2022 Roundup: Year of the Correlatooor

Let's begin by considering a simple truth: This was the year crypto woke up to the world. Let's begin by considering a simple truth:   This was the year crypto woke up to the world.   We've been yanked awake from daydreams of decoupling by a macro environment that many among us have never endured before – at least since crypto's inception. An environment that's arguably even more tenuous than 2008's GFC, compounded by Chinese instability and the Russia-Ukraine war.    In the space of a year, we've gone from counting down halvenings to waiting for CPI prints and FOMC meetings.    Bitcoin's store of value ambitions have been shelved until further notice, with the leading crypto observing a ~65% drawdown YTD in its first real battle test.    If 2021 was the year of the print, 2022 has been the year of the belt. Truly, there's not a soul on Earth who's been immune to the stings of JPow's tightening. Blue-chip equities have traded like shitcoins while citizens across the globe try to survive the pressure of a strengthening dollar and, consequently, the debasing of their own national currencies.    It's been a masterclass in reinforcing dominance from the world's greatest fiat mongers. While Modern Monetary Theory (MMT) continues to explicitly highlight its own failings, the petrodollar's merchants refuse to cede their vice-grip on global economics at all costs.    After recklessly printing 80% of all USD in existence between 2020 and 2021, the rest of the world has been left to suffer the consequences while the Fed unwinds a trainwreck of its own making. While the US and Eurozone continue to observe record inflation numbers, developing nations have borne the brunt of the Fed's aggression and the ECB's inaction.   Emerging markets are teetering on the brink of State Failure. Thanks, Jerome.  Full stats here   Twelve Months in Goblintown Central   After a historic bull run that saw levels of froth only witnessed in the wake of tsunamis, 2022 has brought the space back to Earth without so much as a parachute.    New retail investors riding the meme wave that defined much of the bull have, for the most part, exited with 3rd-degree burns.    But they're far from the only participants who've been scalded by this year's firestorm.    In an industry underpinned by an ethos of "don't trust, verify," an awful lot of trust has been placed in CeFi entities, with earth-shattering consequences.   Tallying up this year's implosions could fill entire libraries. From Celsius to FTX, CeFi stalwarts have seen their net worths evaporate in tectonic onslaughts throughout 2022.    FTX's stunning fall from grace has driven home the need to return to our cypherpunk roots. While investors reel from their losses, SBF's press tour would have us believe that a high-caliber professional trader could simply lose eight billion United States dollars due to "mislabelled" accounts.   Hunting Narratives   With BTC's store of value positioning eroding, the market looked to smart contract leader Ethereum to spark a fresh influx of adoption. After years of development and delays, ETH 2.0 finally came to fruition with the network successfully merging to PoS (Proof-of-Stake).   However, as with any release that's been left to marinate in its own hype for too long, the much-famed Merge arrived in underwhelming strides.    Proponents memed themselves into a corner by touting a triple halvening that failed to drive price action.   That being said, the Merge itself was a success for those of us passionate about the tech.   The network has seen a massive reduction in issuance since adopting its new consensus mechanism. This has been complemented by a reduction in supply via burning and lower liquid supply due to the volume of ETH staked to the network.   Many mistakenly believed that the Merge would inherently make ETH deflationary. However, as per the whitepaper, ETH 2.0's supply growth only flips net negative when gwei is >15.    The fact that the chain has struggled to exceed this boundary of network utilization since the Merge's implementation says little about the tech, but speaks volumes about the current crypto climate.    The frenzied activity that saw gwei touch four digits during 2021's bull has evidently exited the market. As investors continue to de-risk and avoid strays from the Fed's fully loaded 9mm, network utilization is understandably reduced.   Further, the mechanics of NFT minting have evolved in a short space of time, demanding less from the chain itself. Gone are the days of the PvP gas wars, where buyers botted and bribed their way to be first in line for fresh mints. In their place stand white lists and free mints – mechanics that hold their own challenges but are far less prohibitive from an initial cost perspective.   Several other factors could contribute to ETH's low utilization, from the continued development of alternate Layer-1 chains to the space's increased focus on Layer-2 scaling solutions.    However, for those of us who've endured previous bears, muted activity is par for the course. It's in these lulls that good tech is born and the crowded landscapes clear to distinguish fly-by-night projects from those committed to staying the course.   ETH 2.0's supply trajectory has been reduced by magnitudes, even with low network activity. (ultrasound.money)   Looking to 2023 There's no telling what the next chapter in crypto's future holds. At the very least, we can hope that it's punctuated by the arrests of those who've drained billions from the industry this year.    The Fed's great unwinding has already purged the markets of much of the leverage that has driven the last 13 years. Given that further drastic tightening could eviscerate any hopes of Powell's mythical soft landing, markets are pricing in the onset of stagflation.    While this likely spells a prolonged period of high interest rates and high inflation, it could serve to alleviate selling pressure in the short term. Markets may not enjoy quantitative tightening, but they absolutely despise uncertainty. Should the Fed confirm a more forgiving path back to stability, investors may see their risk appetites return.    Importantly, we've already faced the bogeyman this year. In line with crypto's general attention span, recent hikes haven't had the sledgehammer impact observed in earlier months. Remaining participants continue to search eagerly for the next big wave in preparation for another bull.    How long the hangover from FTX's implosion lasts is anyone's guess. One thing is certain, however – the recovery will be propelled by new heights of innovation, without the debris of the bad actors who've been rinsed out this year.   At Origin, we've been building with the next wave in mind. We've been proud to launch innovative flagship products this year at the bleeding edge of DeFi and NFTs.   OUSD's new strategies have turbocharged the platform's DeFi utility, now offering the best risk-adjusted yields in the industry.   Origin's NFT arm Origin Story began building white label marketplaces for leading projects in June, and now serves over a dozen established collections.    Together with Roofstock, we've built the first NFT marketplace for physical property exchange to disrupt the $11T traditional real estate industry. This first foray into tokenizing real world assets is a statement of intent – Origin is here to disintermediate monolithic industries that remain largely untapped, one product at a time.    The future will be decentralized, but only if we build it.   Origin Dollar Origin Protocol Labs Floor 4 Willow House Cricket Square, Grand Cayman, KY1-9010 Unsubscribe - Unsubscribe Preferences