Crypto 2022 In Review: The Good, The Bad and the Fugly

Posted on Feb 6, 2023 | BLOG


2022 was a riches-to-rags year that even the staunchest crypto believers are glad to see the back off. We have covered the carnage that followed the biggest DeFi hacks and cascading CeFI bankruptcies over 2022, with almost all cryptocurrencies down 70-90% of their 2021 highs and a couple of the biggest, FTT and LUNA killed off for the sins of their creators. 

From record inflation to interest rate hikes and the war in the Ukraine, macro-economic factors mattered this year, dragging risk-on financial assets like cryptocurrencies down with it. Empires of crypto heroes like SBF, Alex Mashinsky, Do Kwon and Su Zhu fell like dominoes. By December, both casual and institutional investors alike felt like their funds were under siege, with FUD driving them to either sell or move assets to cold storage. 

Not everything that happened this year was disastrous or a complete write-off though. 

In fact, 2022’s few highlights such as the Merge, leveling up of layer-2 networks and Web2’s adoption of Web3 and NFTs have likely set the stage for the next exponential jump in crypto-related technology and prices. Let’s revisit some of the biggest lowlights and highlights of the 2022. 

The Good

Crypto crowdfunds Ukraine 

In February 2022, Russia invaded Ukraine in a shocking escalation of the war started in 2014. With millions of Ukranians leaving everything behind and fleeing as refugees, crypto came to the rescue of many, as holders worldwide donated over $69 million by March 2022 to the country and various NGOs. Meanwhile, Russians’ adoption of Bitcoin and crypto spiked due to severe global banking and trade sanctions aimed at their government. 

Ethereum Merge 

In September 2022, Ethereum underwent a vitally important upgrade called the Merge, which effectively switched the blockchain from a proof-of-work system to a proof-of-stake system. The change was meant to make Ethereum more energy-efficient and reduce its energy consumption by around 99%. However, the Merge did not address Ethereum’s high transaction costs and slow network speeds, which will be improved with later upgrades in 2023 and beyond.

The proof-of-stake system, in which validators “stake” ETH with the chain in order to write transactions to its ledger, has raised concerns about Ethereum becoming too centralized. Additionally, despite the Merge’s potential to make Ethereum a deflationary asset, the event did not lead to a significant increase in the price of ether, which has dropped around 20% since the Merge.

Overall, while the Merge made progress in terms of energy efficiency, it also raised questions about Ethereum’s decentralization and its potential impact on the price of ether.

L2s level up

According to a Bankless report, the value of assets bridged onto layer 2 (L2) networks fell 28.6% in 2022, from $5.7 billion to $4.1 billion. However, the ether-denominated total value locked on L2s rose 120.6% over the same period, suggesting that L2s saw significant liquidity inflows despite the decline in asset value.

The Arbitrum network saw a 590% increase in transaction count between Q1 and Q4, driven by increased usage of native decentralized applications (dApps) like GMX, as well as the Nitro upgrade which reduced transaction fees. Optimism also saw a significant increase in transactions, likely due to the launch of its OP token and subsequent incentive programs. Optimism processed 3.2 million transactions in Q1 and 30.3 million in Q4, a 846.7% increase between these two periods.

Both Arbitrum and Optimism saw significant growth in active users over the course of the year, with an increase of between 600% to 1000% from Q1 to Q4.

Meanwhile, Polygon continues to conquer new frontiers for both L2 and Web3, with several high-profile partnerships with Web2 giants such as Meta, Twitter, Universal Music, Starbucks and DraftKings setting up a bright future for them. 

With zero-knowledge (ZK) rollup-based L2s like ZKSync and StarkNet (who is working with Visa) on the up as well, 2023 should be a boon year for layer-2s helping Ethereum to scale. 

NFTs and Web3 woo Web2

While the NFT market, dominated by PFP JPEGs, took a massive nose dive in 2022, last year’s and Q1’s BAYC-driven crazy hype led to a plethora of leading fashion brands like Gucci, Louis Vuitton, Burberry, Balmain, Dolce & Gabbana, Givenchy and Under Armour taking a punt on NFT collections and partnerships, seeking IRL and metaverse collaborations that pushed the boundaries for what digital collectibles can be used for and achieve. 

Meanwhile, Web3 continues to attract huge numbers of developers and investors despite a seemingly disappointing 2022. With cash-rich VCs deploying several huge Web3 funds, the decentralized internet can no longer be ignored, and as a result, there has been collaborations between several big Web2 and Web3 firms (see Polygon in this article) to see how they can use each other to thrive in a promising new sector known as Web2.5 that extracts the best from both worlds. 

Web3 sees big investments

In Q1 2022, crypto fundraising was still going strong, with firms like Polygon ($450m), Near Protocol ($350m), Fireblocks ($550m), Alchemy ($200m) and others raising hundreds of millions of dollars. Meanwhile venture capital (VC) firms like Andreesen Horowitz pulled in $4.5 billion for a crypto fund, while Haun Ventures and Pantera both raised $1.5B and Brevan Howard and Electric Capital pulled in a billion dollars each from eager investors. Luckily, while the scene has changed dramatically over the course of 2022’s crypto winter, much of this capital is still there, waiting for deployment in more favorable market conditions.

The Bad


The year started with a record breaking January for NFT sales, as the bull market euphoria continued to prevail despite the Fed signaling their quantitative tightening pivot to come during the rest of the year.

The world’s biggest NFT and digital collectibles marketplace posted a staggering $5billion sales figure for the first month of the year in trading volume between Ethereum and Polygon sales.This dropped to $253 million (from an industry total of less than $400m) by November 2022, the lowest since June 2021. 

NFT technology is still in its infancy though, and as Web2’s adoption of NFT indicates, digital collectibles will be around for a long time and prosper as builders continue to iterate. 

Bitcoin and altcoins crash

Meanwhile Bitcoin opened up January at around $48,000, shedding nearly 20% to end the month at $38,000. BTC is ended 2022 at under $17,000, a price unfathomable during 2021’s mania. Where BTC drops 10%, altcoins drop a lot further usually, and it’s no surprise that the overall crypto market dropped from over $2 trillion to under $800 million. With a recession, more interest rate hikes and a slew of regulations to come in 2023, it may still be some time before crypto prices bottom out. 

The Ugly

Centralized exchanges drop the ball repeatedly

Investor confidence in crypto custodians and in particular centralized exchanges took a beating in 2022 due to a few firms getting wiped out by the Luna contagion. The demise of FTX, Alameda Research, Celsius, BlockFi, Voyager and others have been well-documented this year. However, they were not the only ones. This and the bear market put extra strain on all exchanges, resulting in the likes of (40%) and Coinbase (18%) cutting their employee headcount. 

There’s also the case of canceled sponsorships, which helped elevate the name of crypto in 2021 as several crypto exchanges went all in on exorbitant mainstream sponsorships driven by FTX and 

The bubble popped in 2022 after FTX’s fall from grace, with several firms and brands severing ties with the exchange. While some crypto firms still team up with the biggest sporting events in the world, eg F1 and the World Cup, there is now likely a global rethink by brands on the wisdom of signing long agreements with crypto firms.

Bridges bomb due to hacks

Crypto bridges attracted a lot of attention by the end of 2021, and were viewed as gateways that would help foster seamless interoperability between all chains. This dream soon came crashing down, with several exploits costing investors billions, none bigger than the Ronin hack, followed by others like Wormhole ($300m), Nomad ($200) and Harmony ($100m).

In March 2022, the Ronin Network's cross-chain bridge was attacked by the Lazarus Group, resulting in the theft and laundering of approximately $600 million worth of cryptocurrency. The Ronin Network is connected to the Axie Infinity NFT-based game ecosystem, which had provided a source of income for many South East Asians during the COVID-19 pandemic. This incident highlighted the need for improved security measures at the points of interconnection between blockchains.


This autopsy of Crypto 2022 reveals that while the crypto industry seems all but dead and buried by the hand of horrible macro-economic policies, self-inflicted wounds by hackers and scammers, low investor interest and stringent incoming new regulations, the clenched-jaw mantra of “bear markets are for building” still holds water. So no, Bitcoin and friends are still not dead. 

Just as the class of 2018 delivered some of the biggest performers in 2021’s bull run, so will the under-the-radar gainers of 2022 inevitably push the next big wave of adoption to come in the next few years.