Digital asset research firm Reflexivity Research recently released its annual report and market overview.
Digital asset research firm Reflexivity Research recently published its “ Annual Review 2022/Transition Prospects 2023.”
The annual review attributed the volatility in the crypto market last year to rising global inflation .
The subsequent rise in interest rates caused investors to flee from risky assets like cryptocurrencies.
The subsequent drop in cryptocurrency prices caused several companies to go bankrupt and resulted in scams being uncovered.
While detailing the collapse of TerraUSD, Celsius, Three Arrows Capital and FTX, the report also highlights some developments.
Last year, cross-chain bridges and applications were born, while Ethereum achieved its long-awaited upgrade The Merge .
After a strong year of growth, the report suggests that these sectors will see less growth next year.
Meanwhile, after a rough year, the report predicts market conditions are ripe for other sectors.
After “extremely vibrant and short-lived hype cycles” in 2020 and 2021, DeFi “had a relatively lackluster 2022.”
From $200 billion at the beginning of last year, the total value locked in DeFi has dropped to $44 billion by the end of the year.
However, as confidence in centralized exchanges suffers a blow, the report predicts that investors will be attracted to decentralized alternatives.
Defi also expects the expansion of successful innovations, such as “under-collateralized mortgage lending, on-chain derivatives, passive liquidity strategies and the proliferation of products yield real profits.’”
However, a harsh macroeconomic environment is likely to prevent DeFi TVL from reaching new highs next year.
During that time, the report believes that TVL Defi could return to $75 billion or $100 billion.
While perpetual swaps have become the preferred crypto derivative over the past year, the report shows the rise of crypto options.
During the crypto boom throughout 2021, over 9.87 billion options contracts were traded on the stock market.
That same year, options volume surpassed spot volume for the first time, while volume of $450 billion per day came from options alone.
The report highlights that the majority of crypto options trading takes place on the Deribit centralized exchange.
However, the daily volume of $20 million is quite pale compared to the $400 million in daily open interest recorded by Laevitas.
The report says this “huge gap to fill” is due to “a clear lack of infrastructure and availability” . Therefore, expect an explosion in these developments this year.