Three areas to watch in the coming year: social, ZK, and Bitcoin ecology

Author: Paul Veraditakit, Source: Author’s Blog; Compiler: Song Xue, Golden Finance

Foreword:

From the emergence of the “AI x blockchain” use case, to the growing role of stablecoins in financial markets, to the maturity of zero-knowledge proofs, I believe the overall space remains resilient despite volatile market conditions.

As the CoinDesk article states, I’m going to explore some of the spaces that Pantera is looking at.

1. Social and consumer use cases

Web2 has shifted from social to finance, while Web3 is moving from finance to social. From Friend.tech to on-chain loyalty, the social element of Web3 has recently received more attention, seeking to leverage tokenization to change social behavior. As consumers are likely to become more frequent on-chain transactions, we believe stablecoins are playing an increasingly important role as an on-ramp and egress settlement solution between DeFi and TradFi (traditional finance) use cases. **

In addition, recent advances in generative AI are likely to lead to a more abstract, personalized, and simplified user experience. As AI abstraction increases, we hope this will reduce barriers to entry and education in Web3, making blockchain data more accessible to people from non-technical backgrounds.

2. Modularity and composability supported by ZK

We believe that zero-knowledge proofs (ZKPs) will continue to mature, whether it’s new theoretical advances in recursive proofs or the gradual specialization of companies perpendicular to specific roles, such as co-processing, proof execution, zkDevOps, privacy layers, and soon. At this point, we started using ZKP as a way to establish a common interface between the different layers of the modular technology stack.

Modularity refers to the fact that different layers of the blockchain stack (consensus, execution, data availability, etc.) are operated by different providers. The idea allows for increased composability in the form of a Lego-like “plug and play” blockchain architecture. This means that projects can tailor their blockchain technology stack to the specific needs of consumer-facing applications. In addition, enhancing the composability of smart contracts with a general-purpose language such as Rust can increase developer familiarity, thereby lowering the barrier to entry for Web3 developers.

3. Bitcoin ecosystem

In our view, the third area that could be worth keeping an eye on in the next year or so is the Bitcoin ecosystem as a whole, which has already regained interest ahead of the expected halving in 2024. This includes ETFs for major TradFi funds that the SEC may approve, as well as a modular Bitcoin blockchain that allows for more composable smart contracts.

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The Rise of Inscriptions. Source: Dune Analytics

Perhaps one of the most interesting innovations is the rise of the Bitcoin digital asset, which is supported by ordinal-like technology. From this, we may see divergence in the use of NFTs, with Ethereum NFTs likely to focus on trading utility, while Bitcoin NFTs may evolve into a form of “digital jewelry” and art collectibles due to their blockchain’s cultural significance, fashion and media. ——- Paul Veraditakit**