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Undoubtedly, 2023 will bring more development and expansion across the blockchain ecosystem.
What to expect from Cardano, Ethereum, and Polkadot in 2023. We ended 2022 with Ethereum abandoning mining and moving to a Proof of Stake model. In 2022, we experienced one of the most significant expansions of DApps in the crypto world, with over 50 blockchain projects qualified for development from Ethereum, Cardano, BNB Chain, Polygon, Avalanche, Polkadot, or Cosmos. The result is more than 13,000 DApps.
We also experienced the DeFi boom and the consequences of its collapse. However, DeFi has an undisputed global reach. Today, its protocols are worth almost $39 billion, and the outlook is for growth and expansion, thanks to the arrival of new institutional players and regulations such as MiCA.
Ethereum, Polkadot, and Cardano development
Against this backdrop, blockchain developers continue to do what they know how to do: write code. And communities are looking to generate mechanisms to help them weather the onslaught of the crypto winter more easily. One of ecosystem where we will see the most development and expansion is Ethereum. Vitalik Buterin clarified this in his new roadmap to “re-decentralize Ethereum.” There will be colossal development around Ethereum to make the network faster, with the initial integration of rollups and zk-SNARKs technology, but aiming for Ethereum to expand by embracing its vision.
One of the most awaited events in 2023 will be the arrival of the Shanghai hard fork. Scheduled for Q2 2023, Shanghai will allow initial ETH2.0 stakers to withdraw all profits earned up to The Merge’s activation. As a result, a massive amount of ETH will enter circulation, impacting the Ethereum ecosystem’s economics.
Buterin’s team has indicated that they will activate proto-danksharding improvements this year. They are known as the Ethereum Improvement Proposal EIP-4844; proto-danksharding aims to enhance the capabilities of Ethereum 2.0, to facilitate the development of layer two solutions using zk-Rollups. It also creates the basis for the generation of Ethereum sharding. If all goes well, all these improvements will be activated in the third quarter, impacting the development of L2 with zk-Rollups by facilitating the integration and development of bridges and other infrastructures that enable more transparent and secure operation.
Polygon Hermez, open-source
If you’ve been following the evolution of zkEVM technology, you’ve probably witnessed the competition between Polygon and zkSync. zkSync is one of the oldest and most proven zkEVM implementations available for Ethereum, a Matter Labs development that has been open-sourced (under the free MIT license) for quite some time.
Its most direct competition is Polygon Hermez, which we recently discussed in Observatory and was originally a close-source development. Many people heavily criticized Polygon because its development battery is primarily open-source. Fortunately, Polygon has decided to make Hermez open-source. However, the mix of licenses, from AGPL to Apache 2.0, may create legal problems for companies and the generation of services using such technology.
In any case, the arrival of Hermez in Ethereum’s zkEVM ecosystem will represent a massive boost for the network and blockchain technology in general. With the activation of EIP-4844 in the offing, we will likely see its rapid expansion to realize the full potential of this new technology.
Polkadot and Parathreads
Another project from which we can expect significant developments in 2023 is Polkadot and its DOT token. Despite DOT being hit hard by crypto-winter throughout 2022, the development of Polkadot is not stopping. Part of the things the development team has almost ready for 2023 are the Parathreads and the new version of XCM.
Parathreads will help Polkadot to be able to offer access to its network services/parachains to DApps as required. Parathreads grants the power to initiate a blockchain with the ease of launching a smart contract. These can be established and operated without having to wait for the next auction or do anything more than upload your code to the blockchain and start up some funded collector nodes to maintain that infrastructure.
All of this facilitates access to the Polkadot ecosystem and makes the capabilities of its network more flexible, allowing developers to launch a DApp using parathreads. In this way, they can have an infrastructure capable of using Polkadot’s power, security, and operating model without the complexity of launching a full parachain.
XCM, Polkadot’s cross-chain/cross-parachain communications protocol, will also be upgraded to version 3.0. The advantage of this new update is that XCM v3 will allow parachains, as well as contracts and applications deployed on them, to use functions such as bridging or invocating parachain/parathreads from other chains/parachain/parathreads. It will also allow better support for NFTs and different development APIs. Polkadot is preparing a complete overhaul to enable developers to use the network’s full potential more simply and efficiently.
Cardano and its stablecoin
Another project that will also expand in 2023 is Cardano. With the advent of Smart Contracts on the network, Cardano’s expansion has been significant, but with the imminent arrival of DJED, Cardano stablecoin, the scope of that expansion could multiply much further. However, there is a lot of caution surrounding the entire Cardano ecosystem.
The team intends to make DJED a reality by Q1 2023. Many say it will be this January, but something still has to resolve, which raises many doubts. Another issue that does not help DJED is its algorithmic nature. When “stablecoin” and “algorithmic” come together, we remember the UST and the Terra/LUNA disaster, a reality that DJED and Cardano must fight. The arrival of DJED will be the starting point for the explosion of vast DeFi applications on top of Cardano. We can see something that will become more pronounced in 2023 if DJED becomes a reality.
But DJED will arrive with others in Cardano’s DeFi ecosystem. USDA is the full-backed and regulated stablecoin Emurgo that will launch this Q1 2023 on Cardano. Thus, Cardano will have two stablecoins: DJED and USDA. Cardano’s DeFi runs this 2023 and promises to be strikingly interesting.
Active blockchain development
These are some of the most relevant projects we will see in blockchain development, at least from a DeFi point of view. Most of the major projects continuously improve and develop new features or enhancements. However, the ones that will have the biggest impact are related to decentralized applications and DeFi.