The blockchain revolution, which began with the introduction of Bitcoin fifteen years ago, has not yet been fully realized.
On the contrary, blockchain, similar to other emerging technologies, is progressing in an intermittent and irregular manner. Technology is causing significant transformations and facilitating the emergence of innovative business models in certain industries, while progressing slowly in others. Technology experts, industry analysts, and numerous reports over the past year have forecasted a continuation of similar trends. However, they emphasize that there is ample progress moving forward.
Major advancements in zero-knowledge technology
The initiation of a sequence of zero-knowledge (zk) rollups occurred this year.
Initially, zkSync Era was introduced, which was quickly followed by zkEVM from Polygon, then Linea, and finally, the =nil Foundation, to name a few.
By executing a greater number of transactions off-chain, rollups reduce the amount of block space required to complete a transaction, thereby increasing the efficiency of blockchain operation. Consequently, this will lead to a reduction in petroleum fees and fixed costs.
In this instance, zero-knowledge rollups possess the capability to not only execute transactions off-chain but also verify the accuracy of the executed information without revealing it on the mainnet.
Optimistic rollups, in contrast, operate under the assumption of information accuracy and demand fraud substantiation to scrutinize suspicious transactions.
It is critical to acknowledge that further efforts are required to fully achieve the decentralization and permissionlessness of zkRollups. Upgradability hazards exist for zero-knowledge technologies that are currently in use.
These dangers pertain to the upgradeability or susceptibility of a blockchain to modification; blockchains are more secure when they cannot be upgraded.
More interconnected blockchain technology developments
Interoperability between blockchains also witnessed significant advancements this year.
As evidenced by LayerZero’s recent partnership with Google Cloud and JPMorgan and Chainlink’s CCIP, cross-chain interoperability protocol teams are diligently striving to establish connections between a multitude of public and private blockchains.
Interoperability protocols for blockchain technology enable smart contracts to exchange information and facilitate the transmission of liquidity across multiple blockchain networks.
This is generally accomplished by minting new, corresponding tokens on a destination chain after burning tokens in the smart contract of a source chain. Bridging is an additional method of token transmission in which tokens are locked on the source chain before being minted natively on the destination chain.
For a nominal gas fee, these tools may enable users of diverse blockchains to effortlessly lend, stake, and exchange their tokens across multiple ecosystems.
Bringing more real-world assets on-chain through tokenizations
The last of the three biggest blockchain technology developments is that to increase liquidity on-chain, developers of real-world asset (RWA) protocols are exploring how these assets might be used as collateral through tokenization.
Cash, gold, real estate, and US Treasury bonds are some examples of RWAs in this domain. One of the most well-known RWAs nowadays are stablecoins, such as Circle’s USDC and Tether’s USDT, which are commonly utilized in DeFi protocols.
Centrifuge, Maple Finance, and Goldfinch are some of the protocols that enable on-chain finance.
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