In the fallout from FTX, there’s been no shortage of contagion, fear, uncertainty and doubt floating around. In what feels like the 13th month of this painfully long year in crypto, H.E. Justin Sun shared some insights on his outlook for 2023. In short, Sun stated “I believe that 2023 will be a year of recovery.”
Institutions and traders have experienced a painful moment in 2022. Major exchanges like Kraken and Coinbase have reduced their headcounts, while other similar industry players have followed suit. But Sun believes there’s light at the end of the tunnel. Though the FTX collapse had a severe impact on the market, it also came with some silver linings. Although it may be contrary to public opinion, the event showed that crypto actually has a very good risk management structure. Unlike in traditional banking – where we’ve seen cascading collapses from Lehman Brothers-type events – major 1:1 backed players like USDT, Huboi, Binance and USDC have remained.
It’s important to remember that FTX was a rare case in this industry and that builders should not be deterred from continuing to build. In fact, Sun shared this sentiment that should be shared by all builders: “Thinking about giving up? Hang in there. We’re almost there.” Surviving the next three to six months and beyond might seem impossible in light of all of this bad news. But there will likely be a recovery for those who continue to build.
As an advisor to the international crypto exchange Huobi, Sun shared that the exchange has no plans for layoffs. Huobi will continue to build alongside others, and while they are looking to keep a lean team of top talent, the key is to continue to optimize and build.
Unfortunately, the option to continue building isn’t possible for everyone. For those who were directly impacted by the FTX collapse, the end of 2022 may seem like the end. However, major players in the industry are banding together to help support those projects looking to make a lasting, positive impact on crypto.
Sun shared that Huobi is committed to join Binance’s initiative to help support hurting crypto projects in the wake of FTX. Huobi has reached out and plans to publish the collaboration soon. “These developers are doing a major job on building the crypto industry but some of the projects got hurt not because they mismanaged their funds, but because they simply put their treasury or money on FTX,” Sun said. The effort goes beyond just helping projects on TRON or any single blockchain, but rather a broad initiative to help all of the builders in the industry.
Looking ahead to 2023
As we enter into 2023, we must continue to remember the incredible value crypto has for society as a whole. Since FTX, many people (and regulators in particular) have become very skeptical about cryptocurrency and blockchain technology. Yet a lack of understanding could very well lead to risk for governments and companies in the future. In a digitally native world, our traditional financial system is no longer viable. Companies looking to move to the next generation of web development are going to need to get into cryptocurrency.
So what’s up next for crypto in 2023? In the webinar, Sun states that Asia’s adoption of crypto and stablecoins, along with the new developments of decentralized identity, are going to be big trends into the new year.
Right now, Asia is a hot spot for crypto infrastructure, stablecoins and the CeFi/DeFi market. To empower a business through an international payment network, crypto is the only choice for Asia. Ethereum, Tron and other blockchains have seen massive adoption in Asia. TRON, for example, is handling around 10 million transactions every day, with around 5 to 6 million active users. Despite the decline in crypto prices over the past year, we’re seeing 100% to 150% growth in crypto adoption in Asia.
This adoption really seemed to have taken off with the rise of stablecoins. The USD is very strong, but Asia cannot get access to it outside of crypto. If you take a look at all of the OTC markets for stablecoins in Asia, the buying power is massive, but the selling wall is very thin. This is because vendors and merchants are choosing to use crypto to purchase stablecoins and operate in this global network.
This adoption is expected to continue and the strength of stablecoins and their use cases have only grown. During the FTX incident, we saw Tether, USDC, USDD and other stablecoins get depegged for a few hours to a few days. Yet the strong foundation for stablecoins lead to the rapid reclaim of value. Even in an event like FTX that caused a massive contagion throughout the market, stablecoins have continued to maintain their value.
Additionally, Sun adds that he’s seeing increased attention and appreciation of decentralized identity (dID). The concept of dID was initially brought up by Ethereum co-founder Vitalik in a blog post discussing “soulbound items” in World of Warcraft. In the game, soulbound items are rare, powerful items that cannot be transferred or sold to other players after a user picks it up. Buterin writes on this in-game mechanic and how it could potentially transfer to NFTs.
A few months after the post was published, Vitalik expanded on the concept in a co-authored paper titled “Decentralized Society: Finding Web3’s Soul.” In the paper, the authors described what they called Soulbound tokens (SBTs) as non-transferable, digital tokens that represent a social identity in a decentralized society.
The ideas of SBTs and dID’s have already been implemented by several countries including Estonia. Recently, the Dominican government created a national dID system for its citizens through a partnership with Huobi and Tron. Sun believes that this technology will soon be implemented by countries around the world and create a more compliant and robust system that will serve as the foundation for the next bull market.
Advice for newcomers
For crypto newcomers and particularly in this market, controlling your own assets is important. That being said, it comes with a huge responsibility. Learning about the different methods of safely storing crypto, different attack vectors and the general principles of blockchain technology can help newcomers better control their crypto assets. As you continue to learn and gravitate toward the most trusted custodians and wallet providers, you’ll move toward establishing best practices for storing your assets.
When you’re holding a diverse portfolio of cryptocurrencies, it’s important to treat them each on their own individual basis. While Sun claims to store many of his tokens through self-custody, he also uses custodial services like Huobi and Fireblocks for others. Both self-custody and third-party custodians can come with their own tradeoffs, so it's important to consider how you are using your crypto and what method would best work for your interactions.
That being said, Sun also puts an emphasis on using cold-storage for larger crypto holdings. While iToken, MetaMask or TronLink provide a streamlined user experience for self-custody, maintaining physical control over your crypto and your keys provides the best method for protecting your holdings. Tron has specifically collaborated with leading cold-storage wallet provider Ledger to provide a hybrid cold-hot wallet solution to ensure the safety and accessibility of your crypto assets.