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Infrastructure bottlenecks remain

Although competition between public chain infrastructure increased significantly in 2021, key bottlenecks still need to be addressed.For example, Ethereum, as a top public chain developed by DApp, still suffers from network congestion and high transaction costs.Some second-floor solutions are addressing this problem, but still struggle to gain long-term attention.This also applies to most Ethereum competitors, as they are still in an immature stage, and it is crucial to address these limitations in 2022 and beyond.

There are high expectations for Ethereum 2.0 to ease these problems, as fragmentation can address network congestion, high transaction costs, and low throughput.However, the upgrade is performed in multiple stages, and may not be completed by 2022.Other public chains such as BSC, Solana and Avalanche will continue to attract users and developers until slice implementation.

In addition, the second floor solution will appear in a similar development path to Ethereum, and if the number of users soared, the second floor gas price rise will be inevitable.Therefore, the second floor is not an ideal long-term solution, and unless developers can find innovative solutions, it also has an impact on the cross-chain bridge using the second-floor network.

The NFT and the metaverse continue to evolve

In 2022, the role of the NFT in the metaverse will become more direct.The current NFT market is divided into art, collectibles and games, and new initiatives and tools using NFT standards will also enter the market.In addition, NFT will help various activities in the metaverse, including digital body, virtual space, economic activities and so on.The metaverse helps finalize the application scenarios for NFT development, and NFT will in turn drive the metaverse.

The metaverse will revolve mainly around the game, with the great potential to blur the boundaries between real-world and virtual-world activities.Creating a separate metacom project is the first step towards that goal, and connecting these virtual worlds will be a huge obstacle to overcome until the final formation of a multiple metacom.

Two other anticipated trends in the metaverse include the role of DeFi and cross-chain bridges. DeFi, proven effective and stable, will be a solid foundation for metmetaological economic activity.Furthermore, DeFi and NFT formed a solid combination, suitable for many metaverse use cases.The Metaverse is equivalent to licensing users to accommodate more diverse assets, products, and services, paving the way for broader financial inclusion.

Developers can make progress across chain bridges of the meta-verse.The current activities are focused on each blockchain, causing the "ecological island" problem.Moreover, most public chains struggle with infrastructure, reducing the appeal of metaverse projects based on their technology.Cross-chain bridges can overcome these challenges and bring higher efficiencies to the meta-cosmos, NFT, and DeFi.

Regulatory trends in the Metaverse, NFT, and DeFi

The cryptocurrency industry regulation remains a tough topic, and most countries in the world have not yet made clear decisions in this area.Because of frontier innovative concepts such as DeFi, NFT, and the metaverse, the lack of a clear framework makes regulation more difficult.Therefore, national regulators and policy makers will seek to create a legal framework for the Metaverse.

The field has gained the attention of many enthusiasts and mainstream traditional companies.Clear guidance on compliance or illegal behavior in the virtual world will help to legalize these activities.From the current situation in Europe and the United States, some analysts expect this situation to improve greatly.

In addition, DeFi will continue to attract attention from regulators, but protecting investors without compromising innovation and decentralization is a tricky issue.In addition, the current regulatory guidelines may not be applicable to the DeFi industry.As a result, the US is seeking new regulatory models, depending on how the SEC, BIS, or FATF treats the industry.

The governance of the DeFi agreement is also a special regulatory barrier.Because of the holders of the governance certificate, it leads to a certain degree of centralization of the agreement.It turns out that it is almost impossible to achieve fully decentralized governance so far, but decentralized autonomous organizations (DAO) may play a role, and DAO is expected to become an important trend for DeFi in 2022.

The last regulatory theme to consider is to unify DeFi with KYC requirements and user privacy.Some level of compliance will become a new demand, and licensed DeFi solutions such as Aave Arc are also a way to solve the problem.In the future, both institutional and non-institutional DeFi users are likely to comply with regulations, and KYC on the chain may be an option.

Blockchain security

From some DeFi protocols being "rug pull" (absconded) to hackers attacking exchanges or using smart contract vulnerabilities to steal money, countless blockchain security incidents occurred again in 2021. Blockchain security protection measures are particularly important because the blockchain transactions are irreversible.Although insurance agreements may provide solutions, affected users are still struggling to get real protection.

Code auditing may become the norm for the entire blockchain industry in 2022.Many audit companies have established related businesses, including CertiK, SlowMist, etc.Auditing can help discover vulnerabilities or problems before deploying smart contracts in an actual environment.As audit firms get more financing, they will help the blockchain industry eliminate more risks.

Insurance agreements can also provide additional layers of protection and security.Currently, several insurance agreements exist in DeFi, mainly involving mutual fund pools or financial derivatives.However, growth in such agreements is hampered by high fees, KYC requirements, lack of cross-chain support, and inefficient capital use.To attract institutions to DeFi, the industry needs better and more effective insurance agreements.

The last aspect to consider is transaction privacy.Public chains can provide pseudnames, but usually do not provide privacy or anonymous features.Even privacy computing protocols such as Manta, Oasis, and zkSync all partly sacrifice decentralization to support computational power.As the broader blockchain and cryptocurrencies grow, the demand for transaction privacy will increase.

sum up

Making decentralized technology mainstream is an optimistic idea, but the innovation requires some clear regulatory attitude to convince the mainstream audience.It is unclear whether European and American regulators will eventually make their decisions, but they will not make those decisions indefinitely.In terms of industry technology, addressing the current infrastructure bottleneck is a key issue.Finally, innovative ideas such as DeFi, NFT, and the meta-Universe need to improve the status quo of inefficiency and high cost without compromising decentralization.

*The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of SparkDAO. Every investment and trading move involves risk, you should conduct your own research when making a decision.