The fallout from the Crypto 2022 bears market still affects the industry, unsecured credit conditions not completely recovered from the panic accident that swallowed up lenders like Blockfi, Celsius, Voyager and, in the end, FTX.
Three years later, the compensation protocol cycles preserving confidentiality try to create a basis for sustainable credit markets to reappear.
In May, the company launched a pilot version of prime cycles, which acts as a decentralized compensation house, allowing crypto negotiation companies to net and suspense payments without guarantee or sequestration. The pilot was reserved for institutional trading companies in cryptography which wish to reduce the use of credit without central counterparts.
In an interview with Cointtelegraph, the CEO of cycles, Ethan Buchman, said: “The unsaid credit conditions have been considerably tightened” since 2022, and “companies that were carried out on credit are requiring more and more guarantee or pre-financing”.
“The 2022 crisis has undermined the liquidity of many ecosystems and has led to the sustained decline of many Défi tokens and volumes,” said Buchman. “While some major projects have recovered considerably by 2024/2025, others have not done so, and we saw, for example, USDC did not recover its market capitalization of all time in 2022 earlier this year.”
Like traditional finances, cryptographic industry has become “much more aware of the risk of unsuitable credit,” he said, which has made it more difficult to reproduce credit economy.
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Crypto cannot count on tradfi models for everything
Although many members of the industry have established parallels between crypto and tradfi, especially since more traditional financial assets move on onchain, Buchman stressed that the crypto cannot take all its indices of tradition.
“Many crypto think that the only way to push the credit economy is to recruit major balance sheets from Tradfi which can undertake more risks. This is the general approach of Tradfi, anchored in a central bank which prints money to buy securities in the event of a crisis,” he said.
According to Buchman, the best path to go is a “conscious approach to the network for compensation”.
“The growth of sustainable credit markets depends on the solid foundations of risk management and compensation at the heart of the system, allowing greater effectiveness of capital and liquidity economy, especially during stress.”
In his opinion, “liquidity is fundamentally a problem of network topology”.
Others in the industry also indicated the liquidity problems of the crypto. The founder of B2 Ventures, Arthur Azizov, described it as a “silent structural risk”, referring to the slowdown in the Crypto 2022 as an example of the “liquidity illusion” of the market.
The problem resurfaced in 2025, especially with the 90% collapse of the Mantra OM token in April. Bitget CEO, Garcy Chen, said the crash exposed “critical” liquidity problems in the industry.
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