Ethereum infrastructure development progresses
On the 8th, HashKey Capital, Asia’s largest asset management company specializing in crypto assets (virtual currencies), released a report on technology trends in the web3 industry to watch in 2023. We focused on the following five developments, including Ethereum’s latest upgrades and staking-related tech.
- Ethereum Major Upgrades (Shanghai, Cancun)
- Staking-related technologies, products and services
- Modular blockchain refinement and app-specific rollup development
- Non-scaling applications of ZK (zero-knowledge proofs) (e.g. ZK bridges)
- Deploy technologies such as AA (account abstraction), MPC (multi-party computation), and Lightning Network for end users
HashKey first notes that the most significant upgrade will come to Ethereum this year. He mentioned the Shanghai upgrade, which completed its implementation on the Sepolia testnet on February 28 and is progressing well, as well as the upcoming upgrade, Cancun.
In the Shanghai upgrade, a staked ETH withdrawal function will be implemented, and it will be possible to unlock (withdraw) over several years.
connection:Ethereum Completes Implementation of Shanghai Upgrade on Sepolia Testnet
In addition, Cancun, which implements Ethereum improvement proposal “EIP-4844”, is scheduled to be the next major upgrade after Shanghai, but HashKey describes Cancun as “the most important technical upgrade of 2023”.
EIP-4844 is a proposal to implement 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.
There will also be updates to the Ethereum Virtual Machine (EVM), the EVM Object Format (EOF). This change will improve the operational performance of the smart contract and lead to a reduction in fees.
However, details of the upgrade are subject to change, and while work is underway to lay the groundwork for Danksharding, HashKey believes it is unlikely to happen this year.
Development of staking-related technology
HashKey believes that staking-related technology will see further development once the Shanghai upgrade is complete. Various staking solutions will emerge, but solutions that provide liquidity will be the key to success.
- liquidity staking
- decentralized staking
- DVT (Decentralized Validator Technology): Supporting decentralization of staking
- Stabilizing staking rewards: reducing reward gaps between different nodes
HashKey mentions modular blockchain as one of the hottest areas in 2023. It is said that development is 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.
HashKey mentions the importance of “zkEVM” in terms of solving scaling problems. It takes time for the technology to mature, but ConsenSys zkEVM, Polygon Hermez, Scroll and others are expected to launch testnets and mainnets this year.
connection:ConsenSys to Launch Public Testnet for zkEVM on March 28th
zkEVM is an L2 solution that is compatible and equivalent to Ethereum’s virtual machine (EVM). Although ZK Rollup has excellent technology, it has been difficult to make it compatible with EVM, but multiple projects such as Scroll and zkSync have been working to realize the technology.
What is ZK Rollup
A rollup technology that introduces zero-knowledge proofs. Rollup refers to a scaling solution that leverages the security of the main blockchain while processing some transactions off-chain (outside the blockchain) to reduce network congestion.
Other applications of ZK made great strides last year, and that trend will continue this year, with a particular focus on zkBridge, according to HashKey. He explained that there are methods such as changing the verification of the validator’s signature to ZK proof and implementing PoS as a consensus building process in ZK.
Advances in wallet technology
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 (account abstraction: commonly known as smart account) technologies are nearing completion and are expected to reach maturity in 2023 if code development proceeds smoothly. He said he is looking forward to the announcement of a wallet product combined with MPC.
On the 2nd of this month, it was announced that ERC-4337 had been implemented on Ethereum, allowing developers to start building applications. ERC-4337 is based on a concept announced by Ethereum founder Vitalik Buterin in 2015.
Cryptocurrency wallets such as Metamask usually require user interaction to initiate payment on the blockchain for each transaction, as the user manages the private key. In the future, it will be possible to automate payments via wallets by applying the account abstraction mechanism, improving convenience.
Ethereum Implements “Smart Account”, Expected to Improve Wallet Usability