Crypto Predictions for 2022

I was going to start this post off in a generic way -- with some brief reflections and takeaways from the past year.

But honestly, so much has happened that it became daunting to even attempt to accurately capture (let alone articulate) what transpired in 2021 -- both for the crypto space and for my personal life. So daunting that it prevented me from even putting proverbial pen to paper to draft this article.

I’ll leave it at this: 2021 was the best year yet. For crypto. For me.

Years of hard work validated. Quizzical looks from my peers at McKinsey. Disapproving remarks from my relatives. Outright disappointment and worry from my parents.

So many new [modern friends](https://gabygoldberg.medium.com/my-modern-friends-and-me-1b6e23223f48). Laughs shared on Discords. Hugs IRL in Denver, New York, Paris, Lisbon, Prague. Memories minted and forever stored in the private blockchains we call our brains.

Yes, 2021 was truly one for the proverbial books (more like Mirror thought pieces).

But the best is yet to come.

2022 is shaping up to be another amazing year. Irrespective of what happens in the markets, I’m confident that crypto will continue to improve and march towards the inevitable future of consuming the entire world.

Why is that?

* **More funding than ever**. Both public and private market institutions are aping into crypto; the ecosystem has matured considerably, so the risk is now much lower — coupled with the continuation of high upside plays
* **More design space than ever.** Pre-ICO Ethereum was chock full of ideas: NFTs, DAOs, gaming (sound familiar?). Those ideas took a backseat to payments and finance as the defacto use case after the post-ICO crash. Now, we’re seeing a resurgence of those design spaces as well as a slew of other surface areas for people to build on. The possibilities are endless.
* **More talent than ever.** Smart af people are leaving their cushy, prestigious gigs in consulting and tradtech to join crypto full-time. These people aren’t here for short term speculation, but rather they’re convinced that crypto is a future and want to be a part of creating it — meaning they have longer time horizons and will continue to build even in a crypto winter.

But enough preamble — let’s start with my crypto predictions for 2022.

# Disclaimers

Ah — not so fast. Before I share my alpha, a few disclaimers first:

1. As ALWAYS, this article is made for educational and entertainment purposes. This does not constitute financial advice. DYOR.
2. I’m not making these predictions to be right, but rather to set a high bar for what the future may look like. I think the future will be crazier and more unpredictable than we can imagine, and I’m forcing myself to post more controversial takes in order to account for that.
3. With that said, if you agree with all my takes then I’m doing my job wrong.

Onwards.

# My (Crazy) Predictions for 2022

Instead of a listing of ramblings, I’m structuring my predictions into a framework — heavily inspired by the [Web3 Stack by Polynya](https://polynya.medium.com/).

![](https://images.mirror-media.xyz/publication-images/QzxvsZxHyJuf-1YjPOsi7.png?height=1400&width=2400)

* **Connection to the IRL world**: how the Metaverse talks to the meatspace
* **Interfaces:** how we as humans interact with the Metaverse; usually wallets and other UIs
* **Dapps:** decentralized applications like the ones we know and love
* **Execution Layer**: computer layer; where programs/smart contracts are deployed and executed
* **Base Layer**: what we know and love about Layer 1s (L1s); storing transaction data and ensuring secure, immutable consensus of that data

## Connection to the IRL world

Prediction #1: **Off-chain identity will be bridged and connected on-chain**

* Whether with [zero knowledge proofs](https://mirror.xyz/dcbuilder.eth/QX_ELJBQBm1Iq45ktPsz8pWLZN1C52DmEtH09boZuo0) or [self-hosted infrastructure](https://docs.unstoppabledomains.com/login-with-unstoppable/high-level-overview),

https://mirror.xyz/7ULCX06gCBFLiQtf1hmCPj_p0Yr8MWTbA9b5IU-Bd_k

Top Experiments of 2021 Tournament

2021 was a monumental year for crypto.

ATHs for BTC and ETH, jpeg summer, alt L1s, DeFi 2.0, dog coins, the birth of DAO gurus, the rebrand to Web3.

Crypto broke into the mainstream mindshare, and the floodgates of innovation were open.

We witnessed some amazing product launches: Uniswap v3, Curve v2, Arbitrum One, Optimistic Ethereum, Bored Ape Yacht Club.

We shared some lows too: the [Compound bug](https://www.coindesk.com/business/2021/10/03/66m-in-tokens-added-to-recently-hacked-still-vulnerable-compound-contract/), the Pengu wars, Maxis fighting Ethereans fighting SoLunAvax-ers, and countless market crashes to boot.

Amidst all the craziness, we’ve also seen an [influx of talent](https://www.nytimes.com/2021/12/20/technology/silicon-valley-cryptocurrency-start-ups.html) like never seen before.

After years of hopium, it finally feels like crypto is here for good. Working in this space, it truly feels like we’re at the forefront of innovation -- at the cusp of something world-changing.

Reflecting on all that’s happened this past year, I always go back to what my boss told me about crypto when I was first getting started,

> “What we’re building aren’t companies \[yet\], they’re toys. They’re games. To learn.”

All of crypto is an experiment.

A constant search for the answers of ‘what if’.

What if we had self-sovereign money? What will people build with a permissionless, distributed world computer? How will people coordinate when there now exists a trustless layer of data and value? What does a community-owned network look like, and is it better than what we have now?

And the only way to answer those questions are through trial-and-error -- iterating on the numerous parameters that constitute our giant meta-game, or creating something so crazy and out there that it just might work.

Crypto has captured the minds of the most curious people in the world. Like a puzzle, or a brain teaser. It’s one of the most exciting games in the world.

To end this year, I want to showcase and celebrate the experiments that I think have shaped and will continue to shape our design space.

And I’m doing it in the most fitting way: through a little game.

![8-seed bracket to crown the best experiment of 2021](https://images.mirror-media.xyz/publication-images/IyZ2U16GHkN7FZvcE15Gf.png?height=2048&width=4096&&&&size=medium)

## Rules of the Tournament

To celebrate and determine the best experiment of 2021, I’m “hosting” a three-day tournament with 8 contestants.

I picked, in my opinion, the top 8 experiments -- with guidance from my peers. Three rounds will be held until the winner is crowned; each round is a **[24-hour poll on Snapshot](https://snapshot.org/#/0xjim.eth)**.

The first round will start at 12pm Pacific Time on Tuesday, December 28. That means after three rounds, the winner will be crowned at noon PT on New Year’s Eve! 🥳

The winning experiment will get bragging rights for the whole year! So if you were a part of that experiment, congrats -- you get bragging rights lol

Tournament voters can win something a little more tangible -- the voters who pick the correct winners of all three rounds (seven 1v1s in total) will get an NFT airdrop of the Experimentooooor, commemorating their next-level voting skills 👀

### Criteria for the contestants

In order to qualify in the top 8 experiments, I had three buckets of assessment:

1. **Definitionally an experiment:** the (initial) launch was time-bound, had limited scope, and limited resources. So no venture-backed DeFi protocols sorry
2. **Innovation:** the project pushed the boundaries of our design space
3. **Impact:** the project inspired others, changed narratives, built communities from scratch

## The Matchups

![No. 1 Loot vs. No. 8 Wolf Game](https://images.mirror-media.xyz/publication-images/DAJGytxXZE46CsAS7RpyK.png?height=2048&width=4096)

### No. 1 Loot vs. No. 8 Wolf Game

Could the number 1 seed have been any other project? [Dom Hofmann](https://twitter.com/dhof)’s

Joining Aave as Product Manager

Some personal news: I’ll be joining[ Aave](https://twitter.com/AaveAave) as a Product Manager to lead Web3 experiments!

I’m excited to work alongside gigabrains like Stani, Nicolo, Rebecca, and the rest of the Aave family as we pioneer the frontier of crypto 👻

## It’s all about experiments. Always has been.

Why am I building Web3 experiments?

The future to me is clear: Web3 is an inevitability. An internet built on open & permissionless primitives — built with community-first principles, and values of individual ownership and democratized access.

However, no one is exactly sure how it will manifest itself.

IMO charting the path for the future takes more parts experimentation than vision; the greatest innovations of the modern era came by accident.

[https://twitter.com/0xJim/status/1441059530213888000?s=20](https://twitter.com/0xJim/status/1441059530213888000?s=20)

**Web3 supercharges the experimentation that we’re seeing** — thanks to the open, permissionless building blocks we’ve created.

Anyone can connect into any primitive and begin building on top of it.

Have an idea? Just hook up to a protocol and leverage its liquidity, users, and utility at full capacity.

We saw it with DeFi: any application can empower users’ financial autonomy by plugging into Aave, Uniswap, Yearn, etc.

This trumps any traditional fintech that has to build those financial primitives from scratch every time.

[https://twitter.com/0xJim/status/1444387207167438848?s=20](https://twitter.com/0xJim/status/1444387207167438848?s=20)


---

## Embracing my inner mad scientist

I’m a tinkerer at heart. My personal notebook is riddled with borderline nonsensical ideas that randomly pop into my head throughout the day.

![](https://images.mirror-media.xyz/publication-images/EoMMzUbv3CRF0XYeZwncf.JPG?height=3024&width=4032)

I used to think something was wrong with me — that my brain was somehow wired wrong because I was constantly thinking about seemingly unrelated things.

I was afraid that I kept chasing shiny objects — the next cool thing in crypto — while leaving my current projects unfinished: a[ white paper](https://coolcatscao.webflow.io/) with no v1, a[ landing page](https://sygmo.webflow.io/) with no substance.

Or, like Frankenstein, I would make monstrosities that no one cared about: a[ group crypto investing wallet](https://carbonated-operation-133.notion.site/PRD-Group-Crypto-Investing-d96fca0b02494bc796836f0a0384a921) or a[ video game-like trading interface](https://wary-bestseller-467.notion.site/Trading-as-a-Video-Game-c04bc4146367466ca6ab9b3d30d63fc6).

But slowly, I started meeting like-minded people — seemingly all in Web3. A collection of misfits, self-proclaimed “mutts” (multi-disciplinary folks) who had no real home until they found our little corner of the Internet.

And I overcame my fear.

It’s okay to be a mad scientist; it’s okay to be me.

[https://twitter.com/dhof/status/1444630757863952393?s=20](https://twitter.com/dhof/status/1444630757863952393?s=20)

[https://twitter.com/mollyfmielke/status/1445050787042770946?s=20](https://twitter.com/mollyfmielke/status/1445050787042770946?s=20)

And there’s something so magical about shipping MVPs.

About making a janky product using no code tools, with manual processes abound, duct taped barely all together with Zapier.

I always hear my old boss in my head telling me, “You should never be proud of your MVP”.

Don’t let perfect be the enemy of good.

[https://twitter.com/0xJim/status/1441468535901880329?s=20](https://twitter.com/0xJim/status/1441468535901880329?s=20)

I have an addictive personality, but nothing gives me the same rush as learning something new.

**I crave knowledge. I crave growth.**

And shipping experiments is the perfect spot on the S-curve for me to maximize my learnings as an investment of my time.

A startup’s mission at the beginning is to[ minimize learning cycles](http://theleanstartup.com/). Form and validate hypotheses quickly, iterating at every step 

Layer 2 Won’t Save Ethereum

## What no one’s talking about: the unanswered problems with L2 scaling solutions

![](https://images.mirror-media.xyz/publication-images/ffhNHxPt2gS3jJRwYBA36.png?height=1125&width=2000)

*This article is imported from my 0xjim Medium blog from April 28, 2021.*

*As always, this article is made for educational purposes. This does not constitute financial advice nor trading advice. Past performance does not indicate future results.*

[Two days ago](https://0xjim.medium.com/the-layer-2-wars-heat-up-b8d02d3dd332), I cheekily stated that “Layer 2s will save Ethereum”.

![](https://miro.medium.com/max/1400/1\*0GXEKXHozmzzdPcSRyG_rw.png)

Since Ethereum has been been suffering from high gas fees due to an overload of its network, many have claimed that Layer 2s will be the end-all-be-all: the silver bullet that fixes Ethereum’s pesky gas problem forever.

Frankly, as of until a few weeks ago, I thought that as well — that once Layer 2s hit critical mass of the transactions on Ethereum, Ethereum will be the absolute perfect crypto platform.

But as I started digging deeper into the Layer 2 solutions and started participating more in the in-depth conversation around Layer 2s on Twitter and Discord, I started to realize that — while Layer 2s are a much needed and logical solution to scaling Ethereum — they come with their own question marks and potential issues that may hinder the platform from reaching its true vision of the world’s super computer.

> Layer 2s come with their own question marks and potential issues that few people are aware of or seem to be talking about

With that said, Layer 2s are absolutely still a step in the right direction, and they are needed even with the eventual merge of ETH2 later this year. The throughput and speed that they offer cannot be done purely on Ethereum 2.0’s Layer 1 network.

But they are far from perfect. Maybe that’s way there are just so many solutions to scaling Ethereum: sidechains, childchains, payment channels, roll-ups…

Here are some of the potential issues / unanswered questions that I’ve seen from the current Layer 2 scaling solutions.


---

## Limited Composability

[Yesterday](https://0xjim.medium.com/the-true-power-of-defi-composability-14fe8355e0d0), I talked about how the true power of decentralized finance was composability — arising from the open source nature of the technology.

Personally, I think that composability is the most powerful aspect of DeFi.

Yes, open finance is great — allowing for unprecedented access to financial services, something that has excluded nearly [2 billion people](https://globalfindex.worldbank.org/sites/globalfindex/files/chapters/2017%20Findex%20full%20report_chapter2.pdf) in the world from accessing.

It’s also great that, for the first time since the rise of Web 2.0, individuals are taking back control of their finances, their data, and their possessions from intermediaries like Facebook, banks, etc.

But for me, the added layer of composability really takes the cake. It creates brand-new, never before seen financial products that change the way that we view finances.

The inner kid in me sees DeFi and sees a never-ending web of innovation. Just like how the Internet created companies that we never thought possible in the 90s: Netflix, Postmates, Zoom.

[https://twitter.com/AlchemixFi/status/1362928645103255552?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1362928645103255552%7Ctwgr%5E%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fcdn.embedly.com%2Fwidgets%2Fmedia.html%3Ftype%3Dtext2Fhtmlkey%3Da19fcc184b9711e1b4764040d3dc5c07schema%3Dtwitterurl%3Dhttps3A%2F%2Ftwitter.com%2Falchemixfi%2Fstatus%2F1362928645103255552image%3Dhttps3A%2F%2Fi.embed.ly%2F1%2Fimage3Furl3Dhttps253A252F252Fabs.twimg.com252Ferrors252Flogo46x38.png26key3Da19fcc184b9711e1b4764040d3dc5c07](https://twitter.com/AlchemixFi/status/1362928645103255552?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1362928645103255552%7Ctwgr%5E%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fcdn.embedly.