[Year in Review 2021] Top 5 blockchain and Web 3.0 trends of this year
2021 has been one of the most significant years for the global blockchain, crypto and Web 3.0 ecosystem.
For the first time, the market cap of all crypto assets crossed $3 trillion, the Total Value Locked (TVL) in the Decentralised Finance (DeFi) space touched $100 billion, and the world went gaga over Non-Fungible Tokens (NFTs) as many of them sold for millions of dollars.
In 2021, innovators working on Web 3.0 – who are building decentralised apps powered by blockchain – have also been actively working to scale existing blockchains. Further, institutional investors are looking to be part of the Web 3.0 revolution.
Here’s a deeper look at the top five trends in blockchain in 2021:
Into the Metaverse
In October 2021, when Facebook CEO Mark Zuckerberg unveiled the company’s rebranding to Meta and revealed his ambitious plan to build a metaverse, the announcement renewed the interest in the concept with people searching about what it really meant.
The Metaverse concept was first mentioned in the 1992 science-fiction novel Snow Crash by Neal Stephenson.
In simple terms, the metaverse is an online, 3D universe that combines various virtual spaces. This 3D universe will allow users across the globe to meet, chat, work, and participate in games together.
Due to their open-world nature and being Web 3.0-based, metaverse-like platforms promise to turn into digital economies with various types of utility tokens and collectables. As such, Facebook’s rebrand has brought into the limelight innovation and utility in technologies such as augmented reality (AR), virtual reality (VR), blockchain, cryptocurrency, NFTs, etc.
Further, venture capitalist Matthew Ball’s iconic, in-depth essay ‘The Metaverse: What It Is, Where to Find It, And Who Will Build It’ sold as an NFT for $479,000 in November 2021.
Mainstreaming of crypto
In 2021, cryptocurrencies gained mainstream popularity as global leaders like Elon Musk, Jack Dorsey, Mark Cuban, and others began endorsing crypto on public forums.
With crypto garnering more attention, it emerged as one of the hottest investment options in recent times.
In keeping with this momentum, Bitcoin (BTC), Ethereum (ETH) and several other cryptocurrencies posted their All-Time-Highs (ATH) this year.
In fact, a recent report by blockchain data platform Chainalysis revealed that global crypto adoption has risen by over 880 percent in the last year. Further, the total crypto market capitalisation also touched $3 trillion for the first time.
With large financial institutions and government authorities taking notice of this new system of transfer of value, conversations on crypto took centre stage.
For the first time, the US House of Representatives’ Committee on Financial Services heard from top executives from six major cryptocurrency companies such as Coinbase and Circle on providing clear rules and regulations for the booming industry.
Here, in India, local authorities have also been looking to understand crypto better, and are in the process of defining and regulating it. In an upcoming Bill, the government, which has been speaking to a set of Indian crypto exchanges, is looking to bring regulatory clarity to the space.
Capital influx in Web 3.0
Rapid developments and innovations in Web 3.0 have not gone unnoticed. Institutional investors of all sizes have raised large funds to deploy capital into the space in 2021, hoping to be part of the Web 3.0 revolution.
During the year, US-based VC firms Paradigm and Andreesen Horowitz (a16z) unveiled their monster $2.5 billion and $2.2 billion crypto funds, respectively, to invest in emerging Web 3.0 companies.
In fact, according to PitchBook, VCs have invested over $27 billion in crypto companies globally as of late November 2021, which is more than the previous 10 years combined.
Further, with a 121 percent increase in Series A deals over a five-year period, blockchain technology has emerged as the second fastest-growing startup sub-sector globally, as per the Global Startup Ecosystem Report 2021 (GSER).
In India, crypto exchanges CoinDCX and CoinSwitch Kuber turned unicorns in 2021, with fundraises of $90 million and $260 million respectively.
Blockchain scaling and infra
The much-awaited Ethereum 2.0 upgrade went into full swing in 2021 as the decentralised app development network transitioned into a more scalable, energy-efficient blockchain.
A key step, known as the Altair Beacon Chain upgrade, took place in late 2021 as the blockchain prepares developers and client teams for the upcoming ‘Merge’ where Ethereum will transform from a Proof-of-Work (Pow) blockchain to a Proof-of-Stake (PoS) network.
Besides Ethereum, there is a wide range of projects working on scaling blockchain infrastructure this year.
Polygon – the most well-known Ethereum scaling project – committed $1 billion to Zero Knowledge (ZK) efforts, which are a form of scaling that runs computations off-chain and submits them on-chain via a validity proof
In 2021, Polygon actively partnered and/or acquired a range of ZK projects and teams to launch the ZK-focused initiatives Polygon Hermez, Polygon Miden, Polygon Zero, and more.
Polygon cofounders (L to R) Anurag Arjun, Sandeep Nailwal and Jaynti Kanani
NFT mania takes over
NFTs, or Non-Fungible Tokens, took the world by storm in 2021 with the sale of an NFT by digital artist Beeple (Mike Winkelmann) for $69 million, opening the floodgates for scores of other NFT sales by various artists, musicians, actors, and regular users.
Western stars such as Eminem, Grimes, Paris Hilton, Lindsay Lohan, as well as Indian celebrities Amitabh Bachchan, Vishal Malhotra, and more have all jumped in on the act.
In fact, some of these digital assets — in the form of images, videos, etc — have been traded for hundreds, thousands, and even millions of dollars. NFTs are also finding applications across segments such as gaming, digital identity apps, licensing and certification, digital art, etc.
Research by Cointelegraph showed people have spent over $9 billion in NFT sales in 2021, with some estimates suggesting the total NFT sales may reach $17.7 billion by the end of the year.