Mateusz Raczyński
min read
Last Update:
January 15, 2024

As we wrap up 2022, we’re looking forward to what the next year will bring. What developments might happen and which projects are we likely to see booming? Here are 11 of our predictions for 2023 trends in crypto and Web3.

1. 2023 – The Year of Building

Those that are active in the space long enough to remember how 2018 felt like–we might be in a similar spot. Many projects that were flourishing in the last 1-2 years were founded in 2018, when everything about crypto seemed to be doomed. This is when we first heard about the likes of Polkadot, Solana, or Cardano. They had to keep building for more than two years to become widely known and used.

We believe that if the macro situation from 2022 continues, the interest in crypto and web3 might be shifted elsewhere for the public. But this is exactly when you want to build, avoiding the speculative side of the space and doubling down on creating great products.

Remaining cautious is a good idea when nothing is certain, but if you have an idea you truly believe in–let’s keep building!

2. Regulations

In 2022 we’ve seen major crypto players collapse–Luna, Celsius, Voyager, BlockFi, and most importantly FTX. As this might be usual for the end of a cycle, it is not what FTX did. We’ll learn about what happened in the coming months–or even years–but likely, one of the reasons for FTX’s setup was the lack of clear regulatory framework for crypto projects in the US, but also in other developed countries. It pushed them offshore, operating under very loose framework.

As people have lost their investments on FTX, it is more than likely that the regulators will be demanded to step in and create a new framework that will prevent from similar events to take place. How that regulation will look like is yet to be seen, but we can be sure that a lot of the discussions will revolve around that topic.

As founders and developers in that space, it’s worth watching how this will evolve.

3. Proof of Reserves Redesigned

An answer for the FTX situation came quite quickly from centralized exchanges – proof of reserves audits. However, this system turned out to be not perfect and some exchanges weren’t clear enough on their operations. For example, some have published proofs of reserves that only state their crypto holdings, while not addressing their liabilities at all.

To make this even more concerning, Mazars, the main organization that provided these audits has cut their ties to the crypto ecosystem. They stopped the auditing for all crypto companies.

There is a need for CEXes to be able to provide that their holdings cover all liabilities to the clients. We might see these both concepts to evolve – Proof of Reserves and Proof of Liabilities. It’s yet to be decided by the industry players on how to tackle that, in order to reassure customers and bring back some faith in the CEX part of the market.

This could also be solved by a new technology, although it is rather yet to be designed. There are multiple ideas already considered, such as using Merkle Trees that would allow any customer to verify that his assets are backed. Chainlink also enables using their decentralized oracles network (DONs) to provide proofs of reserves on- and off-chain.

That’s another trend to watch, but also highly in demand to propose solutions that might solve the revolving issues.

4. Evolution of Decentralized Exchanges (DEX)

The ultimate proposition of crypto is the transparency, security and decentralization that creates the so-called trustless environment. However, for own convenience, many users keep their assets on centralized exchanges which in fact are private companies that you have to trust they operate in an honest manner. And as we have learned, some of them don’t, even among the ultimate industry’s top.

In 2023, we might see some push back against using CEXes. Instead, using self-custody for digital assets might be the preferred option–although it’s hard to imagine that CEXes won’t be still the biggest industry players. However, we can already see more volume on decentralized exchanges such as dYdX or 1inch.

As the capabilities and user experience of these DEXes and DeFi products evolves, we might eventually reach a point where we’ll mostly need CEXes for the on- and off-ramping. Which is still a fairly large part of the market as long as you have to pay your bills and mortgage with fiat currencies, but the incentives to hold assets on CEXes might become less compelling.

That won’t happen entirely in 2023, but we might see some broader movement in that direction–or we’ll at least see the overall direction more clearly. 

5. Artificial Intelligence

ChatGPT became a big thing in the late 2022, showing how powerful AI can be, even right now. While this much interest might be temporary, this application made the public realize how future interactions with computers will look like. It’s even more interesting to see such a development coming from a non-Big Tech company. Weren’t Google supposed to provide such clear answers to any questions through AI? Well, OpenAI is still valued at $20bn, but it's relatively new player that started as a non-profit in 2015.

The attention is there. Now, many will realize what is needed for the AI to reach its full potential – that is the data sets it is able to process and machine learning algorithms that help it interpret the data. What’s critical here is the fact that once the machine learning kicks in and you get a solution to a problem or question, you won’t be able to trace how exactly did the AI ‘think’ to provide you that. As it processes endless datasets, it becomes a black box.

This is what blockchain’s transparency might solve in the long run. If the data used by AI is stored on a blockchain, we will be able to analyze how it works. It might also bring more benefits and there are already multiple blockchain projects built exactly for the purpose of AI, such as Fetch.AI, Ocean Protocol, Cortex Labs, to name a few.

The AI might still be a big trend in 2023.

6. New Use Cases for NFTs

NFTs were a big trend in 2021 and lost the momentum throughout 2022. This is a good thing for the technology itself, as creators will have to provide more value to get users’ attention. We’re not only talking about the so-called creator economy–NFTs as a technology have still a huge potential that remains to be unlocked.

We believe that we might see more and more NFT-related projects in 2023 that won’t only allow for trading art but also give NFTs more utility. That especially relates to the provenance functions of these tokens. In 2022, we’ve seen Alfa Romeo add NFT tokens to their Tonale model as a servicing book. It might be just the beginning for other use cases!

7. NFTs in Fashion and Luxury Goods

NFTs are such a natural addition to the fashion and luxury goods industries. For big brands that already worked with NFTs, such as Nike, adidas, or Starbucks, they created additional revenue streams, however on a scale that proves the potential, rather than is a significant part of the business. Even if we take a look at Nike which generated a whopping $185 million in revenue with NFTs, and was the most successful brand offering this tech–it’s nowhere close to their yearly revenue of around $46 billion.

But the point has been proven. NFTs work great as an addition to real products or standalone. They can be part of a marketing strategy and a product itself. They engage new customers, often from younger demographics and specific interest in technology. For luxury brands that usually attracted older generations, that can work as a great advantage of broadening the offering and customer base.

In December 2022, Starbucks released their NFT-based royalty program, which goes along a larger NFT project called Starbucks Oddyssey. We believe other brands might be onto similar projects in 2023.

8. User Experience

We’re big advocates for bringing a better user experience to crypto and web3 products. There’s still so much to be done to create better, simpler platforms that can be used by the parents of current crypto natives. And even if we’re talking about Millenials and Gen Z, interacting with blockchain is still not that well understood.

This trend is already on, which we can see in some newer ecosystems like Solana or Polygon. Betting on the average consumer use might be an interesting bet, compared to platforms addressed for developers, enterprises, and people in finance which are at an advantage of understanding DeFi products.

It’s worth keeping an eye on the development of Solana’s Saga phone. The idea for combining a smartphone with hardware wallet might sound like a bad idea, but the problem that it is trying to solve is valid–mobile experience for crypto products can be even worse than on desktop.

What if 2023 brings another progress towards simplifying the UX of crypto?

9. Regulatory-compliant Blockchain Data Privacy

While privacy of blockchain transactions is a tricky matter that put the creator of Tornado Cash in custody, we have privacy in our everyday lives and we want to maintain it online. The introduction of GDPR and similar regulations have brought more attention to data privacy protection and this makes us think a similar framework might eventually come to crypto.

A public ledger is great for traceability, but you wouldn’t want everyone to know what exactly you’re ordering from Amazon if you paid with crypto or allow enhanced harvesting of your data. Especially if one of the ideas of digital identities held on-chain becomes a reality. On the other hand, money laundering and using cryptocurrencies by bad actors is still a problem that cannot be overlooked. We expect solutions that solve those two problems can become a trend sooner or later, although this is a difficult matter, balancing privacy and transparency.

Some privacy-preserving projects, like public blockhains with private layers, are already gaining traction or were present in the market for several years already. They’re likely to continue the development. We'd expect data privacy might come earlier and become the actual trend as transaction privacy is the harder part to achieve regulatory compliance.

10. Decentralized Autonomous Organizations (DAO)

DAOs are not a new thing in crypto, but they haven’t truly fulfilled their potential yet. Even looking at some recent events, we can easily find use cases for that type of organization. Take a look at Elon Musk’s poll whether he should stay as Twitter’s CEO. He claimed that he’ll abide by the results of the poll and it turned out the public wants him out. But who voted actually? Could the poll be manipulated by bots? Of course it could. Such a vote by a DAO would at least be tied to the voters’ assets and verifiable on-chain.

In 2021, we’ve also seen the rise and fall of Constitution DAO that showed how the global community can raise funds quickly without the need of trusting each other.

There’s still a lot of room for improvement of DAOs, but that is still a very interesting use case for blockchain technology. We wouldn’t be surprised if it makes headlines in 2023 again.

11. GameFi

The NFTs have probably spawned the concept of GameFi or metaverse. It adds economy to games, that players can capitalize on. The assets don’t have to be part of one game and can be transferred between worlds and games–or sold on external marketplaces.

Although some projects in GameFi gathered millions of users, such as Axie Infinity, the space is still maturing. True AAA titles take years to build, but as time passes, we might see more and more of really high quality blockchain-powered games.

In fact, some were already announced, like The Otherside by Yuga Labs or DRKVRS. There’s definitely more to come in the near future.

2023 is going to be an interesting year for our space!

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