• The first half of 2022 proved to be a challenging period for investing in risk assets. Crypto was not spared from the market downturn that also affected traditional asset classes such as stocks and bonds.

  • Nonetheless, continued developments and innovation in the crypto ecosystem contribute to our optimistic view of the future of crypto.

  • The competition between L1s remains fierce. Different L1s have taken different approaches towards increasing scalability.

  • L2 deployment appears on track to become increasingly ubiquitous going into the second half of the year. It would not be surprising to see most, if not all, of the top ranked dApps being deployed on some form of L2.

  • Dominance of Ethereum in DeFi has continued to decline, as other chains such as the BNB Chain catch up. Development in the space remains strong and fundraising in DeFi has hit an all-time high.

  • Trading volume for NFTs in the first half of 2022 remained resilient despite a sharp decline in June. OpenSea is still the leading NFT marketplace but new entrants such as X2Y2 and Magic Eden have introduced strong competition. The shift to using NFT aggregators is likely to continue gaining ground, albeit slowly.

  • The number of GameFi projects has continued to rise but there are signs of slowing growth. Deal flows are healthy and capital investments in GameFi exceeded over US$4.1B in first-half 2022.

  • In terms of returns, the large-cap, blue-chip L1 coins have performed relatively well even amidst market volatility. L1 and Gaming tokens have exhibited some level of resilience and performed better when compared to DeFi and DEXes tokens.

  • Cryptocurrencies would likely benefit from a globally coordinated approach to regulation. Working with regulators rather than against them is probably a good approach.

  • In the first half of 2022, there were more than 1,000 investments within the crypto space. The two areas that saw the most number of investments were Gaming/Entertainment and Asset Management.

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