Major Technological Milestones in the Crypto Ecosystem in 2023

According to Blockworks, the crypto ecosystem has achieved several major technology milestones in 2023, despite setbacks in 2022. Developments in infrastructure and technology sectors have led to innovations that make blockchains faster, more secure, and private. This year marked the launch of a series of zero-knowledge (zk) rollups, including zkSync Era, Polygon’s zkEVM, Linea, and the =nil; Foundation. Rollups aim to make blockchains operate more efficiently by reducing block space needed for transactions and executing more transactions off-chain, consequently reducing gas fees and fixed costs. Zero-knowledge rollups can determine if information is accurately executed without disclosing it on the mainnet, unlike optimistic rollups that rely on fraud proofs to challenge suspicious transactions. However, more work is needed to ensure zkRollups are fully decentralized and permissionless, as existing technology is subject to upgradability risks. Blockchain interoperability also made significant improvements this year, with the introduction of Chainlink’s CCIP and LayerZero’s partnership with Google Cloud and JPMorgan. Cross-chain interoperability protocol teams are working on connecting various private and public blockchains, enabling smart contracts across different networks to communicate and facilitate liquidity transfer. This can be achieved through burning tokens in the source chain's smart contract and minting new tokens on the destination chain, or through bridging, where tokens are locked on the source chain and minted natively on the destination chain. Developers of real-world asset (RWA) protocols are exploring ways to bring more liquidity on-chain through tokenization, with assets such as cash, gold, real estate, and US treasury bonds serving as collateral. Well-known RWAs include stablecoins like Circle’s USDC and Tether’s USDT, widely used across DeFi protocols. Protocols behind on-chain financing include Centrifuge, Maple Finance, and Goldfinch.