Which are the Leading Blockchain Use Cases in 2022

In 2022, crypto assets already drew distinctive lines in their use cases. Several notable classes of coins and tokens appeared, with incentives to lock in value and achieve some independence from the price moves of Bitcoin (BTC). 

Platform Coins Take the Spotlight

CoinGecko has set up a new categorization, showcasing lists of tokens that get exposed to similar risks and have a generally unified use case. The top category wraps platform coins, of which Ethereum (ETH) and Binance Coin (BNB) are the most prominent and liquid ones.

The third spot belongs to Terra (LUNA), a platform that achieved very fast growth in the past 12 months. The rise of Terra was not entirely organic, but engineered to boost the value of LUNA. 

This was one of the reasons why LUNA rose more than 50% week on week despite market turbulence, as demand shifted for Terra USD (UST) and for locking in LUNA as collateral. LUNA spiked to $76.56 late on Sunday, after dipping to around $54, with a view to regaining previous high valuations. 

The total market cap of platform coins is above $332B, though still less than half the value of BTC. 

Blockchain Ecosystems Compete for Prominence

The other collection of assets is tied to various protocols, which compete for influence. Both taken together as platform coins and as separate protocols, those blockchains now have an important spot for catching crypto opportunities for trading and investments. 

Top protocols include Polygon, Avalanche, Fantom, NEAR and others, with total market cap of related tokens between $35B and $50B depending on the project.

Solana and Terra are also in this category, though with a relatively lower valuation. 

DeFi Tokens: Several Avenues of Exposure

The next category of tokens is DeFi, collecting assets with a total market cap above $110B as of February 2022. DeFi tokens can also crossover from platform coins, but not exclusively. 

Another way to pick exposure to DeFi is the category of DeFi Index coins and tokens, which track overall performance and are used as a proxy investment into all other DeFi ecosystems. However, despite the promise of balanced exposure, those tokens are relatively illiquid and may be at a disadvantage compared to a portfolio of DeFi related big platform tokens. 

Metaverse and Gaming

The growth of play-to-earn games, as well as metaverse projects, has built enough liquidity to set apart the assets as a separate investment opportunity. 

The categories of Non Fungible Token issuers and Play-to-Earn partially overlap, and include top assets Decentraland (MANA) and The Sandbox (SAND). Projects carrying NFT collections or digital land plots have a total valuation above $32B, and have a strong growth case. 

Play-to-earn tokens as a whole are riskier, and lost value during the past few months. The total market cap of that category has fallen to $17B from a peak around $30B. One of the reasons for this is that gaming platforms produce reward tokens, which show price weakness due to a bloated supply and selling pressure. Reward tokens like Smooth Love Potion (SLP) still manage significant short pumps of above 100% within days, but are extremely volatile on the downside as well. 

Even the most successful games have problems with their reward tokens, as their value crashes while the game onboards more players. But among play-to-earn tokens, some are listed on Coinbase and Binance, offering significant liquidity and potential to rise as their usage increases. In the case of Decentraland and The Sandbox, the projects enjoy significant buying for their exclusive digital land, setting up a new valuable asset class in blockchain space.

Some of the value of game and NFT tokens flows back to platform tokens, such as ETH, BNB, MATIC and others, as they are used to trade and pay fees on the network. 

Meme Tokens Keep Up the Pace

Despite their unserious nature, meme coins and tokens remain one of the categories with a high total value and significant liquidity. Propped by Dogecoin and ShibaInu, the collection of older and newer meme tokens has a total valuation above $31B. 

Meme tokens go beyond short-term speculation. Projects like ShibaInu integrate some forms of decentralized finance and yield farming. The project has multiple copies with similar characteristics. Some meme token platforms also add play-to-earn games or NFT image collections to build a tighter community or increase the value of the project. 

DOGE is still responsible for around half of this group’s valuation, with a market cap above $16B. DOGE was also relatively predictable, trading around $0.12 and seemingly less affected by the recent market crash.

In 2022, it is uncertain if altcoins and tokens will manage to outperform BTC. However, niche use cases may offer more significant earnings. At the same time, BTC remains more reactive to macro factors and reflects the behaviors of leveraged traders reacting to bearish or bullish expectations.