Year End Review: Assessing The Situation Of Web3 In 2022

Year End Review: Assessing The Situation Of Web3 In 2022

Web 3
January 9, 2023 by Diana Ambolis
The problem with clichés is that they always contain a tiny kernel of dull but crucial reality. The fact that the sky is blue is one example. Its usefulness to physics, biology, and other fields is not diminished by the fact that it is so commonplace as to blend into the background of conscious everyday
Year End Review: Assessing The Situation Of Web3 In 2022

The problem with clichés is that they always contain a tiny kernel of dull but crucial reality. The fact that the sky is blue is one example. Its usefulness to physics, biology, and other fields is not diminished by the fact that it is so commonplace as to blend into the background of conscious everyday thought. The classic understatement that should come to mind when assessing the situation of Web3 in 2022 is that progress is not linear. But it matters a lot how progress makes its nonlinear journey through history. Even to those used to the volatile and intermittent, it is a jagged entity, its movement untidy and unexpected.

In the year 2022, the worlds of cryptocurrencies and NFTs experienced a lot of frantic activity. The terms “bear market” and “crypto winter” are so overused that even those outside Web3’s gates are sick of hearing them. However, just as the concept of zooming out is crucial for preserving a healthy mental health outlook in the NFT ecosystem, so is the concept of setting 2022’s challenges and triumphs within the framework of the bigger picture of where Web3 is headed. When we do, we discover both reasons to be hopeful and reasons to exercise caution for the upcoming year.

NFTs turned green (kind of)

This year, the discourse surrounding NFTs and their effects on the environment changed mostly for the better. More and more people started to see that the terrible predictions made by the blockchain’s major critics were generally exaggerated and poorly framed.

The merging of Ethereum in September was the main development that affected the environmental debate. The second-largest blockchain’s conversion to a proof-of-stake (PoS) validation mechanism resulted in an astonishing 99.5 percent reduction in energy use, putting the final nail in the already shaky claim that NFTs were harmful to the environment.

Beyond its benefits for the environment, the merger helped position Ethereum for further development. The blockchain is essential to the operation of innumerable additional decentralized apps and decentralized financial systems in addition to the millions of NFTs it authenticates. The “surge, verge, purge, and splurge,” as described by Ethereum co-founder Vitalik Buterin, are additional advancements made possible by the merger. These will guarantee that the blockchain can scale more effectively in the future and enable a technique known as “sharding,” which makes network nodes simpler to run.

Lower admission requirements for anyone wishing to take part in Ethereum’s staking community is another advantage of transitioning to a PoS system. With the latest version of Ethereum, even a specialized laptop may perform the function of crypto mining, which previously needed users to acquire and maintain expensive and burdensome equipment. Ethereum’s network has a greater possibility of becoming more decentralized if the number of validators is increased.

Beyond all of this, the integration was a much-needed victory for the crypto community after a challenging year. Blockchain-based technology can minimize its environmental impact more than any other sector, but initiatives like merging have demonstrated that it’s not impossible. It is nothing to laugh at that Ethereum, which has long been the face of NFTs, managed to pull off a staggeringly difficult engineering achievement amid a crypto winter.

The discussion of royalties continues.

In 2022, the debate over creator fees and royalties in the NFT industry heated up like never before. Royalties aren’t hard-coded into the market or the individual smart contracts that enable the buying, selling, and trading of NFTs, despite the fact that they have long been an important aspect of the NFT ecosystem. Zero-royalty websites like sudoswap and X2Y2 appeared on the scene. They quickly gained popularity as discussions about the role that creator royalties should and do play in the NFT ecosystem heated up throughout the year.

Additionally, a number of the largest marketplaces in the community that support creator royalties, such as Magic Eden and OpenSea, experienced confusion over whether or not they would uphold these restrictions and for which collections they would be applicable. Given its size and reputation within the industry, OpenSea stirred the pot more than any other platform. Prior to receiving a strong outcry from the community and abandoning the concept, it had proposed a plan to do away with royalties enforcement for current collections.

Together, these occurrences sparked a sort of unionization movement among Web3 artists and builders, who primarily emphasize two issues. The first is that without royalties, Web3 and the systems that support it today would not exist. Artists create the value that the entire ecosystem depends on. If the royalties that allow them to continue developing were taken away, the entire arrangement would probably collapse. Second, the empowerment of artists is one of the fundamental principles upon which Web3 in 2022 is based. The royalties debate is an important litmus test for that philosophy as well as for those people and platforms that have benefited financially from such creator payments.

Also, read – Top 5 Biggest NFTs Fails And Lesson Learned

Redemption arcs aren’t exclusive to literature.

This year, a number of NFT initiatives recovered from challenging circumstances that left them with damaged reputations and angry or outraged investors. The Department of Justice brought charges against those who committed the most heinous acts against NFT communities. Nevertheless, excluding illicit activity, a few previously written-off localities made unexpected comebacks in 2022. This includes DeGods’ ascent to popularity, Pudgy Penguins’ cunning use of their family-friendly IP to venture outside the Web3 universe, and Pixelmon’s Lazarus ruse.

These initiatives are important not only for their power to change floor prices and investor perceptions but also because they demonstrate to the NFT ecosystem that steady innovation, perseverance, and dedication still exist on the Web3 planet. Cynicism and scepticism are, to some extent, important tools to traverse a decentralized arena where no third party has your back because the world of crypto and NFTs are rife with scams. But they can be abused just like any other instrument. It was encouraging to see such redemption arcs during a crypto winter. Hopefully, 2023 will bring more, but in the meantime, we shouldn’t complain about their flowers.

NFT and cryptocurrency regulation is evolving.

In the wake of incidents like the demise of the algorithmic stablecoin Terra USD and the catastrophic collapse of FTX this year, the already complex interaction between regulatory organizations in the U.S. and the crypto and NFT space got even more problematic.

Although it’s too soon to say how these events will affect regulatory efforts in the United States and overseas, they have only increased the need to control the crypto market to prevent other meltdowns. In a July interview with nft now, SEC Commissioner Hester Peirce voiced displeasure with the way the company and its chair, Gary Gensler, had established an apparent adversarial relationship with the cryptocurrency industry rather than a cooperative one. According to her, 2022 was looking to be the year that a more cooperative framework for future legislative and regulatory legislation in the area was established.

However, in the wake of incidents like the collapse of FTX, that hope has diminished. There are differing opinions both inside and outside the Web3 environment, with people in both places attributing FTX’s failure to either too much or too little decentralization and governance. Representative Tom Emmer (R-MN), who has alleged that Gensler’s relationship with SBF and the cryptocurrency sector is problematically close to one another, has made claims that further muddy the picture. This accusation contrasts sharply with the SEC’s actions this year.

While the existence of such backdoor connections is still a possibility, Emmer’s positions appear to be contradictory given that he has accepted donations from individuals connected to SBF and FTX, co-wrote a letter in March urging the SEC to stop looking into cryptocurrency exchanges (including FTX), and frequently chooses not to respond when asked about the type and amount of donations he has received from the exchange.

In 2023, the decentralized ethos in cryptocurrency will undoubtedly be put to the test. Emmer’s (and other regulatory opponents’) ultimate goal might be to persuade federal institutions to scale back monitoring initiatives in a budding sector with deep finances but a tarnished reputation in 2022. Similarly, be prepared for bad actors to use the forthcoming (and essential) conversation about the future of decentralization as a pretext to impose regulations that declaw the best features of Web3 in 2022 in the name of safeguarding the conventional financial structures that stand to lose the most from its continued growth.

Web3’s issues strengthen the space (in the end)

This year, it was hard for those operating in the market to avoid hearing the tried-and-true lessons from Web3 in 2022. In 2022, some of the most significant rug pulls took place, honing Web3 inhabitants’ senses for the NFT red signals that we should all be well aware of by this point.

No matter how much Web3 preaching is going on behind it, playing fast and loose with people’s money won’t end well, as demonstrated by the failure of Three Arrows Capital, FTX, Luna, and TerraUSD. The industry is struggling, it’s true, but like a body fighting a particularly strong ailment, Web3 will probably emerge from the year’s issues stronger overall because of the hurdles they posed it.

You can criticize cliché all you want, but no worthwhile endeavour has ever been accomplished without effort. We should anticipate Web3’s difficulties to be on a scale comparable to its ambitions if it is as valuable and possibly revolutionary as its most prominent proponents claim it is — and it might be, at least in some aspects. If they weren’t, it would probably mean that we aren’t setting our sights high enough. Who would like to do that?