Sunday, July 14, 2024
Market Analysis

5 altcoin projects that made a real difference in 2022

Bitcoin (BTC), Ether (ETH) and the crypto market had a rough 2022 from a price perspective, but traders are hopeful that 2023 will include bullish developments that push crypto prices higher. 

Despite the market-wide downturn, a handful of altcoins continued to make a positive contribution to the crypto space and thanks to Ethereum, the term altcoin is no longer a derogatory term.

Let’s explore the top altcoins that made a difference in 2022.

Ethereum fundamentals shone in 2022

Ether’s price hit a yearly high at $3,835 on Jan. 2 and has struggled to regain footing amidst the bear market and other macro factors. The Ethereum network is the top project in 2022 not because of Ether’s price action, but for its fundamentals and for completing the long-awaited mainnet upgrade. The Ethereum merge was completed on Sept. 15, 2022 and while many feared the merge to proof-of-stake (PoS) could cause issues, the transition was flawless.

The main advantage of PoS is that it is much more energy-efficient than proof-of-work (PoW) because it does not require expensive and energy-intensive hardware to validate transactions. This reduces usage costs for the end user and makes it a more sustainable and scalable solution for Ethereum’s long-term growth. The Merge also reduced the Ethereum network’s energy consumption by over 99.9%.

Some analysts are bullish on Ether post-Merge due to its emissions schedule becoming deflationary. Although daily active users have increased for the network, emissions have remained inflationary and Ether price is still down from yearly highs.

In 2023, investors are hopeful that increased transactions on the network creates higher demand for Ether and that this translates to a boost in the altcoin’s price.

Lido (LDO) brought Ethereum network staking to the masses

Lido’s makes it easy for users to participate in Ethereum PoS as validators by providing a simple interface for betting without having to reach the high threshold the network requires to stake.

Since launching, Lido has earned $158.8 million in fees from their staked Ether protocol. At the peak, Lido saw 823 daily active users on Sept. 17.

Cumulative Lido fees and daily active users. Source: TokenTerminal

With the Ethereum network Shanghai hard fork scheduled for March 2023, Lido will have a busy Q1 and all the Ether staked in the platform will have the option of being withdrawn. Aztec Connect, the creator of Lido protocol also recently secured a $100 million fundraising round to build an encrypted blockchain.

Polygon partnerships show long-term resiliency

Mass adoption requires traditional companies and brands to get involved in crypto. Polygon (MATIC) has a major focus on partnerships and some of the relationships developed in 2022 include Warner Music, JP Morgan, Instagram and Warren Buffett’s Neobank.

These partners use Polygon in various ways, including integrating the Polygon network into their infrastructure and using Polygon to offer distributed ledger technology (DLT) for their products and services.

Notable companies, including Cointelegraph, also chose to launch NFTs on Polygon. In addition to Cointelegraph, former President Donald Trump, Reddit, DJ Deadmau5 and Nike all launched NFT collections on Polygon.

Some traders expect a 200% upside swing from MATIC due to on-chain metrics showing traction and bevy of future partnerships. Despite all of Polygon’s growth, the Ethereum network still intakes more fees.

Daily fees comparing Polygon (Orange) and Ethereum (Green). Source: TokenTerminal

Polygon’s focus on Web3’s core principles combined with their partnerships, earned them a spot as a top altcoin project in 2022 .

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MakerDAO’s DAI proves resilient

In a year that saw algorithmic stablecoins de-peg and perish, Dai (DAI) has shown resilience. Unlike centralized stablecoins, DAI is a decentralized stablecoin that provides transparency, censorship resistance, and the ability to operate outside traditional financial systems.

While DAI is not new to the crypto space, the decision to increase exposure in low-risk assets such as treasuries and bonds earns them a spot as a top altcoin. According to an analysis from Sebastien Derivaux, a crypto scholar, this decision generated 75% of all DAI revenues (600 million.)

Cosmos upgrades attract institutional investors’ attention

In 2022, Cosmos (ATOM) focused on solving the interoperability and communication challenges that exist between different blockchains. On Jan. 1, Cosmos had 74 active developers and this figure more than doubled, reaching a peak of 154 on Nov. 30.

In a year plagued with cross-chain casualties, Cosmos’ inter-blockchain communications protocol (IBC) has so far seemingly weathered the storm. The success caught the eye of Delphi Digital’s research arm and fund managers at VanEck.

Cosmos fees and developer activity. Source: TokenTerminal

Overall, Cosmos has the potential to be an important infrastructure layer for the crypto ecosystem, helping to facilitate the exchange of value and information between different blockchain networks and enabling a more interoperable future.

While 2022 is a year most crypto investors would like to forget, positive factors in mass adoption arose. The altcoins with a focus on building will continue to propel crypto’s future in 2023 and beyond.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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