4 Crypto Industry Predictions for 2023

1. Ethereum & Staking in Ethereum

When we look back on 2022 in ten years, the actual news will be that Ethereum released proof-of-stake and remains the most prevalent layer 1 cryptocurrency. A series of protocol-level improvements has created a vortex of invention, development, users, and capital. 

Since the Bitcoin Genesis Block in 2009, The Merge was the most important thing to happen in the industry. In 2023, more subtle but still important changes will be made to Ethereum . This will make it more popular and bring in more money, like a flywheel, putting Ethereum Network at the front of the next bull market.

Shanghai, the next Ethereum update following the Merge, is scheduled for the second quarter of 2023. Shanghai will let people get their ether (ETH) stakes out of the deposit contract, where they have been locked since December 2020, when staking was made possible. The ability to unstake ETH may increase the amount of ETH staked as stakers who are hesitant to lock funds join the network.

After the Shanghai update, EIP-4844 is another new feature for Ethereum that will help it become the most widely used layer 1 cryptocurrency. The EIP-4844 establishes a standard for proto-danksharding. Proto-danksharding is considered a precursor to full sharding and will aid in the scaling of layer 2s. Danksharding is a sharding technique that employs a "merged market fee" in which each shard has unique blocks but shares a single block proposer.

EIP-4844 is a proposal to begin implementing Danksharding components while the whole architecture is still being developed. Even if proto-danksharding is taken out of the Shanghai update, I think it will still be accepted and used in 2023. This will help Ethereum grow quickly toward full sharding and the most scalability.

After a smooth switch to proof-of-stake, Ethereum's use as a platform for staking innovation will continue to grow. This will create a new crypto yield curve with returns that grow over time.

After Ethereum's successful transition to proof-of-stake in September, it now has the highest staked capital base of any blockchain, with over $20 billion staked. Before the Merge, projects like Lido, which allows for liquid staking, and Obol, which offers distributed validator technology, showed that staking could be done in a new way.

In 2023, ETH staking will continue to change as capital looks for more stable ways to make money and as updates make it possible to withdraw stakes. EigenLayer is an interesting project for staking. EigenLayer offers rollups, bridges, and oracles as "security as a service" for cryptoeconomic transactions. EigenLayer makes it possible for these projects to use the security of Ethereum's staking to add to or improve the security of a native token. EigenLayer plans to release its re-staking protocol and EigenDA, the first middleware utilizing it. If the amount of ETH you can stake goes up in 2023, validators, stakers, and Ethereum-based projects will want more usefulness. the re-staking technique, in 2023 (data availability).

If the amount of ETH you can stake goes up in 2023, validators, stakers, and Ethereum-based projects will want more usefulness. Staking innovations like EigenLayer and others will continue to add capital and utility to the Ethereum base layer. This will create a positive cycle of adoption and utility that will further establish Ethereum as the Web3 global settlement layer.

2. Regulation is Coming and Economic outlook

The government will become dovish, paving the way for the next bull crypto market in the third quarter of 2023.

I think that the government will stop being so "hawkish" and stop raising interest rates by the second quarter of 2023. As credit card debt reaches record highs and savings reach record lows, I foresee macroeconomic indicators reaching the same level as they were before COVID-19. Both of these signs show that the economy needs a boost, so the government will stop raising interest rates. This will encourage people to take risks and put money into new businesses like cryptocurrency. I also think that by then, the crypto industry will have made enough progress in terms of regulation that the risk-on environment will be accompanied by more open policies. This will generate the second bull run, which will commence in the third quarter of 2023.

The centralized financial disasters of 2022 were caused by bad risk management, bad governance, the lack of audits, and the possibility of fraud. All of these problems could have happened in any business. In 2023, consumer protection will be at the forefront of policymakers' minds. Emerging policy will focus mostly on centralized exchanges and stablecoins. There is a chance that exchanges like Coinbase will have to become G-SIFI-regulated organizations, which will raise their compliance costs. 

3. Growth in NFT Utility, Investment DAOs and Web3 gaming

As we collectively leave the "jpeg" era, NFT usefulness will become more sophisticated, personalized, and commercial. Concurrently, blue chip "jpeg" NFTs will represent a multibillion-dollar asset class.

In 2023, the Web3 ecosystem will move beyond the "jpeg" period of non-fungible tokens, which dominated the previous two years and was exemplified by 10,000 pfp projects and zero-utility art. The name "NFT" will no longer be synonymous with "digital art" because a multitude of use cases utilizing NFTs as the underlying technology will emerge.

Already, commercial titans like Starbucks and Nike are investigating other NFT use cases. If Starbucks is successful, a huge number of big brands will start giving out NFT rewards points. This transformation has been initiated by web3-native initiatives such as Mojito, which are already empowering companies and creators who wish to explore the more personalized functionality of NFTs. In 2023, "phygital" will also be a thing. For example, a young person who buys a real pair of Nikes will also get a digital receipt for those shoes that can be worn on their avatar in the metaverse.

Tokenizing real world asset and converting it into digital form through smart contract will be the way to go for artist and businesses. Tiamonds is one such product by LCX

This rapid evolution in the genuine utility of NFTs will require the crypto community to examine the projects of 2021 and 2022 with a critical eye. If they have not already failed, the great majority of existing NFT projects that have not developed utility will be buried in the NFT cemetery.

Investment DAOs

As decentralized, secure, and transparent alternatives to traditional GP/LP venture arrangements, investment DAOs will increase in popularity.

Investment autonomous decentralized organizations (DAO) will increase in number and significance as transparent, auditable, and collaborative capital deployment and allocation mechanisms. Investment DAOs will compel a paradigm shift in financial decision-making; rather than relying on the opinions of a few specialists, these DAOs will operate based on the consensus of their worldwide memberships through the "wisdom of the curated crowd." As agile, on-chain organizations, these investment DAOs will be among the first participants in high-potential investment opportunities, thereby leveling the playing field for the typical investor.

Tribute Labs is an investment DAO construction engine whose current network consists of sixteen investment DAOs spanning the Web3 landscape and managing over $1 billion in assets. These DAOs have established frameworks that will serve as models for the 2023 crop of investment DAOs. Each DAO is limited to 99 members, striking a balance between a diverse membership and the relative capacity to make swift choices and efficiently manage wealth. 

Web3 gaming

Web3 gaming will move past its initial project flaws and finally begin to engage players where they are.

Web3 gaming has largely fallen short of its original aim. The most "successful" Web3 games, such as Axie Infinity and Defi Kingdoms , have been touted as the future of gaming, yet they have failed to capture the attention of the 3 billion gamers worldwide. In reality, Web3 gaming has a poor image, being viewed as little more than a money grab or DeFi with a gloss. This reputation has not improved due to the fact that Web3 gaming ventures are heavily interconnected with crypto markets.

In 2023, Web3 gaming will abandon the practices of its initial projects and begin publishing games that combine the functionality of Web3 with the aesthetics of traditional gaming. The graphics of the next wave of Web3 games will no longer resemble those of the Axie-style games of the past two years, and will begin to resemble those of popular video games. The focus of the public will shift away from token-first initiatives such as Axie and toward studios, companies, and games that have been developing with a gameplay-first approach, such as Horizon, Animoca, and others.

4. CeFi and DeFi

"Tech crypto" will replace "money crypto" and lay the stage for the subsequent bull market.

The past year has been dominated by crypto-currency adoption, regulatory interest, and consumer knowledge. Centralized exchanges have been the "beating heart" of cryptocurrencies, and authorities are now scrutinizing the CeFi ecosystem. The examination of monetary crypto will clarify tech crypto as a connected but distinct field.

Two factors will increase the use of crypto technology in 2023:

1) the migration of capital from centralized to decentralized financial applications

2) the rise of non-financial decentralized apps such as DeSci, social media, and more.

The result will be an increasing base of Web3 (tech crypto) acceptance as opposed to token (money crypto) adoption alone. As more cash is kept in transparent financial apps rather than shady centralized alternatives, this will pave the way for the next bull market and protect against tumultuous market cycles in the future.

The global community will comprehend the distinction between CeFi and DeFi.

During the disasters of 2022, the only creditors made whole were those using Ethereum-based smart contracts, such as those on Aave, where Celsius and Alameda Research repaid their loans to access the collateral they put in order to borrow dollars. Individuals, financial institutions, investors, and regulators will have a clearer comprehension of the distinction between CeFi and DeFi by 2023 as a result of all of this. In the former, transactions are subjectively mediated by people who have the ability to unlawfully alter the database. In the latter, transactions are mediated objectively and without manipulation by mathematics and computer science.