Outlook on the Development Trends of Blockchain Technology in 2023

Important Upgrade of Ethereum

In 2023, Ethereum will welcome two important upgrades:

1. Shanghai Upgrade: Open staking withdrawals, which is expected to enhance staking participation and intensify competition among staking projects.

2. Cancun Upgrade: Possibly the most significant technical upgrade for Ethereum in 2023.

   • Proto-Danksharding: Aims to reduce mainnet transaction fees, enhance performance by several times, and pave the way for L2 development.
   • EVM Object Format (EOF): Optimize EVM, improve smart contract performance, and reduce fees.

In addition, Ethereum is also preparing for future technological developments:

• The KZG Ceremony started in January, providing the cryptographic foundation for Proto-danksharding.
• Establish Danksharding standards to address technical obstacles. Although it is difficult to achieve in 2023, success will mark the successful scaling of Ethereum.

Staking Track Development

With the Ethereum Merge and Shanghai upgrade, the Staking track will welcome new opportunities:

1. Liquid Staking: Improve the liquidity of staked tokens, solutions like stETH are worth paying attention to.

2. Decentralized Staking: Existing solutions like RocketPool have insufficient liquidity and need improvement.

3. Restaking: EigenLayer's "secondary staking" has attracted attention, but it may affect the protocol's security.

4. Decentralized Validator Network ( DVT ): SSV and Obol explore decentralized validator solutions.

5. Staking yield stabilization: Addressing the issue of excessive yield disparity between different nodes.

Modular Blockchain Technology

Modular blockchain is expected to make progress in several aspects:

1. New competitors in the data availability layer: In addition to Celestia, projects like Polygon Avail have joined the competition.

2. Flexible and efficient execution layer:

   • Fuel uses UTXO and a highly parallel virtual machine to improve efficiency.
   • Emerging execution layer networks such as Rooch

3. Layer2 Optimization Plan:

   • AltLayer adopts a modular Rollup approach
   • OP Stack supports rapid deployment of Layer 2
   • Stackr, dymension and others support the rapid construction of application-specific Rollups.

4. Sequencer Decentralization:

   • Shared sequencer services, such as Espresso, OP Stack, etc.
   • Decentralized sequencer design scheme proposed by Polygon Hermez's Proof of Efficiency

5. Layer3 Ecosystem:

   • Provide further vertical scaling tools based on Layer 2, such as Starknet's Slush, zkSync's Opportunity, etc.

ZK Technology Application

zkEVM will gradually launch testnets and even mainnets in 2023, but the technology still needs time to mature. Notable projects include ConsenSys zkEVM, Polygon Hermez, Scroll, and others.

In addition to scalability, the application of ZK in other fields is also worth looking forward to, especially zkBridge:

• Use ZK proofs to verify validator signatures on light clients.
• ZK-ifying the PoS consensus process

Wallet and User Applications

1. MPC(TSS) is expected to become the standard configuration, supporting scenarios such as custody and no mnemonic.

2. Account abstraction (AA) design is close to completion, and the wallet product combined with MPC is worth looking forward to.

3. Development of Lightning Network Applications:

   • OmniBOLT Taro introduces stablecoins and custom assets
   • DLC non-custodial solution实现金融衍生品应用
   • The combination of the social protocol Nostr and the Lightning Network brings new traffic.

Web3 Developer Tools

1. New Programming Language Ecosystem: The Move language ecosystem has entered a critical phase with the launch of Aptos, Sui, and others.

2. Layer2 Development Ecosystem: Especially development environments like zkVM that require translation.

3. New Developer Tools:

   • Low-code/No-code tools
   • On-chain data processing middleware
   • Decentralized Endpoint Service

With the development of these technological trends, the blockchain industry is expected to make breakthroughs in various aspects such as infrastructure, scaling solutions, and user experience in 2023, laying the foundation for future large-scale applications.