Here's a quick look at three major developments in blockchain technology this year: zero-knowledge, interoperability, and RWA

Over the past year, the crypto ecosystem has achieved a series of major technological milestones.

Despite a series of unfortunate events in 2022, first the collapse of the Terra ecosystem and then the bankruptcy of Sam Bankman-Fried’s FTX, in 2023, blockchain has shown full resilience in the technology space.

Especially in terms of infrastructure and technological developments, emerging innovations aim to make blockchain faster, more secure, and more private.

Significant progress has been made in zero-knowledge technology

A series of zero-knowledge (ZK) rollups were launched this year.

For example, first came the release of zkSync Era, followed by Polygon’s zkEVM, then Linea, and most recently, the Nil Foundation.

The goal of all kinds of rollups is the same: to execute more transactions off-chain to reduce the block space required for transactions to make the blockchain run more efficiently. In addition, gas fees and fixed costs can be reduced.

In this particular case, ZK Rollups are not only able to perform off-chain executions, but also determine if the information is executed accurately without exposing the mainnet information.

This is different from Optimistic rollups, which assume that the information is accurate and rely on fraud proofs to challenge suspicious transactions.

It’s worth noting that more work needs to be done to ensure that ZK Rollups are fully decentralized and permissionless. Existing zero-knowledge technologies are at risk of scalability.

These risks refer to whether the blockchain can be upgraded or is likely to change – and if not, the blockchain is more secure.

Related reading: An in-depth look at the application of zero-knowledge proof technology: the third major technological innovation in the history of blockchain development

Blockchain interoperability enhancements

Blockchain interoperability has also seen some impressive improvements this year.

From the release of Chainlink’s Cross-Chain Interoperability Protocol (CCIP) to LayerZero’s recent partnerships with Google Cloud and JPMorgan Chase, the Cross-Chain Interoperability Protocol team is actively working to connect a variety of private and public blockchains.

Blockchain interoperability protocols enable smart contracts between different blockchain networks to communicate with each other and facilitate the transfer of liquidity.

This is usually achieved by burning tokens in the smart contract of the source chain and then minting new corresponding tokens on the target chain.

Another way to transfer tokens is through bridging, where the tokens are locked on the source chain and then minted on the destination chain.

These tools enable users across blockchains to seamlessly trade, lend, and stake tokens across different public chains for a small gas fee.

Related Reading: An In-Depth Look at How Any Messaging Protocol Solves the Interoperability Trust Puzzle

Bring more real-world assets on-chain through tokenization

In order to bring more liquidity to the chain, developers of the Real World Assets (RWA) protocol are also working on how to use these assets as collateral through tokenization.

Examples include assets such as cash, gold, real estate, and U.S. Treasuries. One of the most well-known RWAs today is stablecoins, such as Circle’s USDC and Tether’s USDT, which are widely used in DeFi protocols.

Some of the protocols behind on-chain funding include Centrifuge, Maple Finance, and Goldfinch.

Source: Golden Finance