Is 2022 going to be DeFi’s boom year?

On By mehranmuslimiblogIn crypto, DeFiLeave a comment

This month, prominent DeFi projects have shown a strong recovery after January’s slump. According to Coingecko,, “The combined capitalization of DeFi tokens sits at $121B, having bounced 16.7% since posing a local low of $103.7B on 3rd February.”

As an example, Terra (LUNA) has jumped 7% in the last week, and is the sector’s top token with a market cap of $23.5B. Furthermore, the sector’s combined TVL is up 11.5% since February began according to DeFi Llama, and is currently at $221B. 

Despite this, Ethereum’s network activity is slower. The Defiant says, “The weekly burn rate dropped to roughly 7 ETH every minute from 8.34 ETH, and is down nearly 42% in the past month. OpenSea, a favoured NFT marketplace, was the largest source of burnt ETH, with 12,384 ETH wiped from circulation so far in February. 

Analysts predict excellent year for DeFi

Some analysts are predicting that DeFi will take centre stage in the crypto world this year. And, according to Gunnar Jaerv, the COO of digital asset services firm First Digital Trust, traditional financial institutions will drive growth for DeFi this year. Jaerv observed that the sector has matured, providing the basis for a strong appetite for it. He also added his own explanation for that: “If you look at what’s happening around up today. It’s actually largely commercial. It’s Enterprise.”

A Consensys report published on 1st February also noted that the total number of unique DeFi addresses had produced steady growth amid the market downturn. It commented that the data was “a worthy pulse on the overall health of the DeFi ecosystem, suggesting price action would begin to recover should unique addresses continue to grow.”

A few days earlier, Huobi published a report offering a view on the idea that institutions will drive DeFi growth. It predicts institutions will converge on protocols offering under-collateralized lending solutions. Huobi also anticipates the recent growth in the low-cost Layer 1 and cross-chain dapps will accelerate during 2022.

Some analysts see challenges

Those who think DeFi will face challenges this year include JP Morgan. A report published 3rd February predicts DeFi will soon face a regulatory reckoning. It says: “the governance tokens of leading protocols including Uniswap, Synthetic, and Compound constitute unregulated “pseudo-equities” that “provide token holders with claims on future cash flows generated on DeFi protocols.” Michael Cembalest — JP Morgan’s chairman of market and investment strategy commented, “These are not registered as securities even though they sure act like them.”

As ever, it’s a question of whom to believe.

KPMG reports surge in Singapore crypto investments

On By mehranmuslimiblogIn crypto, Economy, Fintech, GovernmentsLeave a comment

KPMG’s ‘Pulse of Fintech’ report highlights the strong growth in Singapore’s crypto markets. According to the latest report, “Singapore has seen a tenfold increase in crypto-related investments last year worth $1.48 billion, up from $110 million in 2020,” and this surge is expected to continue.

Government support

It is true that the city-state has for some time been recognised as a cryptocurrency hub, with over $1.48 billion in investment completed in 2021 alone. KPMG suggests that this growth is “in part due to government efforts to stimulate the capital market.” One of the actions it has taken is the establishment of a special-purpose acquisition company (SPAC) listing framework that positions Singapore as the best location for firms that are growing fast, as well as unicorns, wishing to go public.

Currently, regulators are making decisive efforts to regulate what they see as speculative digital assets. However, KPMG believes that that this will not hamper Singapore’s crypto investments, and that they will continue to grow this year.

Singapore crypto market changes from services to software

Whilst it is true that in January, Singapore’s central bank ordered cryptocurrency businesses to stop advertising their services to the public, and a significant number of firms have been refused the crypto licenses needed to operate a regulated cryptocurrency business in Singapore, KPMG forecasts that growth will continue because “the majority of cryptocurrency and blockchain investments last year were focused on software and underlying infrastructure rather than services.” Indeed, this sector now accounts for a third of the total fintech investment in Singapore, which rose to $3.94 billion last year , according to KPMG.

Asia-Pacific region going strong

Another highlight of the report is that the Asia-Pacific region is doing well in general. The region saw fintech investments hit a record high of $27.5 billion in 2021, with total funding surpassing $17.4 billion in the second half alone (compared to $11.5 billion in 2020). Furthermore, in 2021, venture capital funding rose to $19.6 billion from $11.5 billion in 2020.

KPMG’s trends to watch out for in 2022

Although KPMG reports cover all world regions, these are its predictions for 2022 in the Asia-Pacific region – ASPAC:

  • Singapore growing on the radar of companies looking for a base from which to expand outside of the Asia-Pacific region;
  • growing investment from Asia-Pacific based countries into developing regions, including the Middle East, Africa, and Southeast Asia;
  • continued growth of embedded finance, including banking and insurance.

NFTs escape the crypto crash

On By mehranmuslimiblogIn Bitcoin, Ethereum, NFTsLeave a comment

DappRadar has published an interesting report on how NFTs appear to have escaped the current crypto market crash relatively unscathed. It points out that while ‘fear’ is the sentiment dominating the crypto market, the very opposite appears to be true of NFTs, or non-fungible tokens.

So, what is happening on the NFT scene that is contributing to this growth. The report first points to the celebrities and big brands that are joining it daily. Some of the celebrities have an enormous social media reach, such as Kevin Hart with +192 million followers on Twitter and Instagram. Hart and footballer Neymar Jr (+200 million followers) have publiicised their entry into the Bored Ape Yacht Club (BAYC), one of the prime NFT projects right now.

Furthermore, Twitter, perhaps the most popular social media platform across crypto and NFT enthusiasts, enabled its first web3 functionality inside the social platform a few days ago. The other social media platforms are expected to follow, and even Walmart has filed several trademarks for NFT use.

Google has also revealed that searches for ‘NFTs” have now outstripped those for ‘crypto’, another telling sign that NFTs are in the ascendance, and there is increased interest from Asia. Prior to this the market was dominated by North America and Europe, but an Asian fan club could make a massive difference.

Some NFT metrics

On their own, NFTs “produced one of the most impressive metrics we saw in the blockchain industry last year,” DappRadar says. “In total, $25B was generated by this type of asset in 2021 alone. That’s a whopping 18,414% more than the four previous years combined.”

And whilst most cryptocurrencies are struggling at the moment, it is necessary to look at Ethereum, the blockchain used by the majority of NFT projects. ETH may be facing challenges, but Ethereum was responsible for 75% of last year’s volume. For example, since December 2021, more than 53,300 UAW have connected to Ethereum NFT dapps on average per day. That’s 43% higher than the numbers seen during Q3 of last year. Furthermore, before the end of January 2022, a record 1.6M unique traders propelled Ethereum NFTs to generate more than $3.7B in sales, and were on track to break the record set in August 2021 of $4.5B.

A store of value?

According to the report, a recent floor price analysis for some essential Ethereum collections signals that NFTs behave like assets that store value. The floor of an NFT collection is the minimum asking price and represents the lowest entry barrier. According to the floor price market cap for the top 100 NFT collections, the value of NFTs has decreased by $2.4B from November and is currently estimated at $14.8B. On the other hand, despite the 50% hit to ETH, the value of the most traded collections only experience a 15% dip, showing that the category resisted the crash. 

There is a lot of positive sentiments around NFTs, much of it down to the growing fame of BAYC. In November, when BTC and ETH were showing all-time highs, the floor price at BAYC was 30 ETH. One week later the BAYC floor increased over 60% to surpass 50 ETH despite a 15% drop in ETH’s price. By the end of December, the cheapest BAYC could be purchased for 60 ETH, and it has now passed 90 ETH. By the report’s calculations, you need more than $225,000 at current ETH prices to buy the most affordable Bored Ape.

Essentially, NFTs have gradually become an asset class of their own. Although they remain tied to cryptocurrencies, NFTs are slowly creating an economy for themselves. What we are seeing now is the proverbial tip of the iceberg, but perhaps most importantly, NFTs are proving themselves as digital assets capable of storing value.

You can read the DappRadar report at https://thedefiant.io/dappradar-nft-report/

The Case for Crypto Optimism

On By mehranmuslimiblogIn Bitcoin, Blockchain, cryptoLeave a comment

As the crypto markets experience a sharp sell-off, it is pleasing to note that not everyone is suffering from extreme pessimism. In an opinion piece for Coindesk, Michael J. Casey, a respected commentator on the market, argues that this is nothing like the events of 2018, despite the slump.

Certainly, 2021 was a boom year that “generated overblown prices” for tokens, whether fungible or non-fungible. However, Casey points out something very important: “In many ways the building and problem solving that followed the 2018 meltdown has served us well. It meant the speculation behind the most recent boom was built on a more established foundation than in 2017.” And while crypto is not yet anywhere near being mainstream, it’s an awful lot closer to that goal than it was in 2017-18. There is a feeling that it is here to stay, and “that’s why this crypto winter feels less brutal” Casey says.

He suggests there are six reasons to say, “this time is different,” which may also give cause for cautious optimism.

  1. Layer 2 scaling is a reality

From the Lightning Network to DeFi apps, cryptographic advances have over the past three years gone from concept to deployment. This means we’re closer than ever to seeing the scalability that will bring mainstream adoption.

  • The success of permissionless projects

Recent crypto success stories are concentrated among permissionless projects open to any participants. DeFi, non-fungible tokens (NFTs) and decentralized autonomous organizations (DAOs) are where money is being made. As Casey says, “Users are finding value in blockchain technology’s most disruptive, paradigm-changing promises rather than in incremental adjustments to existing business models.”

  • Institutions and corporates are in

Thousands of mainstream firms are experimenting with NFTs and social tokens, especially those in entertainment, fashion, media and gaming. Plus, the engagement in crypto among hedge funds, family offices and even pension funds has surged last year, and even if they have sold off some of their crypto holdings recently, “those investments now stand as a base of established infrastructure for handling future transactions.” In other words, institutions etc are not leaving crypto.

  • Regulations equal normalisation

Whilst regulations may hamper innovation, they are also a framework for normalizing the industry and for making the general public feel more comfortable with it.

  • Don’t blame crypto

In 2017, ICOs fuelled investor mania. This year it is quite different. Indeed, it is the extra fiat money available that prompted the 2021 boom. That surfeit of dollars, euros and yen flowed into risk assets: stocks, commodities, real estate, fine art and, significantly, cryptocurrencies. As Casey says, “Now we’re all paying the price for that as an inevitable inflation problem is prompting the U.S. Federal Reserve to remove the punch bowl.”

  • Let it settle

The market will eventually settle. Anyone who has been in crypto for a few years knows this will happen. Casey says, “I think the excessive part of the crypto price rally – the part that took Bitcoin from $30,000 to $65,000 but not that which drove it from $10,000 to $30,000 – was perhaps due to external factors. Once we get to the other side, we will be able to see if future price advances are driven by legitimate crypto-only factors rather than “the risk-on/risk-off whims of a global financial system addicted to central bank largesse.”