Crypto Investment Trends That Will Define 2023: Report

Less than a month into the new year, the market is already showing sustainable signs of recovery, and the “creative destruction” that transpired could ultimately be a huge win not just for the consumer but also in terms of regulatory protections and rapid innovation, as well as lowered cost structures.

Despite the many ups and downs, crypto has become a serious player in the world economy. Investors are still pouring their portfolios into the asset class. According to OKX’s new report, here are the five key trends in crypto investment that will define the year ahead.

Ethereum Devs

The development in the Ethereum ecosystem has been consistently increasing. The completion of the Merge shifting from Proof of Work to Proof of Stake saw its energy consumption slash by 99%. To top that, several, several OP layer 2s are scaling the network.

Danksharding would be another turning point for Ethereum by boosting TPS to 100k+ after approaching the Shanghai Upgrades. The design will essentially pave the way for a vastly cheaper and quicker execution which will ensure that layer 2 networks can thrive.

Onboarding Innovation

In recent years, the DeFi and Web3 space has seen a flurry of financial enthusiast forays. The COVID pandemic spurred tens of millions of gamers and gamblers into the GameFi and Play 2 Earn projects and this trend seems to intensify.

Subsequently, big players such as Yuga Labs, Reddit, and Starbucks brought traditional users with their NFT products. Several blockchain networks also joined forces with major brands to attract new users.

Meanwhile, storage and retrieval of both public and private keys have been the Achilles Heel of Web3 security. But wallet developers are now seeing big investments to enhance the experience and usability.

DeFi Revitalization

Heavy deleveraging pressures inflicted in the second half of 2022 sparked the collapses of several prominent crypto companies. The total value locked (TVL) in DeFi took a severe beating and declined by over 76%. The failures are expected to set the stage for “grander innovations ahead.” As such, the industry is looking to develop decentralized stablecoins that may have utility in the real world.

The NFT market, too, suffered a similar fate at the hands of the crypto winter. But beyond PFP NFTs, which have no utility beyond their social attributes, securitization coupled with DeFi, for one, can bring credit, value, and equity. This is expected to trigger the explosion of NFT-Fi in the future.

An Industry-Wide Focus on Infrastructure

Permissionless and decentralized infrastructure projects could see bigger bets being placed this year. For instance, validator adoption of mev-boost has reached 90% since 2021. With OFAC’s sanction on Tornado Cash, Flashbots mev-boost relay validators are under the scrutiny of the enforcement agency.

On the brighter side, the MEV landscape is set for a huge change. The fragmentation of liquidity brought by layer 2, app-chains, and multi-chains could provide huge opportunities for MEV. The introduction of danksharding is expected to alter how Flashbot typically extracts on Ethereum.

Moreover, centralized data tools, such as Dune and Glassnode, have dominated the space for investment and on-chain data analysis. But decentralized data tools will become a central focus for developers in the coming months.

On-chain security

The space witnessed rampant fraud, with hackers on the rife, and no redress.

As such, on-chain data, tracking tools, and asset recovery tools will be a main focus for 2023, centered around Web3 security governance, monitoring on-chain activities, Web3 user behavior, tracking lost assets, and protection against AML.