Looking back at a year in cryptography

In this special edition of The Protocol, we look back at the groundbreaking developments of 2024 and look ahead to what will happen to blockchain technology in the coming year.

Let's take a closer look at the milestones, trends, and predictions that will shape the next era of cryptocurrencies.

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1. Looking back: Key cryptographic milestones in 2024

Ethereum’s Dankun Upgrade: 2024 marked Ethereum’s most significant network upgrade to date. Ethereum has enabled the Cancun-Deneb (Denkun) Upgrade, a groundbreaking improvement aimed at enhancing scalability and reducing data charges, marking a pivotal step in the network's evolution. Duncun introduced proto-dunk sharding, a mechanism aimed at reducing the cost of layer 2 rollups by simplifying data availability and increasing transaction throughput. Although this change was highly controversial, it was intended to benefit developers, pave the way for further innovation in Ethereum's roadmap, and strengthen its position as the leading smart contract platform.

Solana’s Value Locked: Solana’s DeFi TVL continues to grow the DeFi ecosystem, reaching $9 billion in total value locked (TVL) for the first time in three years. This achievement reflects increased user engagement and the expansion of decentralized applications on the platform. This growth was largely driven by institutional adoption and large-scale consolidation. Financial giants such as Franklin Templeton and Societe Generale have leveraged Solana for their tokenized asset projects. Solana also expanded its reach with Robinhood adding SOL to its trading platform and Cboe Global Markets filing an ETF linked to Solana, demonstrating growing confidence in the company's infrastructure.

Quantum Computing Alarm: Google's advances in quantum computing, particularly with its revolutionary quantum chips, have raised alarms within the cryptocurrency community about potential threats to blockchain security. The chip's ability to solve problems far beyond the reach of traditional computers has reignited debate over Bitcoin's reliance on traditional cryptography and its broader impact on the crypto ecosystem. Experts emphasized the urgent need to transition to quantum-resistant cryptography to protect cryptocurrencies from future vulnerabilities. Although current quantum computers do not yet have the ability to compromise blockchain networks, Google's progress highlights the need for proactive measures to ensure the long-term security and resilience of digital assets.

Layer 2 adoption has skyrocketed: Layer 2 adoption has skyrocketed as projects like Arbitrum, Optimism, and Base played a key role in addressing Ethereum's scalability challenges. Arbitrum continues to dominate the Layer 2 ecosystem with strong developer support and DeFi integration, with over 1 billion transactions. Optimism continued to expand its influence with its OP stack technology, which enables modular Layer 2 solutions and fosters collaboration across the ecosystem through Optimism's integration into superchains. Base, a Layer 2 cultivated by Coinbase, gained significant traction by leveraging Coinbase's extensive user base and new entrants, with Franklin Templeton becoming the first to launch a tokenized treasury fund on the network. Became an asset manager.

Innovation for DeFi leaders: Aave was the focus of a new fund launched by Grayscale Investments in October, offering institutional and accredited investors exposure to governance tokens (AAVE) through traditional investment vehicles. Uniswap Labs announced Unichain, a decentralized layer 2 blockchain built on Optimism's OP Stack. Unichain is designed to increase transaction speeds, reduce costs, and improve cross-chain interoperability, with a mainnet launch scheduled for 2025. And MakerDAO will rebrand to Sky as part of its endgame plan, with new governance (SKY) and stablecoin (USDS), an autonomous “Sky Star”, deflationary tokenomics, and a complete transition from MKR to SKY tokens. Introduced a roadmap.

2. New trends for 2025

AI x Blockchain: The integration of artificial intelligence and blockchain will revolutionize identity verification, predictive analytics, and smart contract automation, and hopefully limit the negative side effects of AI. Regulated crypto hubs: Jurisdictions such as Hong Kong, Dubai, and Singapore are positioning themselves as crypto-friendly innovation centers, attracting startups and institutional investors alike. Interoperability will take center stage: Cross-chain protocols will be at the heart of development, enabling seamless asset transfer and collaboration between each other. blockchain ecosystem.

3. Developer Spotlight: 2024 by the numbers

Electric Capital Developer Report: This report highlighted sustained growth in blockchain development with a 35% increase in active developers. Ethereum, Solana, Polkadot, Base, and Polygon led the way, showing off their strong developer communities. Solana is the biggest draw for new developers, bringing in 7,625 new developers in 2024, surpassing Ethereum. Solana's appeal is driven by its low fees, fast transactions, and large number of meme coins, establishing itself as a strong competitor in the smart contract space.

4. What to watch in 2025

Ethereum’s Pectra Upgrade: Ethereum’s upcoming Pectra upgrade is split into two phases: Prague and Electra to more smoothly roll out key improvements to the consensus and execution layers. The Electra phase increases validator efficiency, strengthens network security, and introduces improved mechanisms for managing validator termination. Scaling solutions: ZK rollups and modular blockchains drive the next wave of scalability and ensure a smoother user experience. Zero-knowledge proofs are emerging as a revolutionary technology, enabling enhanced privacy and efficiency, while paving the way to a future where blockchain networks can scale seamlessly without compromising decentralization. Decentralized Identity: The rise of decentralized identity solutions has the potential to redefine how users interact with Web3 platforms. These systems leverage blockchain technology to give users control over their personal data and allow them to verify their identity without relying on a centralized authority.

5. Final thoughts

2024 set the stage for the next chapter in cryptocurrencies, with breakthroughs in scalability, DeFi, and security shaping the year of transformation ahead.