Overview of the Development of Various Fields in Web3 in the First Half of 2024

Ethereum

Zero Knowledge

ZKVM & ZKEVM

In the first half of 2024, an increasing number of ZKEVM projects are starting to shift towards the ZKVM architecture, with the Ethereum Foundation PSE team as a representative. Taiko is collaborating with Risc0 on ZKVM, and Scroll is also preparing in this area. The launch of Plonky3 has become a catalyst for this transition, outperforming Halo2.

Currently, the virtual machines available in this field include ZKWASM, Succinct's SP1, a16z's JOLT, and Risc0. Polyhedra's ZK Prover performs excellently and plans to develop a virtual machine in the future. Aztec and Mina are also developing their own virtual machines.

Key factors driving broader adoption include proof costs, efficiency, and development time. Currently, ZKVM is well-suited for building and deploying verifiable applications, which is worth noting.

ZK Middleware

In terms of middleware, the activity level of the proof verification system remains high, with Brevis, Alignlayer, and Nebra collaborating with Eigenlayer to enhance security. The market is gradually shifting towards OP and ZK hybrid solutions to improve proof efficiency. Catalysts such as verifiable AI and verifiable off-chain data will bring more application demands.

MEV, chain abstraction/account abstraction, intent

MEV Development Trends

Flashbots has been experimenting with products that utilize Intel Software Guard Extensions, attempting to use Trusted Execution Environments for privacy computing on the Ethereum Virtual Machine. Fully homomorphic encryption has also become a potential solution against MEV.

Block Builder

The block building market is highly concentrated among a few builders, with beaverbuild, titan builder, and rsync builder being the most dominant and profitable. This centralization has sparked further research into the design of block auction mechanisms.

Relay

Relay remains crucial in block supply, with over 90% of blocks transmitted through relays. Titan builder launched Titan Relay this year, and it is growing rapidly.

When evaluating Relay, factors such as performance, reliability, and scalability need to be considered.

The key issues for the future of the MEV track are how to achieve value capture and how to successfully design tokens, etc.

Chain Abstraction and Account Abstraction

Chain abstraction is a key concept for achieving mass user adoption. NEAR has launched a multi-chain signature feature that allows a single account to be used across different chains.

Account abstraction ( AA ) mainly consists of smart contract wallets and modular services. The number of AA accounts has exceeded 12 million, with UserOps call counts exceeding 49 million. Polygon is the network with the most smart accounts, and Base is also quite popular.

EIP-7702 will bring a more seamless experience. In addition to AA, you can also pay attention to tracks such as the strategy engine, intent framework, and preconfirmation.

Bitcoin

Interest in Bitcoin Rollup has diminished, but technological breakthroughs like BitVM are still worth paying attention to. BitVM has created a cross-chain bridge that can be used for large cross-chain transactions.

Income-oriented Bitcoin strategy

More and more projects are providing wrapped BTC for holders, offering users returns. For example, Mezo integrates various products, and Rollup is just one of them.

Asset Protocol: BRC20, Runes, Atomicals, RGB, Taproot Assets

The performance of BRC-20 tokens remains weak, and interest in Runes is gradually fading. The integration of Taproot assets with the Lightning Network may rekindle market interest.

Infrastructure providers that service these assets may become attractive investment opportunities.

Bitcoin Staking

Staking(restake) addresses the demand for BTC yield and the need to be bound to the Bitcoin main chain. It can be divided into three categories: principal slash, interest slash, and no slash.

Babylon has formed its own ecosystem, and many Bitcoin applications will consider leveraging Babylon to achieve connectivity with the main chain.

Bitcoin DeFi, MEV

BTCFi: Focused on lending and stablecoin applications. The Wrapped BTC project has attracted attention, intensifying competition.

Bitcoin DEX and related applications: On-chain DEX still mainly use PSBT, and some projects use pre-confirmation strategies in the memory pool.

MEV: The activation of RBF and the introduction of new assets have led to a more active MEV scenario on Bitcoin. Currently, MEV activities mainly come from transaction acceleration services.

Bitcoin technology development

OP_CAT is enabled in the Bitcoin trial client, but it may introduce unpredictable risks.

BitVM bridge has made progress in development and may launch its testnet/mainnet by the end of 2024.

Channel, Joinpool class solution

Progress has been made on solutions related to channels and Joinpool, allowing multiple users to share UTXO on the main chain. Ark v2 offers higher capital efficiency and introduces the concept of Brollups.

Statechain is another interesting solution, Mercury Layer has made progress, and projects like Mach are developing underlying infrastructure.

Solana

Institutional Interest

Paypal has launched PYUSD on Solana, integrating with major DeFi protocols. Stripe re-enters Solana, allowing USDC payments. Solana Labs has launched the Bond platform.

Solana Action and Blockchain Links (Blinks)

Solana has launched Action API and Blinks to create a seamless experience for retail users. Currently, there are about 155 projects and 25 registered Blink domain names.

Solana's Meme Culture

Memecoin is still an important component of the ecosystem, and pump.fun allows anyone to issue memecoins at zero cost.

TON

TON performed exceptionally well in the first half of 2024, with an increase of over 200%. The large user base of Telegram is a major advantage. Games like Notcoin have gained widespread attention.

TON has launched an advertising revenue-sharing mechanism, established an ecological fund and community incentive program. However, factors such as the arrest of Telegram's CEO are detrimental to the ecosystem.

Restaking (Restaking)

Eigenlayer

Eigenlayer has become a hot topic, with a TVL reaching 20 billion USD. This has spawned multiple LRT and AVS projects. The narrative has shifted from providing shared security to complementing the Ethereum governance system.

Babylon

Babylon allows Bitcoin holders to stake BTC to secure the PoS chain. The ecosystem projects cover multiple categories including Layer 2, DeFi, and liquid staking.

Modularity

Data Availability ( DA )

There are fewer participants in the DA field, including Ethereum, Celestia, EigenDA, Avail, and NearDA. Ethereum remains the preferred choice for rollups.

Rollup Frameworks & RaaS

Arbitrum, Base, and OP Mainnet have clear competitive advantages. RaaS is primarily provided by Arbitrum Orbit, OP Stack, ZK Stack, and Polygon CDK.

DePIN

DePIN gained significant attention in the first half of 2024, with Solana becoming the center for DePIN applications. Node sales are a popular monetization strategy.

IoT sensors/wearable devices

The core lies in data collection and monetization. The key is to incentivize users to participate in data mining and earn rewards through data distribution.

Data Market

The key challenge is the scalability and adoption rate of the data market.

Wireless Network

Many projects are trying to use the Web3 concept to improve penetration, but there are common issues such as poor user experience and compatibility problems.

AI x Crypto

The demand for storage, computing, and network resources has surged due to AI. Blockchain technology has become a viable solution, encouraging participation through token incentives.

The computing infrastructure can add privacy protection. The data track is combined with AI to serve AI. Directions include providing data sources, data infrastructure, data privacy, etc.

RWA

RWA brings diversified real yields and easier access to illiquid assets for cryptocurrencies. U.S. Treasuries and private credit are the most notable.

Institutional investors are increasingly interested in tokenized financial products, but regulatory risk remains a major concern. Avalanche has made progress in this area.

Games and Entertainment

Apart from the TON mini-games, market sentiment towards games is sluggish. IMX, Polygon, and Ronin are popular gaming chains. Ronin leads in the first-level gaming ecosystem.

The integration of games and AI has not yet seen significant progress. The key lies in balancing incentives and community building.

SocialFi

SocialFi has become a hot topic, mainly due to the continuation of Friend.tech, the breakthroughs of Farcaster, and the explosion of TON/TG social applications.

Friend.tech

Friend.tech has sparked discussions about the long-term viability and sustainability of its model. The V2 version introduces new features, but user engagement has stabilized once again.

Breakthrough of Farcaster

Farcaster has become a dominant player, and Frames have received positive feedback. The combination with meme tokens drives user growth and activity.

DeFi

The growth of DeFi in the first half of 2024 is mainly attributed to Eigenlayer and Ethena. Stablecoins are experiencing a new round of attention. Ethereum continues to lead in terms of TVL.

The CeDeFi model reflects the demand for secure returns on on-chain assets. DeFi has demonstrated the ability to attract capital through yields, but the key to long-term success lies in accumulating value for holders.

Institutional Services

The expectation of institutions adopting cryptocurrencies has driven investments in multiple directions, but the main beneficiary in the public market is Coinbase. Looking at global fintech financing trends, the amount of financing has continued to decline, and investors prefer mid-to-late stage companies.

The main areas of observation on the track include trading infrastructure, institutional-grade staking, CeFi lending, yield-bearing stablecoins, and derivatives platforms.