2022 is supposed to be the year crypto goes mainstream, with many traditional venture capital firms betting heavily on the ecosystem in 2021. However, with one disaster after another, 2022 is a disaster year for the new crypto ecosystem. Some of the biggest names said to be pivotal to advancing the crypto ecosystem are orchestrating the worst year in recent memory.
That said, quite a few protagonists rise to the occasion. These winners prove that crypto is not just about a select few individuals and companies but a vibrant ecosystem that can survive significant setbacks.
Let’s start with some of the biggest winners in the crypto ecosystem in 2022. The list includes individuals, companies and anonymous groups working for the betterment of the industry.
The winner
In a year that saw the multibillion-dollar collapse of the Terra ecosystem, FTX and Three Arrows Capital, it’s hard to pick a winner. However, crypto has faced enemies before, and 2022 is no different. Several positives came out of the year despite the collapse of several centralized entities.
Ledger and Trezor
When Satoshi Nakamoto created Bitcoin (BTC), the core idea was to give people financial sovereignty that would make them less dependent on centralized intermediaries.
With lucrative interest rate offers for yield products and derivative trading services, most crypto users prefer to keep their crypto assets in a centralized exchange. However, this lucrative offering turned into a nightmare when millions of customers lost their funds due to the collapse of centralized exchanges.
In the ruins of the FTX collapse, crypto investors lost faith in centralized exchanges. Hardware wallet providers like Ledger and Trezor have benefited from investors changing their behavior towards custody.
In immediate response to FTX failure, #Bitcoin investors, all wallet cohorts, have made a distinct behavioral shift towards self-sustainability.
From Prawns, to Whales, #Bitcoin onchain balance is up
Read more at The Week On-chainhttps://t.co/cVUE7QHbtQ pic.twitter.com/uIxUIcI46a
– glassnode (@glassnode) November 14, 2022
In December, custody services and hardware wallets became the preferred choice for many. After the collapse of FTX, Trezor saw a 300% increase in sales and revenue and Ledger saw its the biggest the day of the sale.
White hat hackers
The crypto ecosystem is relatively new, and some use cases like decentralized finance (DeFi) are in the early stages of development. This makes it vulnerable to bugs and exploits. According to DefiLlama, the DeFi protocol will be exploited for almost $5.93 billion in 2022.
However, the number would be much higher if it weren’t for white hat hackers. These white hats generate millions of dollars in stolen funds and flag security bugs that can lead to further exploitation. Security service provider Immunefi claims to have prevented the theft of $20 billion worth of crypto assets through a bug bounty program for white hat hackers alone.
While many projects tend to ignore white hat, 2022 shows that it is better to pay millions in bug bounty than to lose billions of exploits.
Tether
Amidst the chaos of 2022, the stablecoin Tether (USDT) has managed to maneuver through the ruins of Terra and the collapse of FTX.
Centralized stablecoins have been at the forefront of critics’ comments for as long as they have existed. When the original stablecoin Terra depegged, there were rumors of Tether’s exposure to the doomed ecosystem.
However, USDT can overcome the fear, and in 2022, it has reduced its volatile exposure. The company also pledged to stop lending funds from reserves and end all fear, uncertainty and doubt, or FUD.
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Tether has become more transparent over time, with 82% of its reserves in liquid assets. The company had total assets of $68.06 billion at the end of the third quarter, exceeding total liabilities of $67.8 billion.
A loser
The crypto ecosystem has many losers in 2022, with Sam Bankman-Fried getting the first mention. The former CEO of the crypto exchange FTX started 2022 with a value of $ 20 billion. In less than a year, his net worth disappeared and Bankman-Fried is now acquitted of allegedly stealing customer funds and committing securities fraud. Co-founder Terra Do Kwon, whose last known location was in Serbia, also made the list.
Terra USD
Algorithmic stablecoins are a novel, promising concept during bull markets. The Terra ecosystem rose to new heights based on this hype. However, the flawed design of TerraUSD (UST), now known as TerraClassicUSD (USTC), aided by Kwon’s reckless decisions, led to its downfall. The failure of the original stablecoin Terra also undermined the concept of algorithmic stablecoins, with regulators warning against them.
The collapse of UST wiped out $40 billion in investor capital and caused a contagion that claimed nearly half a dozen other crypto companies with exposure to Terra. While many companies and individuals escaped the list of losers, the implosion of UST Terra was the catalyst that led to more upheavals in 2022.
Research Alameda, FTX and centralized exchanges
At the beginning of 2022, FTX is worth $32 billion, while its sister company Alameda Research has a value of several billion dollars. However, the November bank in FTX soon became bankrupt. As more details emerged, it became clear that FTX and Alameda Research were not as independent as they claimed. Even FTX US, which was supposed to be a separate entity governed by United States law, found itself embroiled in a complex saga.
According to authorities, FTX and Alameda linked funds to each other, and both companies were also involved in misappropriating customer funds. Alameda used FTX funds to lend billions of dollars to other companies. FTX, on the other hand, uses non-existent housing projects with rising prices as collateral to take on significant debt. All Ponzi’s fall in November.
related: Top five crypto winners (and losers) in 2022
The collapse of FTX and Alameda created more contagion in the crypto ecosystem and single-handedly removed confidence in centralized exchanges and the wider crypto ecosystem practically overnight.
Crypto investors
Amidst all the chaos and downfall of many crypto exchanges and major venture capital firms, the biggest losers are crypto investors. If the bear market burn wasn’t enough, millions of crypto investors who had funds in FTX lost their savings overnight.
Terra used to be a $40 billion ecosystem. The original token, LUNA – now known as Terra Classic (LUNC) – is one of the five largest cryptocurrencies by market capitalization. With millions of customers investing in the ecosystem, the collapse brought their investment to zero within hours. After Terra collapsed, crypto investors lost their funds in a series of centralized exchanges and staking platforms like Celsius, BlockFi and Hodlnaut. Crypto investors also lost heavily in the nonfungible token market, with prices of many popular collectibles down 70%. Overall, crypto investors are one of the biggest losers this year.
2022 will go down in crypto history as bad year. Crypto investors want to forget the year and start fresh. Venture capital firms and investors in crypto projects are reevaluating their investment strategies. After many years in crypto, the likely result is the acceleration of regulations in the industry throughout the coming years. This could restore some of the lost confidence in the industry.