“FutureX Meet-Up #5 — Market Outlook for 2022” Recap and Highlights
The DeFi market in 2021 exploded, topping $100 billion dollars for the first time in October, as the popularity of NFTs and Layer 2 protocols, among other things, boomed. While the value of the market continues to grow, problems in the young industry, like hacks and looming regulations, persist. With that being said, what does 2022 hold for DeFi?
SynFutures is a next-generation decentralized derivatives exchange that is committed to helping traders trade decentralized synthetic asset futures and derivatives more efficiently and effectively, and most importantly safely. We established our FutureX sessions in September as a way to connect and share our thoughts with the wider SynFutures community.
On Dec 21st, 2021, SynFuture’s Matt the Finance Guy hosted the “FutureX Session #5: Market Outlook for 2022” event with a distinguished panel of blockchain experts consisting of Ran Yi, COO at Kronos Research, Joe DeTommaso of CMS Investment Research and SynFutures’ own Rachel Lin.
As we prepare to welcome in the New Year, we took a look back on what happened in 2021, gave some thoughts on where the market is at right now, and talked about our projections for the market in 2022.
If you have missed the live session, you can check the recordings of the session HERE.
Keep reading to see highlights and insights from our guests from the event regarding the current and future state of derivatives in blockchain.
Selected Highlights from the Event
I think 2021 was a lot of fun because we got to see a ton of different themes play out in the market. So, as 2021 kicked off, we saw DeFi spill over from the previous year. Derivatives platforms got quite a bit larger in 2021. And then we saw things like NFTs and GameFi, really start to play out in the latter half of the year.
So I think there’s been a lot of building, but also a lot of platforms that have started to interact with one another. I think 2021 has been great to set the stage for our easier use of these things and more interoperability to bring a broader user base on board.
I think we’re generally starting to see a lot more usability on chains outside of Ethereum. So, in that regard, from the CMS’ perspective, we’ve been heavy traders on the directors’ platforms on Ethereum to-date. And a lot of the other changes either lack liquidity or there wasn’t much going on there. But today we’ve got things like Terra, Avalanche, Solana is quite far along at this point, slowly just becoming more and more usable for us, which just generally says that there’s more liquidity in the ecosystem outside of Ethereum.
I think CMS overall is optimistic about 2022. But I guess generally we’re kind of at the whim of the traditional market right now and just waiting to see how things pan out there. I don’t think that we’ll see these 3-year bear markets and some of the larger assets that we have before.
But I guess generally, what I’m looking forward to, or expecting, in 2022, I think we’ll probably get a heavy wave of UIUX platforms that abstract this type of stuff away a lot further from the user.
So let’s start with who’s going to win out in the market. And then see what types of cross-chain activity can be set up to accommodate linking everything up. Another point is, obviously, institutionalization with Bitcoin futures; ETF. A whole bunch of ETF is being approved. Also just mass insurance of people from public companies to hedge funds and pension funds. This will become more mainstream and regulated.
What we’re trying to do is just decrease fees and slippage across CeFi and DeFi, I think that’s a trend, or, it’s more of a segment. So trading fees on DeFi are quite expensive. Now if you go across the chain, it’s even more expensive. And I think that’s going to come down. And it’s what stands in the way of that in a broader product set of DeFi dominating over CeFi.
I think that’s an obvious trend that’s coming. And even in CeFi, because we’re traders, just general lowering of these and increasing liquidity. Crypto can be like a traditional asset as all the institutional players are coming in. How do you execute a trade of $100 million and not move the price as much, right? That’s from just institutionalizing this asset base. So I think that’s my main thinking.
For 2022, I’ll just say what I would like to see. Right now, we’re kind of focused on the FED, right? The players that are trading crypto are becoming more similar to the players trading traditional assets, right? You could sort of see some of the higher correlation especially in the downturns.
So, what the FED will do will impact everything, right, all assets. Hopefully, crypto will get less impacted. But it’s becoming a mainstream asset class. So, I would like to see more friendly regulations for crypto across the board. You see this in Dubai and sort of in the US and just supporting it to become a mainstream asset base.
I actually just now compiled a list of the 10 most major events that I viewed as most important in 2021, I would say the first true event was the NFT hype. The second was the play-to-earn model, carving a new path for the gaming business model. The third one would be the emergence of the Ethereum challenges, and the fourth one would be the Layer 2 summer, so, we’re seeing improving infrastructures.The 5th and 6th ones were more about the regulation. So, we’re seeing the great mining industry, migration from China. The 6th one was, I think, the institutional adoptions of the industries has been astonishing, seeing companies begin to allocate their assets to the crypto industries.
Also Bitcoin became the legal tender for El Salvador, which is huge. I think the other two or three things that I found very interesting is that the meme coin phenomenon emerged as well as the DeFi 2.0 emerged. Lastly, I would say the success of dYdX was a major event in the industry.
I think today, one of the huge phenomena we are seeing is a lot of institution adoption as well as the correlation of the crypto market to the broader financial markets.
And we’re seeing from the investor size, lots of traditional VCs have been coming into the market in spades, and we’re seeing lots of average users retail has been rushed into the market, although of course there are some bubbles out there, but it is an educational process for everyone to understand cryptos.
For the complete video recording of our FutureX events, please visit our YouTube Channel.
We look forward to bringing you more insights and knowledge in the coming FutureX events! Stay tuned for more information!
SynFutures is a next-generation derivatives exchange focused on creating an open and trustless derivatives market by enabling trading on anything with a price feed. By cultivating a free market and maximizing the variety of tradable assets, SynFutures is lowering the barrier to entry in the derivatives market, creating a more equitable digital assets exchange market.