Episode Summary
Executive Summary: This year-end Chopping Block episode reviews the crypto industry’s winners, losers, best mechanisms, biggest surprises, best memes, and 2023 predictions after a brutal 2022 marked by Terra, lender failures, and FTX. The hosts argue that DeFi, Ethereum/EVM, stablecoins, and newer infrastructure themes still showed resilience, while crypto’s reputation, tokenomics, centralized lenders, and growth investors were badly damaged.
Main Topics: 2022 Winners: Stablecoins, DeFi, EVM, and Crypto Journalism (Priority: 5/5): The hosts identify rare bright spots in a year with few gains: stablecoin holders, DeFi’s resilience through centralized blowups, Ethereum Virtual Machine dominance, and standout crypto journalism/citizen reporting. 2022 Losers: Industry Reputation, Solana, Tokenomics, and Growth Investors (Priority: 5/5): They argue the biggest loser was crypto’s public reputation after Terra, CeFi failures, and FTX, while Solana, NFTs, token-driven projects, and growth-stage investors all suffered major damage. Best Mechanisms: MEV, Blur liquidity mining, Tornado Cash, and emerging designs (Priority: 4/5): The discussion contrasts mechanisms that succeeded in practice or theory, especially MEV’s normalization, Blur’s liquidity incentives, Tornado Cash’s censorship-resistant persistence, and future-looking designs like EigenLayer. Biggest Surprises: Inflation, lending collapse, and Arbitrum’s DeFi pull (Priority: 4/5): Surprises included inflation’s market impact, Bitcoin failing as an inflation hedge, the total collapse of centralized lenders, and Arbitrum emerging as the dominant DeFi L2 without heavy incentives. Best Memes: Proof of reserves, FTX-era absurdity, and cultural markers (Priority: 3/5): The hosts debate memes that captured the year, including proof of reserves as a reaction to FTX, a low/mid/high-IQ disaster chart, and other community symbols like Miladys and Gabriel Haines. 2023 Predictions: Ethereum recentering, ZK apps, rollups, and exchange disaggregation (Priority: 5/5): Predictions focus on developer activity returning to Ethereum, the first broadly usable ZK application, rollup growth, and structural separation of custody, exchange, and lending after FTX.
Key Arguments: Stablecoin strategies were among the few consistently profitable approaches in 2022 because they avoided market beta and benefited from stablecoin usage growth. DeFi survived a major stress test because core protocols remained solvent and functional even as centralized lenders and exchanges collapsed. The EVM won the smart-contract architecture war, with most leading chains now EVM-based and the standard likely to persist as the lingua franca. The industry’s public reputation was the year’s biggest loser because Terra, lender failures, and FTX created massive external damage and cultural stigma. Tokenomics was exposed as a weak thesis in a bear market; many projects that relied on token design without strong products failed. MEV became normalized and institutionally embedded via MEV-Boost and Flashbots, making it both a successful mechanism and a troubling one for users. Blur succeeded because it aligned incentives around real liquidity rather than wash-trade-style token farming. Tornado Cash demonstrated that a privacy protocol can continue functioning permissionlessly even under heavy legal and operational pressure. Arbitrum’s DeFi dominance likely reflected better developer experience and more predictable infrastructure, not just token incentives. 2023 will likely bring a return of composability and Ethereum-centered development as cheaper gas and rollup scaling improve the base layer experience.
Data Points: Terra damage: $60 billion directly - Discussed as part of the collapse of Terra/UST and its broader effect on the crypto industry. Terra indirect damage: a couple hundred billion dollars - Estimated broader market damage attributed to Terra’s collapse. Stablecoins usage: new all-time highs - Stablecoin issuance and transaction volumes were described as reaching new highs in 2022. NFT mints: 50% of all-time highs - Tom cited this as evidence of continued NFT usage despite the bear market. NFT user numbers: 50% of all-time highs - Usage durability in NFTs remained strong relative to peak levels. Reddit avatar minting: 4 million people - Used as an example of strong NFT onboarding and activity even in a down market. QQL mint revenue: $17 million - Referenced as a successful NFT mint during the NFT winter. Arbitrum DeFi share: clearly trouncing everyone - Qualitative claim that Arbitrum led L2 DeFi activity in 2022. Proof-of-reserves response: daily volume in the low hundreds of thousands to low millions - A Twitter account tracking Tornado Cash volume showed ongoing usage after sanctions and site takedown. EVM chain concentration: 9 of top 10 chains by TVL - Used to illustrate EVM dominance across smart-contract chains.
Pivotal Quotes: "this year the biggest loser was the reputation of the industry from the perspective of outsiders" — Robert: Explaining why Terra, CeFi blowups, and FTX collectively damaged crypto’s public standing. "DeFi is still doing well" — Tom: Arguing that decentralized protocols remained solvent and useful despite centralized failures. "If DeFi succeeds, there can't be a movie about it because there are no characters" — Haseeb: A joking but pointed remark about DeFi’s infrastructure-like, not personality-driven, nature.
Implications: The episode suggests crypto’s next phase will be more serious, more Ethereum-centric, and more infrastructure-driven, with stronger emphasis on transparency, composability, ZK, and clean separation of functions after the FTX era.