Since its inception, blockchain technology has grown significantly from being mainly associated with cryptocurrencies such as Bitcoin. The year 2024 comes with a fast-changing pace driven by scalability and interoperability advances, artificial intelligence development, and decentralized finance. The following article outlines some of the most notable developments in shaping up the future of blockchain this year.
Layer 2 Scaling Solutions: Tackling Blockchain's Scalability Problem
Among the most persistent difficulties blockchain has had to face right from the outset is scalability. The need for speed, affordability, and greater efficiency in ways of transacting has given way to some serious innovation this year. Solutions like L2 scaling, built on top of existing blockchain networks, have become a key player in the solution.
Among the hot new L2 technologies gaining traction this year have been zero-knowledge rollups or ZK-rollups. That means ZK-rollups bundle a great deal of 'off-chain' transactions and send only the proof onto the main chain. Ethereum, the second most valuable blockchain, has perhaps benefited from this technology the most. In this regard, Ethereum's network easily hosts thousands of TPS thanks to scaling solutions like ZkSync and StarkNet. This is in contrast to an earlier limit of 15 TPS on its base layer.
Also related to the Ethereum blockchain, another L2 solution that has seen some major updates in 2024 is Polygon and its zkEVM. That is to say, developers can deploy Ethereum smart contracts directly onto Polygon's L2 network for some pretty major cost savings. The cost per transaction on Polygon's zkEVM stands at as low as $0.01 during mid-2024, huge in contrast with base layer Ethereum gas fees that surge upward of several dollars during times of high demand.
At the same time, the popular L2 solution is developing: Bitcoin Lightning Network. In 2024, the network's liquidity reached more than 5,000 BTC, which is 25% higher compared to that in 2023. It means that L2 scaling solutions are as important for Bitcoin as they are for Ethereum. This brings blockchain technology further and closer to mainstream use: faster, cheaper, and more scalable payment systems.
New and Emerging Crypto Coins: Innovations Beyond Bitcoin and Ethereum
The demand for cross-chain interoperability has never been so relevant as in the 2024 scenario when the blockchain ecosystem is fragmented. Considering the leaps and strides of many parallel Layer 1 blockchains—such as Ethereum, Solana, and Binance Smart Chain, among others—it is the bridge of transferring their assets or data across such networks that holds the key to evolving this industry.
Meanwhile, emerging new crypto coins such as Aptos and Sui are further complicating the landscape. Each of these new crypto coins comes with its own architectures and consensus mechanisms, which raise a question of how to achieve seamless interoperability that will be in demand from users and developers to interact with various blockchain networks.
Key in the space is LayerZero, an omnichain bridging protocol. All in all, in 2024, LayerZero has powered billions of dollars in cross-chain transactions by empowering developers to build dApps with the ability to communicate cross-chain. It has signed more than 100 partnerships this year alone, placing its technology as one of the most important innovations in blockchain interoperability.
Likewise, Cosmos Dai remains in the lead with its IBC protocol that enables different blockchains to inter-operate by transferring assets and information from one chain to another. In 2024, a number of blockchains using IBC with active usage has been over 50, driving a 30% increase compared to cross-chain transactions in 2023. The Cosmos Network, primarily considered the "internet of blockchains," now executes more than $100 million in transactions daily across its interoperable network interface.
With its parachain capabilities, Polkadot will also further continue to play a leading role in 2024's cross-chain world. Thanks to the built-in function of Polkadot's cross-chain messaging system—which allows developers to transfer not only tokens but also data—Polkadot has become an ideal platform for them. In early 2024, the total value that Polkadot had locked in cross-chain apps went over $8 billion, validating its stake in the future of interoperable blockchains.
Blockchain and AI Convergence: A Symbiotic Future
With the rapid evolution of artificial intelligence in 2024, one should not be surprised by the convergence of blockchain technology. Both technologies complement each other: blockchain provides transparency and immutability through decentralization, while AI provides great strengths in large-scale data processing and analysis.
In the end, one of the most discussed trends in this year is the use of AI-created smart contracts. AI-powered tools are being used for writing and auditing smart contracts, which reduce human errors, hence making improvements in the development process a little easier. Tools like the Autonomous Smart Contracts, with machine learning to optimize the algorithm of the contract based on real-time data, have improved security and efficiency.
The other notable project, Fetch.ai, is said to integrate AI with Blockchain and has gained immense momentum in 2024. It enables autonomous agents that are artificially intelligent to perform tasks such as data analytics, energy grid optimization and supply chain management across decentralized networks.
AI combined with blockchain is viewed as a game-changer for industries in need of real-time autonomous decision-making. Besides, blockchain is being applied to make the AI models more trustworthy. More and more companies have started applying blockchain in 2024 for tracking data of AI training, ensuring validity and tamper-proofing of the datasets. This approach mitigates one of the fundamental challenges in AI-data manipulation and bias.
Decentralized Finance (DeFi) 2.0: Enhanced Security and Usability
2024 marks the maturity of DeFi 2.0, an even more secure and user-friendly rendition of the initial wave of DeFi. Among many aspects, one major emphasis by DeFi 2.0 will fall upon developing a fix for such loopholes that were used in instances such as early DeFi hacks and protocol failures.
One of the big trends in DeFi 2.0 has been real-world asset tokenization. In 2024, institutions have increasingly utilized DeFi protocols to tokenize assets in real estate, commodities and bonds.
The market for tokenized assets had reached over $1 trillion in 2024, while the likes of Aave and MakerDAO were fronting mainstream allocations. Asset tokenization aside, better UIs have also made DeFi platforms more available to a wide field of participants.
For instance, projects like Uniswap V4 have made intuitive UI/UX enhancements, allowing non-technical participants to easily interact with decentralized trading and lending. Security enhancements—including a multi-signature wallet and auditable smart contract integrations, among others—have also considerably hardened DeFi 2.0.
As we head towards the end of 2024, this will be the year of complete transformation for blockchain technology. Fast in its evolution, the year is packing itself with innovations around Layer 2 scaling, cross-chain interoperability, integration of AI and DeFi 2.0, jumping the future of decentralized systems.
Although these trends have only just begun to unfold, it seems pretty clear that blockchain could reshape anything from finance to supply chain management.
Resources:
https://ethereum.org/en/developers/docs/scaling/zk-rollups/
* This is a contributed article and this content does not necessarily represent the views of sciencetimes.com
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