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December 2021 | Issue 20
Normally, in the Enthusiast we recap the previous month. However, with 2021 coming to a close and a record year now behind us, this edition we will take a look at the charts, trends, and visuals that made this year (arguably) crypto’s greatest yet. Scroll down memory lane with us and have a happy New Year’s!
2021 look back
- Total crypto market cap increased from billion to $2.3 trillion during 2021, peaking at ~$3 trillion.
- Bitcoin’s price appreciated ~75% in 2021, peaking at an ATH of ~$68,500
- Bitcoin largely behaved as a risk-on asset in 2021, selling off with any spikes in the volatility index (VIX).
- Bitcoin’s Lightning Network capacity has surged from ~1,000 BTC to 3,300 BTC, largely in part to El Salvador adopting Bitcoin as legal tender, becoming the first nation in history to do so!
- The big bout of volatility this year was caused by China banning Bitcoin mining in May. Despite the ~50% drop mid-year from the Chinese mining ban, the mining hashrate increased ~25% in 2021.
- The Bitcoin network mined its 18.9 millionth BTC, meaning that 90% of all BTC that will exist are now in circulation
- In stark contrast to Bitcoin’s scarcity, the number of people experiencing double-digit inflation crossed 1 billion people in 2021.
- At home in the US was no exception with inflation surging all year, consistently topping market expectations.
- Bitcoin fees remained muted while Ethereum usage, and thus fees, surged past Bitcoin’s.
- Stablecoin supply has increased from $5.38 billion to $148 billion. After starting 2021 with a supply of $29 billion, the stablecoin market capitalization looks to end 2021 around $140 billion. While USDC and USDT remained in the top spots, MIM, FRAX, and UST showed their potential as on-chain alternatives for their centralized counterparts.
- Terra’s algorithmic stablecoin UST has gone from $0 to ~$9 billion in its first year and overtook Maker’s DAI in market cap in 2021.The former now boasts a total market cap of just over $9 billion, while the latter is still below $9 billion.
- Ethereum’s Beacon Chain and the amount of ETH locked there for staking, steadily grew all of 2021 surpassing 8 million ETH (~$32 billion).
- Ethereum releases EIP-1559 and burns a ton of ETH (~$5 billion in total in half a year).
- On Ethereum alone, total value locked (TVL) in DeFi protocols rose from ~$16 billion at the start of 2021 to ~$110 billion.
- DeFi TVL in L1 ecosystems overall grew even quicker, adding over $166 billion since the start of the year for a gain of about 974%.
- NFT sales have increased from $340 million to $17.7 billion in 2021; a 5,100% increase.
- NFTs brought in hoards of new Ethereum and EVM-compatible users, as evident by Metamask’s huge 2021 monthly active user growth.
- Axie Infinity launched the gaming/GameFi/play-to-earn mania.
- Decentralized exchanges (DEXs) reported more than $1 trillion in trading volumes in the year 2021. That is a massive ~850% increase compared to 2020 DEX trading volumes.
- Top ROI of 2021 (starting with a market cap greater than $200 million) - Winners: Metaverse and alternative L1 smart contract platforms.
- Alternative L1 smart contract blockchains have a breakout year.
- Alt L1s can thank this chart (and their incentive programs) for their big year.
- Release of Ethereum rollups solutions remains modest (but early) compared to the TVL of other EVM-compatible L1s.
- ~$20 billion bridged to other EVM-compatible chains while only ~$5.7 billions on rollups in 2021.
A few headlines from December 2o21
Wyoming Republican Senator Cynthia Lummis, a well-known Bitcoin advocate, is planning to introduce a comprehensive bill in 2022 that includes taxes, consumer protections, and more. The bill aims to enact clear guidance on which assets belong to different asset classes, regulate stablecoins, and create a new organization under the CFTC and SEC specifically for cryptocurrencies. Lummis and other crypto-friendly regulators have helped bring the potential of digital assets in front of the Senate and other US regulatory bodies in the back half of 2021.
Earlier this week, Ethereum developer Tim Beiko and the Ethereum Foundation announced the deployment of the Kintsugi Merge test network. Kintsugi is a “longer-lived, public testnet” that will allow applications developers and users to become familiar with a post-Merge Ethereum environment. Heavy usage of the test network will allow clients and Ethereum developers to find any potential issues and further mitigate issues during mainnet’s impending Merge.
In December, a whitehat hacker discovered a critical vulnerability in the Polygon network that left ~9B MATIC at risk. The hacker reported the issue, Polygon then secretly patched the bug and initiated a hard fork to remove the issue. The team's efforts were successful and the issue has been fixed with no loss of funds. However, the bug reinforces how new and risky these scaling technologies are while the secret hard fork illustrates just how much control a small team has on the Polygon network.
