On the eve of Halloween, the crypto community should remember the main financial and technological nightmares of 2022.
The events of 2022 have become a real nightmare for all participants in the cryptocurrency industry, regardless of the direction of activity, the level of the company and the experience of the players. They shook the ecosystem and had a significant impact on investors, companies, entrepreneurs, miners and developers. The extraordinary volatility of the market, the uncertainty of the time frame, coupled with international political tensions, have become “black swans”, due to which seemingly unshakable projects and successful enterprises have shaken or collapsed.
According to crypto industry experts, the biggest trigger that launched a series of negative events was the collapse of the Terra ecosystem. It has morphed into the biggest financial disaster in 13 years. Two internal offerings from Terraform Labs (TFL) destabilized and lost market value almost instantly. The collapse of Terra highlighted the risks associated with algorithmic stablecoin peg mechanisms and their instability.
Regulators have begun imposing bans and carrying out massive inspections of the activities of similar companies, which has contributed to the confusion and uncertainty of market players.
Given the numerous examples of stablecoins falling in value, lawmakers in the US House of Representatives have called for the creation or issuance of “endogenously backed stablecoins” to be criminalized.
The crypto crash in the first half of 2022 spooked crypto investors as it not only led to massive shutdowns of projects, but also drained the profits of sub-ecosystems. In less than a couple of months, the industry’s total market capitalization has dropped by almost 60%, from over $2.5 trillion to less than $1 trillion. Underfunding was felt at all levels, which led to the closure of a number of existing companies and start-ups.
As a result, the burden of losses was shared by former employees of some crypto companies. Notable market players including Robinhood, Bitpanda and OpenSea have announced mass layoffs for reasons related to the challenges of surviving a falling market.
According to onlinetracker
cuts and layoffs at tech startups Layoffs.FYI, from January to October, more than 700 tech startups faced layoffs, affecting about 100,000 employees worldwide.
By downsizing, cryptocurrency companies have tried to reduce operating costs and eliminate unprofitable components of their business systems.
Another of the most notable issues related to crypto in 2022 has been the growing number of hacks and scams. The crypto community notes that since January, hackers have withdrawn billions of dollars worth of crypto assets to their wallets, subtly exploiting the vulnerabilities of crypto projects.
According to Atlas VPN, in the first quarter alone, blockchain projects in the Ethereum and Solana ecosystems lost more than $1.3 billion from hacker attacks. Blockchain security agency SlowMist published a report according to which hackers stole from protocols DeFi and bridging over $1 billion
Summarizing, we can draw several important conclusions that will help you to benefit from the most annoying events. First, the need to conduct their own independent research before investing in an untested project became apparent. Secondly, investors are becoming increasingly aware of the need to be critical of the advertising of crypto assets from unknown sources, as well as to avoid any open exchange of personal and confidential information on the Internet.
Cryptocurrency investors need to be attentive to the global political agenda in order to see in advance the potential risks that are looming. First of all, this applies to the last, eighth EU sanctions package, which included a complete ban on transactions with cryptocurrencies with any Russian citizens and organizations.
Source: Bits
I am an experienced journalist, writer, and editor with a passion for finance and business news. I have been working in the journalism field for over 6 years, covering a variety of topics from finance to technology. As an author at World Stock Market, I specialize in finance business-related topics.
