Well, what a year that was.

Throughout 2022 Dune Wizards have been at the cutting edge of trends, events and dramas in crypto. They've provided a huge service to the public and investors, pumping out thousands of dashboards to educate and inform us all.

So we're going to wrap up the year with 22 of the most interesting trends they uncovered.

Take a read, see what's behind us, and get a head start on 2023.

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. 

15.84 million $ETH is now staked, 13.14% of the entire supply.

Continuing an established trend from 2021, liquid staking remained the largest staking category and continued growing in 2022:

Within the liquid staking space itself, Lido remained the market leader, increasing its marketshare from 18% to ~30% throughout the year.

This all helped to propel the network to a successful Merge and relatively seamless switch to proof-of-stake.

2. The rise of L2 rollups 

Coming into 2022, one of the big narratives was Ethereum scaling through L2 rollups.

This time the narratives delivered, with L2s like Optimism & Arbitrum growing significantly throughout the year. 

An excellent dashboard by @blockworks_research shows the trend clearly. 

Active addresses on Arbitrum & Optimism grew impressively throughout the year:

Daily transactions have also been rising as those on Ethereum itself steadily fall.

For the first half of the year, Optimism & Arbitrum combined were doing <200k daily transactions. By Q4, this figure was regularly hitting 1 million:

Another key metric - the percentage of L1 gas consumed - has also been growing impressively.

This was particularly noticable in Q4, when L2s collectively used 3%+ of total gas on several occasions:

Optimistic rollups are earning significant revenue, while fulfilling their aim of taking computational pressure off L1. 

They're also saving users significant gas costs, making the world of DeFi & NFTs more accessible to a wider userbase:

Overall, it has been a great year for Optimistic rollups!

We expect this trend to continue into 2023 and beyond, as they become an ever more important part of the wider ecosystem. 

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 to return to crypto's decentralized ethos and 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:

If we segment the outflows by size, we can see that large transactions also happened around the same times:

In conclusion, the flight to safety in non-custodial wallets is real but the long-term effects on the Ethereum ecosystem and the broader crypto space is unknown and will need to be monitored in 2023.

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 $BTC on Ethereum. 

Holders saw a huge opportunity to put their assets to work in Ethereum’s rich DeFi ecosystem, and by the beginning of 2022 more than 322 thousand $BTC were on the network. 

Throughout 2022 though, almost 100 thousand $BTC left Ethereum:

The vast majority of this drop has been driven by the largest platform, $wBTC, an ERC-20 token backed 1:1 by $BTC. 

One of the top $wBTC dashboards is this masterpiece by @21shares_research. 

The $wBTC supply peaked in April at 282.8k, and has dropped by 98.4k over the past 3 quarters:

$wBTC’s marketcap has dropped from $16b in late 2021 to just $3.1b today, a result of both $BTC itself crashing in value and some of the largest $wBTC burns in history since summer:

Will Bitcoin return to Ethereum in 2023? With the current macro environment and widespread calls for self-custody, we wouldn’t want to bet on it…….

5. NFT Financialization 

Through 2022 several platforms launched that blended the world of NFTs with DeFi. 

An interesting dashboard from the team at @impossiblefinance tracks metrics for the top 5 NFT lending platforms - NFTfi, BendDAO, Pine, Arcade, JPEGd, Drops & X2Y2. 

The OG platforms going into the year were NFTfi & Arcade, with NFTfi in particular dominating the market back in Q1.

According to this query by gigawizard @rchen8, NFTfi saw explosive growth from January through to April - with almost $50m in monthly loan volume at the peak:

By Q2, competitors were also growing, most notably BendDAO which started to see serious borrow volume from April onwards. 

Though NFTfi is still market leader, things have become increasingly competitive, especially since marketplace X2Y2 launched their own NFT lending platform in Q4:

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 bull mania of 2021. 

We also saw the growth of other interesting NFT financialization experiments like reNFT, an NFT rental platform, and NFT fractionalization protocols like NFTX. 

NFT financialization is a trend to watch for 2023 & beyond……

6. Investors flee DeFi

The 2022 bear market caused a noticeable flight to safety from market participants. 

Investors withdrew their stables from smart contracts, with the share of DAI, USDC & USDT held by smart contracts plummeting throughout the year with noticeable spikes. 

Some of the safest DeFi yield products, such as the UniV3 DAI/USDC liquidity pools, fell by almost 100x (-99%):

This is a sign of the times and part of the broader flee to safety trend. Keep an eye on the % of stables in contracts in 2023, it'll be a good indicator of overall sentiment.

This trend was submitted by @frank_maseo. Check out his Dune profile, Twitter, and recent article on Network Penetration!

7. OpenSea is challenged, but remains king  

OpenSea started the year as the absolutely dominant force in the NFT marketplace space. 

In a free market like Web3 though, you can never get too comfortable with your monopoly, and in 2022 serious competitors emerged for the first time. 

A dashboard by @jhackworth took a deep dive into NFT marketplaces. He found that almost 2 million addresses have bought an NFT on Ethereum, and over 96% of those addresses have used OpenSea at least once:

From the beginning of 2022 until spring, OpenSea reliably accounted for >90% of total 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.

It’s no surprise when you consider that OpenSea has pocketed over $820m in platform fees:

That’s a tempting pie to try to take a slice of, so we wouldn’t be surprised if 2023 sees even more competition and new upstarts muscling in.

8. On-chain Leverage

The amount of on-chain leverage drastically reduced during 2022 with -76% YTD in Open Interest across Ethereum's leading lending protocols. 

This was 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. 

To look at things optimistically, one could say that these protocols passed a significant stress test!

This trend was submitted by @frank_maseo!

9. Wash Trading 

In early 2022, NFT trading seemed to explode - hitting several billion dollar’s worth of weekly volume for the first time. 

Looking back, we now know that much of that sky-high volume was a mirage. 

A recent article by @hildobby caused shockwaves in the NFT community by revealing that at its height in January - more than 80% of NFT trade volume was wash trading….. 

Wash trading is a form of market manipulation where users trade NFTs between different wallets that they own, typically with the goal of accruing trading rewards or boosting metrics of a specific piece or collection. 

In 2022 we saw wash trading like never before. In fact, it accounted for 58% of NFT trading volume for the entire year!

As overall NFT volume dropped significantly from May onwards, wash trading remained a significant (>50%) slice:

The rise of wash trading was intimately related to the launch of new NFT marketplaces which launched earlier this year and offered token rewards for trading, like LooksRare & X2Y2. 

So long as these token incentives exist, wash trading will too.

Thanks to @hildobby though we now have the tools to measure and expose it!

In 2023, we could see new ideas and strategies for incentivising usage that do not encourage market manipulation. 

10. Rise of Web3 Social 

In 2021, we were tantalized by the imminent rise of “web3” platforms which leveraged crypto tech for underexplored social use cases. 

Did it play out? A recent dashboard by @denze showed some encouraging figures.

The key platforms, like ENS & POAP were around way back in 2020 - but in 2022 they did indeed see unprecedented user growth.

We also saw a diversification of the market, which until the beginning of Q3 was completely dominated by ENS & POAP:

POAP is still the most successful project in the space, but it's now followed closely by Galxe, while a raft of smaller platforms like Lens & DeWork carve out their niches below:

While these platforms are all still nascent, the ecosystem does seem to be growing in an interesting direction and is one to keep an eye on for 2023.

11. Big Brand Successes 

2021 saw a lot of large brands from the wider world starting to dip their toes into crypto and in particular NFTs.

In 2022 some of them jumped in fully, and saw startling success in some cases. 

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:

Most of this success came from the beginning of the year when the NFT market was still roaring and the hype hadn’t yet subsided. 

Through Q3 & Q4,  royalty revenues dropped to a relative trickle (though still in the hundreds of thousands monthly)

With all that said, the successes of early 2022 served as a great proof of concept, and we can expect brands to take NFTs seriously going forward into 2023 & beyond….. 

12. Airdrop failures 

Throughout 2022 airdrops have failed to live up to some of their promises. 

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 recipients dumped their $UNI, with only a small fraction maintaining or increasing their position:

He also found that 98% did not participate in governance in any way!

Worse still, through 2022 only a small fraction of airdroppers were actively trading, around ~10% in recent months:

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 the golden boy of algorithmic stablecoins, $UST, blew up spectacularly in May - it caused shockwaves throughout the industry. 

This had a knock on effect on other algorithmic stables.

The largest, $FRAX, lost almost half its supply overnight.

In total, the algorithmic stablecoin supply shrunk by 45%.....

On-chain volume, as well as velocity, also dropped significantly throughout the latter half of the year for the whole category. 

The contagion wasn’t just limited to algorithmic stables either. Decentralized, crypto collateralized stablecoins like $DAI lost even more ground. 

The $DAI supply plummeted in May, saw some weak growth in late summer, and has steadily declined since - dropping by ~43% throughout the year:

Other decentralized stables like $MIM, $FEI & LUSD declined even more, typically losing 80-90% of supply throughout the year:

Overall, decentralized stablecoins lost more than 60% of their supply throughout the year. 

Does this mean that nobody is using them anymore? Thankfully, no. Taking $DAI as an example - while supply fell off a cliff, users and transactions were relatively unaffected. 

So we can conclude that the number of active $DAI users remained roughly the same, but many of these users transferred some of their money from $DAI elsewhere.

This brings us to the (relative) winners of the 2022 edition of the stablecoin wars - centralized stablecoins…..

Centralized, fiat-collateralized stablecoins like $USDT, $USDC & $BUSD saw only a 1.6% reduction in supply.

They're back to 90%+ of the entire market, erasing the marketshare gains made by decentralized & algorithmic stables through 2021:

There was another notable event too. 

$USDT was the market leader in terms of supply at the end of 2021. Barely into 2022 though, $USDC hit the #1 spot for the first time, retaining it throughout the year:

Overall, 2022 was a rough year, especially for the more experimental stablecoins. The more risky they were perceived as, the more users rushed to protect their funds. 

On a brighter note, the majority of these protocols worked perfectly throughout the turbulence, seeing steady usage and maintaining their pegs to the $ well. 

Have centralized stablecoins secured their dominance forever, or will we see algorithmic and decentralized stables rise again in 2023? We’ll have to wait and find out……

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 

For several years there has been speculation about bringing “real world” assets on-chain and blending DeFi with the world of legacy finance. 

There’s still a long way to go on that front, but 2022 did see some important first steps. 

For example, in Dune Digest #53 we covered MakerDAO’s investment in treasury & corporate bonds, tracked in this dashboard by @SebVentures. 

MakerDAO’s investments increased steadily over the past 2 months, and now sit at almost $500m:

Maker aren’t the only DeFi platform interfacing with the real world though. 

Goldfinch Finance, a platform that allows users to take out loans fully collateralized by off-chain assets, also saw strong growth throughout early 2022 and has weathered the bear market well:

Several other RWA platforms, like 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 

Across the industry, we are seeing increasing transparency from centralized exchanges due to the implosion of large crypto entities. 

This prompted several large CEXs to disclose their wallet addresses as “proof of reserves” in an attempt to regain clients' trust, particularly in the wake of the FTX blowup.  

In this dashboard @21shares_research investigated and tracked balances of major centralized platforms like Binance:

As well as net flow and many other metrics:

While these steps to greater transparency are of course welcome, they aren’t really enough. 

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 defy the bear market

At the beginning of 2022 music NFTs were still a nascent trend, but through the year they started to find their feet.

According to a great dashboard by @pandajackson42, the two leading platforms coming into the year were Sound & Catalog. Sound quickly started to crush it 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:

Indeed, according to another dashboard by @nicoelzer, Sound saw more new song releases & mints than ever since October:

It’s good to see these platforms continuing to build despite the market conditions. Music NFTs are still a new use case, but the data suggests that Sound is building a solid foundation for 2023 & beyond.  

17. Sanctions & Banned Addresses 

One of the most dramatic events of the year occurred in early August. 

The US Office of Foreign Assets Control caused shockwaves through crypto by hitting 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 @subinium shows a that slightly fewer $USDT addresses were banned in 2022 compared to 2021:

But when it comes to $USDC, 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.

It looks like certain centralized stablecoin platforms are becoming more ban-happy, and have shown an eagerness this year to comply with regulators. In the case of Circle, many have argued that their compliance was excessive. 

In 2023, perhaps we can expect further state crackdowns on privacy tools and more eager compliance from centralized platforms.

18. ZK Adoption  

Optimistic rollups like Arbitrum & Optimism had an excellent 2022 - but so did their even more cutting-edge cousins, ZK rollups. 

ZK rollups use zero-knowledge proofs or zk-SNARKS to offer greater privacy & scalability for Ethereum. 

While still more of an emerging, experimental paradigm, leading ZK rollup platforms performed well throughout the year, especially through the second half. 

According to this dashboard by @Marcov, zkSync saw significantly more daily transactions in 2022, as well as 4x growth in deposits:

Another leading ZK L2, StarkNet, also saw record adoption through Q4 of 2022 and crossed 2k daily users for the first time according to this query by @chaininsight 

Privacy-focused rollup Aztec Network also had a good 2022, with its zk.money platform seeing record growth in daily users and $ETH deposits 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. 

They’re still operating on a smaller scale than their Optimistic cousins, but they’re positioned well to become a major force in 2023.  

19. Rise and fall of Move to Earn 

Back in January few were familiar with the term “move-to-earn” or StepN. 

By late Spring though, it seemed like everyone and their auntie were out there putting in the steps and harvesting those sweet GST rewards in return. 

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 StepN onboards very few new users these days, there does seem to be a core of existing steppers that are keeping the platform alive:

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 

Perpetual futures aka “perps” are a financial instrument well known to the world of legacy finance. Throughout 2022 they became a more important part of DeFi too. 

One year ago there were only a handful of perp protocols, and typically a couple of hundred daily users. 

Since then, daily users have grown ~30-40x over the past year, and numerous new platforms have launched:

Arbitrum emerged as one of the key platforms for perp trading, with market leader GMX seeing solid growth in volume and users throughout the year:

As DeFi matures in sophistication, we expect to see more exotic trading instruments coming online in 2023. 

21. DEX activity

Decentralized exchanges (DEXes), one of the most crucial components of the wider DeFi ecosystem, 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 50-70% off their 2021 highs:

Uniswap came into the year in a dominant position, and on that front, not much changed. Uniswap is ending the year with almost the exact same market share as it started out with last January:

According to this dashboard by @danning.sui, it’s a similar story across other chains like BNB & Polygon. Optimism is the network bucking the trend, seeing an increase in active traders through Q4:

Will DEX activity come roaring back in 2023? Keep an eye on some of the top DEX dashboards on Dune and make your mind up!

22. MEV Changed 

As activity has fallen across major DEXes, we’ve also seen a decline in MEV. 

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.  

MEV is still huge though. An interesting query looks at MEV bot activity post-merge, and has some startling figures. 

Since the merge, MEV bots have driven ~50% of all Uniswap volume, despite accounting for just 5-10% of swaps:

According to @jhackworth: 

“One could take this two ways. 1) Uniswap LP fees and overall volume are dependent on MEV. 2) Most large trades will encounter some form of MEV working against them”

In 2022 we also saw a new MEV strategy emerging - JIT liquidity, explained in detail in the dashboard.

JIT is demanding, with only a handful of searchers capable of it. Still, 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!

To 2023 & Beyond.....

Well, that wraps up our 22 trends for 2022.

There were many others that we could have talked about, but we'll have to save them for another report. So, what are the takeaways?

Though many of the trends indicate a general loss of confidence, increasing risk aversion, and general slowdown of activity - it isn't all doom and gloom.

Several key technologies established themselves this year, laying a stronger foundation for the future.

We learned a lot more about what works and what doesn't, what's real and what's fake, and got valuable lessons to help us build into 2023 & beyond.

The important thing is to keep on keeping on. Rome wasn't built in a day, and the future of finance isn't going to be built overnight.

For our part, we couldn't be more excited for 2023, and can't wait to keep the data flowing and working to make crypto data accessible for the Wizard community.

We've got some big plans in the works, and some announcements incoming that you're gonna love.

A Happy New Year to you all - see you in 2023!

(This article wouldn't have been possible without the help and advice of several amazing Wizards. @frank_maseo, @tomwanhh @hildobby, @thedatanerd, @jhackworth, @sealaunch, @KARTOD - thank you!)