Investors might have a tough time during a bear market, but these downward cycles are often seen as a great opportunity for innovators to double down and refine their ideas. This is especially apparent in the Web3 industry, where the long and drawn out crypto winter that began at the tail end of 2021 has weeded out many of its flawed projects. Those that are left standing are now primed to usher in some exciting new use cases as the crypto industry looks set for a strong rebound heading into 2024.
As optimism builds over the prospect of a new bull market for crypto, now seems like a great time to take stock of some of Web3’s most exciting new developments.
Distributed Validator Technology
DVT is gaining momentum as a superior approach to blockchain validator security due to the way key management and signing responsibilities are split across multiple parties, increasing the resilience of the network.
With DVT, the private keys used to secure a validator are shared across multiple clusters of computers. This means it becomes exponentially more difficult for hackers to gain access to that private key, as they would have to attack numerous machines separately. Another benefit is that some nodes can go offline, without the validator being affected, as the key signing can be performed by a subset of machines within the larger cluster.
DVT therefore delivers three main benefits to Proof-of-Stake blockchains – it increases security, it means there’s no single point of failure for a validator, and it accelerates decentralization by making it simple to establish numerous independently operated validators.
One of the leading lights in the DVT space is SSV.Network, which provides the significant advantage of allowing validators to remain anonymous, helping to reduce hacking and coercion attempts. SSV makes it much more difficult for cyberattackers to target a specific validator, and simultaneously makes validation much more accessible as users can participate in a node with minimal financial resources.
SSV is tipped to gain substantial momentum in 2024 following the launch of its permissionless mainnet in December. With its launch, anyone can participate in Ethereum’s network by staking a minimal amount of ETH, validating transactions to earn a share of the rewards on offer. The project has gotten off to a great start, with more than $160 million worth of ETH being staked by over 2,200 validators across 74 SSV nodes.
Zero-Knowledge Proofs
Although ZK-Proofs is a relatively old technology within the Web3 sphere, it’s set to make a big splash in 2024 as it reaches a new level of maturity.
The basic idea of ZK-proofs is that they allow one party in a transaction to prove to a second party that it has specific knowledge regarding the details of that transaction, without revealing any specifics. The technology has profound implications for blockchain as it addresses headaches around the opposing needs for transparency and privacy. With ZK-proofs, it becomes possible for crypto transactions to be verified without anyone knowing the transaction details. This ensures full transaction privacy, while preventing anyone from cheating the system.
ZK-proofs were first popularized by the privacy-focused cryptocurrency ZCash, but the technology is now being used for additional use cases, such as verifiable off-chain computing.
With ZK-proofs we can build a verifiable web that enables users to make informed decisions, because they can verify exactly what the systems they interact with are doing, promoting greater trust. In a blog post, ChainLink cites three main benefits to the verifiable web. First, users will know what they’re getting into because they can proactively verify everything about a system and confirm it won’t change. Second, they’ll be able to understand what is happening within any system by using ZK-proofs to verify any events or data. Third, users can proactively decide if and when they want to leave a system, as the verifiable web clearly defines how to do so.
Several projects are working hard to make the verifiable web a reality. They include Space and Time, a decentralized data warehouse startup that uses ZK-proofs to verify queries against both on- and off-chain data. Space and Time has developed a technology called Proof-of-SQL, which makes it possible to cryptographically secure database queries. In turn, this means smart contracts now have a way to verify off-chain data, opening the door to more sophisticated decentralized applications that can respond to real-world events. Space and Time has notably integrated its technology with Google Cloud’s BigQuery to private queries to off-chain data stored in the cloud.
A second major player driving greater adoption of ZK-proofs is Cronos. In December, Cronos announced the launch of its third major network in testnet – a Layer-2 known as the Cronos zkEVM chain – which is built using Matter Labs’ tools for spinning up so-called “hyperchains” that sit above existing networks.
The Cronos zkEVM chain is expected to launch its mainnet in the second quarter of 2024, and brings benefits such as its low hardware requirements and lower transaction fees. By using ZK-proofs, it also facilitates native account abstraction, where transaction fees can be paid using alternative cryptocurrencies.
Fully Homomorphic Encryption
Even as ZK-proofs gain momentum, others in the blockchain industry are working on what they believe is a superior alternative to facilitate private transactions. Fully Homomorphic Encryption, known as FHE, makes it possible to perform computations on data that remains encrypted in ciphertext format, ensuring it remains protected at all times. This is important, because in traditional computing it is necessary to unencrypt data before it can be used by any application.
FHE provides significant benefits, for example by allowing untrusted networks to access data that remains fully encrypted, preventing any misuse.
One of the biggest proponents of FHE is Google, which offers an extensive toolkit for developers looking to build applications that leverage the technology. In the crypto realm, Fhenix is one of the leading players in FHE, building an EVM-compatible blockchain that’s said to be the first network of its kind to implement the technology.
Fhenix argues that FHE can provide big benefits to a blockchain industry that’s known for its transparency due to the public nature of decentralized networks. The startup, which raised $7 million in funding in September, announced the launch of its testnet earlier in the year, followed by a private devnet that launched in June.
Because Fhenix’s FHE blockchain is EVM-compatible, the startup says it can improve the utility of Ethereum-based dApps, supporting capabilities such as private voting for DAOs, private real-world asset tokenization, blind auctions, on-chain identification and more.
Super Apps
The concept of the Super App has its roots in the world of Web2. Super Apps are basically just one application that offers users multiple, diversified services for everyday life. They’re usually built atop of a single function, such as a chat or financial payments platform, which integrates with various other services and makes them easier for their users to access.
Super Apps first emerged in China, with the likes of WeChat and Alibaba amassing millions of users on their respective chat and e-commerce platforms, before expanding to include other offerings. These days, WeChat is far more than just a chat app, as it also offers social media, hotel bookings, transportation services such as taxi bookings, e-commerce marketplaces, video games, financial services, online dating and everything else you can imagine.
Kresus is now looking to bring the concept of the Super App into Web3 with the launch of a crypto wallet that doubles as a portal to the world of decentralized applications. Besides just being a wallet, Kresus offers functionality such as minting and transferring NFTs, numerous on- and off-ramps to fiat, access to DeFi protocols and more.
One of the best things about Kresus that’s likely to help with its growth is its simplicity, which overcomes one of the major hassles in crypto. Whereas other non-custodial wallets require users to carefully store their seed phrase to ensure they can access their digital assets if they lose their wallet, Kresus is completely idiot-proof. It’s simple to set up a wallet, and no seed phrase is created. Instead, it employs traditional account recovery techniques such as email or SMS to ensure users can always access their wallets, even if they forget their password.
Kresus also gives each user a free Web3 identity that’s powered by Unstoppable Domains, which can be used to easily and securely login to any dApp, metaverse or blockchain game in a single click.
Kresus was recently named by FinBold as one of the easiest apps to buy and store crypto with, noted for its ability to provide the same level of security as a hardware wallet, without needing to buy any actual hardware.
Ethereum Virtual Machine
Progress continues to accelerate in the world of EVMs, which are virtual machines that power the smart contracts so critical to the Ethereum network. The EVM is what makes it possible for developers to write smart contracts in the Solidity programming language, and is the key enabler for every autonomous dApp deployed on the network today.
The overwhelming dominance of Ethereum in DeFi and Web3 today means that many other networks are now looking to create their own EVMs to tap into its ecosystem. One of the most prominent examples is the EOS EVM, which was launched in 2022 and has been the focus of much innovation ever since. Although Ethereum has the biggest ecosystem of dApps by far, many developers believe that EOS is a superior network, with faster transaction processing times and lower fees just some of the major benefits.
The EOS EVM effectively bridges the gap between the two ecosystems, providing a way for developers to deploy Solidity-based smart contacts on the EOS network, where they can benefit from its superior performance. It allows developers to use Ethereum’s battle-tested code, libraries, SDKs and other tooling to build dApps that can run on EOS.
With the latest update to the EOS EVM in December, it gained support for WebSocket, which is a key tool for building more sophisticated dApps that rely on real-time, bidirectional communication. With WebSocket, dApp developers can establish two-way and real-time communication between their apps and a remote server, with minimal latency. It improves on the older HTTP communication standard, which is unidirectional, meaning that the client can only send requests, and the server can only respond.
By using WebSocket instead, dApps can maintain a two-way connection that facilitates a continuous exchange of data. This paves the way for instantaneous updates for Web3 chat dApps, messaging tools, trading platforms, blockchain games, NFT tracking tools, DeFi notifications and more.
Web3 Streaming
The concept of livestreaming is taking on a new life in Web3 thanks to the power of Azarus, a streaming platform that changes the very nature of how content creators and their fans interact.
Azarus sits at the forefront of Web3 streaming, with its innovative wallet feature that layers over the video player to enable direct interactions between streamers and viewers. With Azarus, esports players and other content creators have a simple, seamless way to stream and engage with their viewers, using blockchain tokens to provide incentives that enhance the viewing experience.
The beauty of Azarus’s technology is that it provides gamers and other creators with a new source of revenue together with the ability to reward their most loyal audiences, motivating them to spread the word about their gaming exploits. Its platform also provides a way for creators to encourage viewers to visit off-stream destinations such as e-commerce portals, brand properties and more.
Web3 streaming is looking set to become all the rage following the acquisition of Azarus by Animoca Brands, one of the biggest Web3 game developers. Animoca intends to integrate Azarus’s streaming technology into its own games to provide richer experiences for gamers and fans alike.
Ultimately, Animoca believes that Web3 streaming will lay the groundwork for the creation of a player-owned economy that will give gamers, content creators and streamers full control over their digital property and the ability to monetize their expertise.
