event of the year. The second largest exchange after Binance has liquidity holes. An investigation by CoinDesk sheds light on the balance sheet holes of the exchange led by Sam Bankman Fried (later labeled by many "Scam Bankrupt Fraud"). Basically the funds deposited by customers have been used to cover the debts of Alameda Research (also managed by Sam), buy apartments in Miami, in the Bahamas, for sponsorships, trading. FTX also featured on the arena of the Miami Heat (NBA) and on F1 cars. When the investigation came out, FUD was spread on Twitter and Binance's CZ also delivered the coup de grace. An unprecedented bank run has started with 7 billion dollars of withdrawals in 48 hours. Bankman is arrested on December 12, the charges are: fraud, computer fraud, money laundering, market manipulation, conspiracy. Creepy stuff about client fund management has come out over the weeks but if you haven't lived on the moon in the last 2 months, you should already know all about it.
THE CALM BEFORE...(DECEMBER 2022)
There were no notable events in December 2022. The month was fairly flat. Or maybe it was the FTX scandal that made it seem uncritical? The FTX scandal in my opinion has reinforced the Bitcoin narrative: you don't have to trust anyone. No exchange is safe. It can all end overnight. The collapse of FTX has brought to the fore the need for exchanges to provide a "proof of reserve" and therefore of "solvency" which demonstrates the presence of liquidity in real time.
PS=There have been other notable events such as the Ronin hack (625M$), other bridges (Wormhole, Binance Bridge) or even blockchains hack (see Harmony). The usual rug pulls on some NFT collections but the events mentioned above are the ones I consider most impactful/important. The following events should also be mentioned: bankruptcy of Core Scientific (a company inherent in BTC mining), Telepass integrating NFTs, partnership between Mastercard and banks for Crypto trading, partnership between Polygon and Disney concerning augmented reality and AI, integration of Moonpay on Uniswap to use credit cards and wire transfers in DeFi without going through an exchange, collaboration between Visa and Ethereum for automatic payments in Crypto, entry into the NFT world of companies such as Dolce and Gabbana, Tiffany, Givenchy, Prada, Puma, Adidas, Asics , Warner Bros, Ubisoft. One of the craziest stuff of 2022 is that on Decentraland it is possible to pay taxes in Norway! BetaShares launched a metaverse ETF on the heels of Bloomberg Metaverse Select which integrated NVIDIA and Meta.
2023
What to expect from 2023? I do not foresee a recovery of the markets, for that we will have to wait for the post halving of Bitcoin (2024). However, even if I expect side effects / short pumps / further dumps, I hope that no further scandals emerge.
What were your 2022 events? How do you see 2023?
Happy New Year, hoping that 2023 brings earnings to all of us!
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