A&T Capital: 2023 Web3 Trends Report (Summary Version)

Written by: A&T Capital

A&T Capital has released the "Web3 Trend Report 2023," making the following 6 predictions about this year's innovation tracks and applications. This article is the Chinese essence version.

1. Market and Innovation: Web3 is Creating a New Paradigm

• The scale of Web3 primary market fund management reaches $50 billion; the NFT market size exceeds $20 billion, with over 3 million NFT holders;
• Innovations brought by Web3 can be seen at all technical layers, with the application layer creating dedicated scenarios for users, the middle layer optimizing interaction processes, and the infrastructure layer optimizing consensus and settlement;

2. Zero-Knowledge Proofs: Zero-Knowledge Layer 2 Solutions are a Better Long-Term Choice for Ethereum Scaling

ZK L2: Mainstream ZK L2s like StarkNet, Scroll, and zKSync are likely to launch their mainnets within 2023, further accelerating Ethereum's scaling; and it will be a market with multiple solutions coexisting in the long term, benefiting the industry through this diversification.

Beyond scaling: The value of ZKP technology for different parts of the blockchain industry is being increasingly discovered.

• The design of ZKP + Light Client is expected to revolutionize the existing inter-chain interoperability track;
• Virtual machines like ZKWASM and Rust version ZKVM will allow Web2 developers to enter Web3.0 with minimal changes to their existing development habits;
• Using ZKP to transmit off-chain execution results to the chain in a verifiable form is suitable for various content that is not suitable for on-chain execution, providing another enhancement to the overall efficiency of blockchain beyond L2;

3. Public Chain Keywords: Parallel Computing, Modular Design, Application Chains

Parallel Computing: As a technology widely adopted in traditional high-performance computing, parallel computing has recently been brought into the public eye of the blockchain industry by projects like Sui/Aptos/Fuel Network, and will become a means to push the computing power of blockchain networks to higher limits in more scenarios;

Modular Design: With the popularization of the Ethereum + L2 combination and Celestia's relentless advocacy, modular design has gradually become a mainstream design concept in blockchain: on one hand, it meets different needs easily and sufficiently through different modules, and on the other hand, it shortens development cycles and improves development quality by focusing on a single module;

Application Chains: Thanks to their excellent performance in customization, exclusive network efficiency, and richer value capture, application chains will find exact applicable scenarios in 2023 and occupy a certain market share, with diverse forms such as L1/L2/L3;

4. Wallets: Account Abstraction (AA) Wallets and Externally Owned Accounts (EOA) Wallets Will Achieve Lower Usage Barriers and Better Interaction Experiences Through Different Trade-offs.

As the entry point for Web3, the widely used mnemonic wallets currently face issues of high security barriers and complicated interaction processes, leading to poor user experiences. To address this pain point and pave the way for a billion-level new user influx into Web3, Account Abstraction (AA) wallets can achieve this through on-chain smart contracts; Externally Owned Accounts (EOA) wallets can achieve this through off-chain MPC technology.

5. MEV: A Trustless, Anti-Censorship, Permissionless MEV Extraction Market Will Replace Existing Solutions

MEV-Boost is the current Ethereum MEV extraction solution. Although connecting to MEV-Boost can bring more profits to Validators, it remains a trusted and censored structure.

Bringing "programmable privacy" into the communication network of MEV market participants will be a way to achieve a more ideal MEV extraction market.

6. Exchanges: The Separation of Functions such as Custody, Trading, and Settlement is Inevitable

The FTX incident deeply shocked the market, as centralized exchanges that combine custody, trading, and settlement carry high moral risks.

Publishing proof of reserves is just a small step; to fundamentally solve this pain point, one must either embrace regulation and store customer assets with trusted compliant custodians or choose decentralization and lock assets in smart contracts on the chain.

In 2022, the crypto industry experienced significant events such as the collapse of FTX, the Luna crash, and the Ethereum upgrade merge. The market is adjusting, but the power of innovation has not ceased to flow in. We look forward to Web3 approaching the public in a more innovative, secure, efficient, and convenient manner.