Anticipating what to expect in the fast-moving crypto and blockchain world might seem like a futile ambition, like predicting the exact movements of a typhoon. Yet the conclusion of every year inevitably provokes a raft of industry predictions, some ludicrously ambitious, others grimly pessimistic and the majority thankfully more or less feasible.
As 2023 draws to a close and a New Year looms into focus, many expect a big 12 months ahead in Web3. After all, Bitcoin’s fourth halving is coming up in spring, spot ETF approval is apparently imminent, and numerous privacy-focused Ethereum L2s are also emerging. But which major crypto trends should we stay aware of in the year ahead? You’ll just have to read on to find out.
Layer3 Tech, DeFi and dApps
When talk turns to blockchain layers, we tend to hear lots about Layer2 scaling solutions for Ethereum – but Layer3 tech is also growing in prominence. These specialized app-specific networks built atop L1s enable independent dApps to operate according to their own unique rule-sets and economic incentives rather than those of a dominant chain.
L2s have already had their moment in the sun and they fulfilled an important role in relieving the strain on Ethereum prior to its switch to Proof-of-Stake in 2022. But there are plenty of reasons to believe Layer3 will be a major talking point in 2024 and beyond.
One is the sheer number of L3s emerging onto the market, like RARI Chain, an Ethereum-compatible network that enforces on-chain NFT royalties, gaming-centric blockchain Xai, and Orbs, an L3 protocol that empowers dApps to achieve greater efficiency and scalability.
Because they host but one dApp, L3 networks are tailor-made for the growing influx of entrepreneurs, builders and users migrating from the web2 world, delivering improved scalability, customization and interoperability with the dApp ecosystem.
The aforementioned Orbs, to take one example, leverages the security of long-established L1s and the scalability of L2s while delivering an execution layer of its own to provide services to DeFi apps. Orbs’ decentralized L3 nodes power its own DeFi infrastructure protocol Liquidity Hub, which is designed to bring aggregated liquidity to the DEX market.
With on-chain gaming and DeFi likely to explode during the next bull run (and many predict one to get going post-Bitcoin halving), expect Layer3s that improve the performance of dApps to surge in popularity.
Central Bank Digital Currencies: A Growing Reality
CBDCs are coming, we just need to get used to the idea. One of the few questions that remain is which implementation model will be favored.
The Bank of England and Swiss National Bank have already put on record their preference for a synthetic CBDC (sCBDC), a type of e-money backed by central bank reserves but managed by private sector intermediaries. But over 130 nations are exploring their own CBDC systems, with the majority in the advanced stage of development.
Whether it’s bank-to-bank CBDCs or retail implementations, CBDCs will continue gaining a foothold in 2024 – something civil liberties activists are up in arms about. They argue that CBDCs will lead to nightmarish levels of surveillance and control, particularly as we transition to a cashless society. Oh well, there’s always Bitcoin…
Bitcoin ETFs and TradFi Entrants
Speaking of which, Bitcoin is set for a huge 12 months. Yes, that remark is made at the end/start of every year but 2024 is consequential for two important reasons: the approaching halving and the expected regulatory approval of spot ETFs that could incite a wave of institutional adoption.
If history is any indication, the halving alone will cause the price of BTC to speed to fresh heights. Factor in the expected ETF green-light and recent momentum (gains of 160% in 2023) and you’ve got a recipe for a whole lot of FOMO. Of course, nothing is preordained in crypto so the message remains the same: DYOR.
More Users, Better Security
If bitcoin does indeed grow in value, and the arrival of CBDCs compel privacy-minded citizens to seek a safe, comparatively surveillance-free haven in crypto, there’ll be plenty of new users exploring the web3 world. Expect technologists, developers and savvy entrepreneurs to cater to newbie interest by designing intuitive, user-friendly solutions – chief among them wallets.
Digital wallets are the gateway to the blockchain world, giving consumers the ability to store, buy and trade currencies. Increasingly, they also offer the prospect of staking returns and access to NFTs and dApps. With so many wallets to choose from, novices are easily flummoxed. In 2024, it’s likely we’ll witness more wallets like Kresus come to the fore. This self-described “goof-proof SuperApp” reassures users that they will never get locked out – even if they lose access to their email.
As well as the emergence of new wallet solutions, we’ll see existing providers (Coinbase, TrustWallet, MetaMask etc) streamline their products to capture the custom of TradFi émigrés. With any luck, this natural competition will lead to stronger products and an improved level of customer service.
Whatever happens in the year ahead, one adage will surely hold true: there’s never a dull moment in crypto.