Blockchain technology has gained significant traction in recent years, with the crypto wallet serving as the entry point for many individuals entering the blockchain space. However, newcomers often face challenges when dealing with crypto wallets, including handling gas fees, seed phrases, and approvals. To simplify interactions with crypto wallets, the blockchain ecosystem needs to incorporate account abstraction.
Account abstraction has long been desired within the developer community, as it encourages a wider range of wallet and protocol designs, unlocking programmable authorizations. It offers many practical applications, such as enhancing the user experience of storing and recovering private keys, facilitating easier payment of gas fees, allowing accounts to change public and private keys, supporting diverse signature verification systems, and more.
Numerous projects are leveraging account abstraction, including zkSync and Alchemy Bundler, which aim to improve the accessibility, usability, and security of crypto wallets, making blockchain technology more user-friendly and inclusive.
Scalability is another challenge faced by blockchain networks when dealing with significant amounts of transactions. Many have made insufficient efforts to adapt blockchain systems to cope with growing workloads and resource demands. To address these limitations, Layer 2 solutions have emerged, built on top of Layer 1 blockchains like Bitcoin or Ethereum. These aim to enhance scalability, privacy, and other characteristics of the underlying blockchain.
Various Layer 2 solutions include state channels, sidechains, optimistic rollups, and zero-knowledge rollups. Rollups offer a scaling solution that can lower transaction costs and increase throughput on blockchain protocols. Among these solutions, zkEVM stands out by leveraging the power of zero-knowledge proofs and maintaining full compatibility with the Ethereum virtual machine. This approach will position zkEVM favorably in terms of privacy, security, and scalability for the foreseeable future.
Projects to watch include zkSync, Scroll, Arbitrum, and Taiko, enabling blockchain networks to alleviate scalability issues, expand the range of possible use cases, and accommodate data-intensive applications.
Decentralized infrastructure poses another challenge for the blockchain industry, particularly in terms of deployment and management. Many decentralized applications rely on centralized infrastructure providers for their hosting needs, limiting access and hindering enterprise-grade performance. To guarantee data ownership, eliminate single-node failure, and mitigate censorship risks, blockchain data needs organizing for accessibility and deployment on a global network of geo-distributed servers.
Noteworthy examples of decentralized infrastructure services include decentralized website hosting, decentralized storage and compute, as well as decentralized database, promoting user-friendly decentralized infrastructure to unlock the potential for mass adoption. Expanding the network of decentralized infrastructure will enhance privacy, security, and reliability in the digital ecosystem.
Projects to watch include The Graph, Alchemy, Oort, Storj, and Gensyn, advancing the adoption of decentralized technologies and products for a data-centric future that respects individual privacy and ownership.
To achieve widespread adoption, blockchain-based decentralized technologies must rapidly mature, coupled with enhanced scalability and seamless user experiences to capture the attention and adoption of the next billion users. The blockchain ecosystem can alleviate scalability issues, enable larger workloads, accommodate growing demands of data-intensive applications, and expand possible use cases by incorporating Layer 2 solutions and decentralized infrastructure. Therefore, the industry must address these challenges to attain a data-centric future that ensures individual privacy and ownership while promoting new possibilities and business models.
