HashKey Capital Reveals 5 Key Technology Trends in Web3 Industry for 2023
As the world of cryptocurrency continues to evolve and gain mainstream acceptance, developments in Web3 technology are becoming increasingly important. On March 8th, HashKey Capital, Asia’s largest asset management company specializing in crypto assets, released a report on technology trends in the web3 industry to watch in 2023.
The report identified five key areas of development, including Ethereum’s latest upgrades, staking-related technologies, modular blockchain refinement and app-specific rollup development, non-scaling applications of zero-knowledge proofs (ZK), and advancements in wallet technology.
Ethereum Major Upgrades (Shanghai, Cancun)
The report notes that the most significant upgrade to Ethereum will come this year, with the Shanghai upgrade being completed on the Sepolia testnet on February 28th and progressing well. In addition, Cancun is scheduled to be the next major upgrade after Shanghai, and is described as “the most important technical upgrade of 2023.”
The Cancun upgrade implements Ethereum improvement proposal “EIP-4844,” which proposes a feature called “Proto-Danksharding.” The feature is designed to improve Ethereum’s scalability and, if implemented, could make L2 fees up to 100 times cheaper. In addition, there will be updates to the Ethereum Virtual Machine (EVM), the EVM Object Format (EOF), which will improve the operational performance of smart contracts and reduce fees.
Development of Staking-Related Technology
HashKey predicts that staking-related technology will see further development once the Shanghai upgrade is complete, and that various staking solutions will emerge, with solutions that provide liquidity being the key to success. These solutions include liquidity staking, decentralized staking, restaking, DVT (Decentralized Validator Technology) supporting decentralization of staking, and stabilizing staking rewards to reduce reward gaps between different nodes.
Modular Blockchain Refinement and App-Specific Rollup Development
HashKey identifies modular blockchain as one of the hottest areas in 2023, with development expected at various levels and directions. A modular blockchain is a public chain that modularizes technologies, applications, rules, and standards. Each module has a different function, and it is characterized by separating the execution of consensus and application, etc. into separate layers.
HashKey anticipates increased competition in the data availability layer and a more flexible and efficient execution layer. He cited Celestia, Polygon Avail, and Arbitrum AnyTrust as successful and notable projects.
Non-Scaling Applications of ZK (Zero-Knowledge Proofs)
HashKey mentions the importance of “zkEVM” in terms of solving scaling problems. Although it takes time for the technology to mature, ConsenSys zkEVM, Polygon Hermez, Scroll and others are expected to launch testnets and mainnets this year.
While ZK Rollup has excellent technology, it has been difficult to make it compatible with EVM. However, multiple projects such as Scroll and zkSync have been working to realize the technology. Other applications of ZK made great strides last year, and that trend will continue this year, with a particular focus on zkBridge. HashKey explained that there are methods such as changing the verification of the signature of the validator to ZK proof and implementing PoS as a consensus building process in ZK.
Advances in Wallet Technology
Finally, HashKey anticipates that MPC (Multi-Party Computation) could become a must-have feature in the wallet space. MPC allows keys to be securely split, encrypted, and distributed among multiple parties, leading to greater security of user assets.
In addition, EIP-4337 and other AA technologies, commonly known as smart accounts, are imminent and expected to reach maturity in 2023, as long as code development proceeds smoothly. The anticipation is for the announcement of a wallet product combined with MPC.
On the 2nd of this month, Ethereum announced the implementation of ERC-4337, which permits developers to begin building applications. This concept was initially introduced by Ethereum founder, Vitalik Buterin, in 2015.
Currently, cryptocurrency wallets like Metamask necessitate user involvement to initiate payment on the blockchain for each transaction since the user manages the private key. In the future, account abstraction mechanism will enable the automation of payments through wallets, improving convenience.
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