GM
Welcome to issue #62 of Dune Digest!
It has been a quieter week than usual here at Dune, as many of the team relax over the holiday period.
But, the data must still flow. And that includes your weekly dose in your inbox.
This week we’re going to go through something a little different. We’re going to review a crazy year in crypto - and look at some of the major events of the year through some of the best dashboards & on-chain wizardry.
(this is fairly long, you might need to open it in your browser)
Without further ado - here are 22 trends of 2022.
1. ETH staking
In Ethereum history, 2022 will go down as the year of The Merge.
Staking on the beacon chain was already an established trend through 2021, but in 2022 it grew to new heights.
According to this dashboard by @hildobby, almost 7 million $ETH was deposited to the Beacon Chain throughout the year, and the number of validators grew by more than 215 thousand:
This helped to propel the network to a successful Merge and relatively seamless switch to proof-of-stake.
2. Rise of L2 rollups
Coming into 2022, one of the big narratives was Ethereum scaling through L2 rollups - and this time the narratives delivered.
An excellent dashboard by @blockworks_research shows the trend clearly.
Active addresses on Arbitrum & Optimism grew over 10x throughout the year:
Other key metrics, for example:
Transactions processed
L1 gas consumed
Contracts created
L1 revenue
…… have also been growing significantly!
We expect this trend to continue into 2023 and beyond, as Optimistic rollups continue to succeed in their mission to scale Ethereum.
3. The Flight to self-custody
This year we saw the rise and fall of multiple systemically important platforms - such as LUNA/UST, Celsius, Voyager, Blockfi, and most recently, FTX/Alameda.
This damaged people’s (already shaky) trust in centralized platforms, and led to louder calls for self-custody.
Did it materialize? A dashboard by @thedatanerd has the answers……
If we look at CEX outflows throughout the year, we can indeed see upticks around the time of major blow-ups in May, June and November:
Large individual withdrawals also happened around the same time.
Though the trend is not too extreme, the flight to safety and self-custody is real. What effect this has on the broader ecosystem is yet to be seen.
This trend was submitted by @thedatanerd. Give them some New Year Dune stars, & follow them on Twitter!
4. Bitcoin leaves Ethereum
The 2021 bull market saw a massive rise in the amount of bitcoin on Ethereum, and by the beginning of 2022 more than 322 thousand $BTC were on the network.
The trend reversed in 2022 though, with almost 100 thousand $BTC leaving Ethereum:
The vast majority of this drop has been driven by the largest platform, $wBTC, an ERC-20 token backed 1:1 by $BTC. We can investigate the token through this excellent dashboard by @21shares_research.
The $wBTC supply peaked in April at 282.8k, and has dropped by 98.4k over the past 3 quarters.
Its market cap dropped from $16b in late 2021 to just $3.1b today - a result of both the declining $BTC price and some of the biggest burns in history:
$BTC may return to Ethereum some day, but it isn’t guaranteed in 2023…..
5. NFT financialization
Through 2022 several platforms launched that blended the world of NFTs with DeFi, which we can track through an interesting dashboard by the team at @impossiblefinance.
NFT lending platforms got going in the latter part of 2021. This year though they really boomed, with NFTfi in particular seeing explosive growth through Q2 & almost $50m in monthly loan volume at the peak:
The market became increasingly competitive throughout the year, with platforms like BendDAO, Arcade & recently X2Y2 gaining ground.
2022 saw some interesting drama in this space too, most notably BendDAO’s liquidity crisis in late summer, which we covered in this Arcana episode.
Overall, the bear market has seen a drop in activity for these platforms. But borrow volume is still significantly higher than it was during the peak bull of 2021.
NFT financialization is a trend to watch for 2023 & beyond……
6. Investors leave DeFi
As the bear market got underway, investors began to withdraw their stables from smart contracts.
The share of $DAI, $USDC & $USDT held in contracts plummeted throughout the year with noticeable spikes:
This will likely remain the case while we’re in a bear market, but you never know when a catalyst like DeFi summer could come around the corner to put things in reverse…..
This trend was submitted by @frank_maseo. Check out his Dune profile, Twitter, and recent article on Network Penetration!
7. OpenSea was challenged, but remains king
An excellent recent dashboard by @jhackworth shows that from the beginning of 2022 until spring, OpenSea reliably accounted for >90% of total NFT trading volume.
Since then though, new competitors like X2Y2 started to gain market share, and in Q4 Blur exploded onto the scene as the most powerful challenger yet:
OpenSea retains a strong lead when it comes to trades and unique users, but you’ll still notice the 2022 trend of competitors gaining ground:
Overall, the NFT marketplace space has become more diverse and increasingly hyper-competitive throughout 2022.
Will this trend continue or will we see consolidation in 2023? With such a juicy prize at stake, we suspect so.
8. On-chain leverage
The amount of on-chain leverage drastically reduced during 2022 with -76% drop in Open Interest across Ethereum's leading lending protocols.
This is caused by worsening market conditions and several infamously over-leveraged funds blowing up.
However, only $1.1B of the $14B (~8%) in OI reduction came from liquidations, showing that most of the unwinding took place in an "orderly" fashion.
One could say that these protocols passed a significant stress test!
This trend was submitted by @frank_maseo!
9. Wash trading
2022 started out with some truly crazy NFT trade volume figures being thrown around. Thanks to a recent article by @hildobby, we know that much of it was a mirage…..
@hildobby revealed that at its height in January - more than 80% of NFT trade volume was wash trading aka fraudulent.
2022 we saw wash trading like never before. In fact, it accounted for 58% of trade volume for the entire year!
The rise of wash trading was intimately related to the launch of new NFT marketplaces earlier this year that offered token rewards for trading (looking at you, LooksRare & X2Y2).
In 2023, perhaps we’ll see new ideas and strategies for incentivising usage that do not encourage wash trading.
(To learn more - read the original article, it’s very good!)
10. Rise of Web3 social
A great recent dashboard by @denze showed that Web3 social platforms had a good 2022.
Though OG platforms ENS & POAP were around way back in 2020 - in 2022 they saw unprecedented user growth:
We also saw a diversification of the market with new platforms like Galxe, Lens, Layer3 and others all having a successful year.
We’ve used Dework & Layer3 at Dune, and can really see the potential!
Web3 social platforms may just be getting started, but they’re certainly an interesting category to watch in 2023 & beyond.
11. Big brand successes with NFTs
In 2022 some large brands saw startling success with NFTs.
A viral dashboard by @kingjames23 amazed the industry by revealing that Nike had made over $185 million from NFT sales & royalties.
Others like Dolce & Gabbana, Tiffany, Gucci, adidas, & Time Magazine also executed 8 figure success stories:
Nike in particular went all in on NFTs, launching over a dozen different collections that cumulatively drove over $1.3 Billion in volume!
Though revenues dropped in recent months, the successes of early 2022 served as a great proof of concept and we expect to see more experiments in 2023 & beyond…..
12. Airdrop failures
In an excellent recent article & dashboard, @jhackworth argued that the airdrop model was broken through an analysis of Uniswap’s 2020 drop.
He found that the vast majority of airdrop recipients dumped the $UNI tokens, and hardly any participated in governance.
Worse still, through 2022 only a small fraction of airdroppers were actively trading:
This year we saw this pattern clearly repeating across multiple airdrops, and few still believe the more optimistic airdrop predictions of previous years.
In 2023, we might see new mechanisms developed to reward early adopters and decentralize governance.
(for a thorough breakdown, read @jhackworth’s full article)
13. Centralized stablecoins victorious
When UST blew up spectacularly in May, it had a knock-on effect on other algorithmic stables.
$FRAX lost almost half its supply overnight - and the overall algorithmic stablecoin supply shrunk by 45%!
Decentralized stables like $DAI fared little better - with supply dropping by ~43% throughout the year. Other decentralized stables like $MIM, $FEI & LUSD declined even more, with supply dropping by 80-90%!
In contrast - centralized, fiat-collateralized stables like $USDT, $USDC & $BUSD saw only a 1.6% reduction in supply, and are back to 90%+ of the entire market:
In another notable event, in 2022 $USDC overtook $USDT for the first time, becoming the #1 stablecoin by supply!
Overall, 2022 was a rough year, especially for the more experimental stablecoins.
On a brighter note, the majority of these protocols worked perfectly throughout the turbulence, seeing steady usage and maintaining their pegs to the $ well.
We doubt we’ve seen the end of algorithmic stablecoins, but while markets remain so turbulent, people will tend to stick to the safest options.
This trend was submitted by the legendary @KARTOD and the team at @impossiblefinance. Check out @KARTOD’s stablecoin dashboard for more!
14. Real-world assets
2022 saw some important first steps toward bringing “real world” assets on-chain.
A prime example was MakerDAO’s $500m investment in treasury & corporate bonds, tracked in this dashboard by @SebVentures.
Other platforms tied to RWA like Goldfinch Finance and Defactor also performed well throughout the year.
We can say that though still nascent, the blend of DeFi with the real world did get underway in 2022 - and could certainly accelerate in 2023.
15. CEX Transparency
In the wake of 2022’s big blowups, several large CEXs have disclosed their wallet addresses as “proof of reserves” in an attempt to regain clients' trust.
In this dashboard @21shares_research investigated and tracked balances of major centralized platforms like Binance:
Though we welcome the trend, proof of reserves alone can't prove whether a CEX is solvent.
Clients' assets only represent a part of the liabilities and do not include credit lines and other obligations by the CEX, nor do we have a picture on potential asset-liabilities maturity mismatch.
While it is a significant step forward for the industry, the future would be using Zero-Knowledge Proofs (ZKPs) from audits to have the full picture of proof of solvency.
We hope to see steps toward this in 2023.
This trend was submitted by @tomwanhh of @21shares_research. Tom posts great crypto threads on Twitter - give him a follow!
16. Music NFTs defied the bear market
Through 2022 Music NFTs performed well, according to a great dashboard by @pandajackson42.
The two major platforms are Sound.xyz & Catalog.
Sound quickly started to dominate from Q1 onwards, and saw huge ATHs in volume through March & April.
Though volume fell off a cliff from May through summer - Sound has recently defied the bear market to show strong growth through Q4:
According to another dashboard by @nicoelzer, Sound has also seen more new song released & mints than ever in Q4.
It’s good to see these platforms continuing to build despite the market conditions, it seems like they’re laying a strong foundation for 2023 & beyond.
17. Sanctions + banned addresses
In early August, the US Government hit popular privacy tool Tornado Cash with some gnarly sanctions.
This query by @poma shows that Tornado Cash was seeing a ton of activity in early and mid 2022, which dropped to practically zero within days of the sanctions:
A side effect of this was a significant spike in banned addresses.
This dashboard by @hashed_official shows that slightly fewer $USDT addresses were banned in 2022 compared to 2021. When it comes to $USDC though, we saw an unprecedented number of bans in both August & November.
There’s now more than $435m in frozen $USDT, and over $7.34m in frozen $USDC.
In the coming years perhaps we can expect further state crackdowns on certain tools, and eager compliance by centralized platforms.
18. ZK tech saw adoption
While still more of an emerging category - leading ZK rollup platforms performed well throughout 2022.
According to this dashboard by @Marcov, zkSync saw significantly more daily transactions in 2022, as well as 4x growth in deposits to the platform:
StarkNet also saw record adoption through Q4 of 2022 and crossed 2k daily users for the first time according to this query by @chaininsight, and Aztec’s zk.money platform saw impressive growth through Q4 according to this query by @licrazy.
We saw several other interesting ZK platforms launching throughout the year too - like zkBob, a protocol for private stablecoin transfers tracked in this dashboard by @maxaleks.
Overall, ZK rollups proved themselves in 2022 and showed strong signs of adoption and product-market fit, and are positioned well to become a major force in 2023.
19. Rise and fall of move-to-earn
According to this dashboard by @nguyentoan, there were only 2.5k active StepN users in January.
By May this number had grown by more than 300x, with more than 705k users stepping away throughout the month.
Sadly it was not to last, and by the middle of Q4 active users had dropped by almost ~90% from the Q2 highs:
StepN today only gets a small fraction of the usage it did at the top. Other move-to-earn platforms like Genopets have seen similar drops in activity.
That said, it might be premature to call these platforms dead.
Though we don’t anticipate any imminent comebacks, it’s not guaranteed that the end of 2022 will be the end of move-to-earn…….
20. Perpetual Protocols Grew
One year ago there were only a handful of perp protocols, and typically a couple of hundred daily users.
According to this query by @mcclurejt though - through 2022 daily users have grown ~30-40x, and numerous new platforms have launched:
GMX has cemented its position as the dominant market leader, and Arbitrum and Avalanche have emerged as favoured destinations for this kind of trading.
As DeFi matures in sophistication, we expect to see more exotic trading instruments coming online in 2023.
21. DEX activity declined
Decentralized exchanges didn’t have a particularly exciting 2022.
This dashboard by @abhi_0x shows that weekly trades across major DEXes peaked in late 2021, and consistently declined throughout 2022:
Daily unique addresses also plunged throughout the first 2 quarters, but have rebounded since late summer and currently sit at 50-70% off their 2021 highs.
Uniswap has maintained its dominant position.
According to this dashboard by @danning.sui, it’s a similar story across other chains like BNB & Polygon!
22. MEV Evolved
This excellent dashboard by @jhackworth dives deep into MEV trends on Uniswap, where almost 98% of all Ethereum MEV activity goes down.
It shows that 2021 was the real heyday for MEV, with arbitrage profits and transactions dropping throughout early 2022:
Though MEV declined in absolute terms it’s still a massive part of overall DEX volume - driving ~50% of all volume since the Merge despite accounting for just 5-10% of swaps:
In 2022 we also saw a new MEV strategy emerging - JIT liquidity, explained in detail in the dashboard. There have been over 23k total attacks, the vast majority occurring in late 2022.
So although MEV declined in absolute terms through 2022, it became increasingly important in other ways and evolved along with the wider space.
With Flashbots data now live on Dune, Wizards will be tracking MEV trends into 2023 & beyond!
This trend was submitted by @jhackworth. Check out his Dune profile and read his recent article!
More Dashboards
Phaver by
GN
Thanks for reading - and a special thanks to all the Wizards who helped us put this together!
If you have any suggestions for trends, or any thoughts on these - feel free to leave a comment below.
2023 is almost upon us, Dune will keep on keeping on and we can’t wait to share some super exciting new plans and announcements with you in the NY…….
Happy New Year!
Ante todo gracias por el artículo!! Es superinteresante. Me gustaría un análisis de las Dao ,como pueden funcionar con los smart contractos y defi en 2023. Muchas gracias
Análisis de DAOS ?