2024 Web3 Track Analysis

ZK Technology

ZK technology further expanded into more application scenarios in 2023 and differentiated into different tracks:

zkEVM

• Progress has been made in several types, including type0, type1, and type2.
• type0 is fully equivalent to Ethereum, but faces technical challenges.
• type1 has made improvements based on EVM, providing a better application experience and compatibility.
• type2 launched the mainnet earlier, each developing its own ecosystem.

zkVM

• zkWASM is the main technical route, with strong architectural scalability.
• The RISC V architecture is mainly focused on RISC0, which is more friendly to front-end languages and hardware.
• zkLLVM can quickly compile high-level languages into zkSNARK circuits.

ZK Mining

• The efficiency of GPU and FPGA is comparable, but the ASIC scenarios may gradually differentiate.
• The increase of Prover DAOs, computing power is the core competitive advantage.

ZK Middleware

• Including zkBridge, zkPoS, ZK Coprocessor, zkML, etc.
• The ZK Coprocessor is progressing rapidly, with most projects having reached the testnet stage.
• The zkML track is heating up, with differentiation in project progress and competition.

MEV

• Early stage of the trading supply chain ( intention stage ) is worth paying attention to.
• The new generation of DEX design and infrastructure will attract more capital.
• Private auctions/trading pools, if functioning effectively, will improve the trading supply chain.
• The development of FHE, MPC, and ZKP is worth paying attention to.
• The endgame of the track may be an unlicensed competitive market
• The MEV supply chain will undergo changes in areas such as APS, document execution, and PEPC.

Order Flow Auction ( OFA )

• Starting in 2023, high-value transactions will flow to OFA.
• From RFQ auctions to blockchain space aggregators, meeting different needs
• More ETH transactions will be conducted through OFA in the future.

Blockbuilder

• The market is concentrated in a few builders.
• The advantages of high-frequency trading firms may weaken.

Relay

• High market concentration, lack of incentive mechanisms
• Looking forward to the development of optimistic rollups and relay incentive proposals.

Account Abstraction (AA)

• Divided into two main categories: smart contract wallets and modular services.
• It is difficult to gain traffic solely through features, the wallet factory is worth paying attention to.
• Bundler and Paymaster have become standard services.
• The AA development of L2 is doing well, and EF is considering providing native support for L2.
• The issue of DApp not supporting AA is still serious.
• Private mempool may be associated with MEV and intent merging

Intents

• Rapidly developing, but facing issues such as solver malfeasance and order flow trust.
• Need to integrate MEV and AA architecture development
• The Telegram Bot may evolve towards Intent.

Data Availability(DA)

• The head effect is significant, mainly including Celestia, Eigenlayer, and Avail.
• The project can be examined from aspects such as security, customizability, and cost.
• Large Rollup projects tend to choose Ethereum as the DA layer
• EigenDA has a unique positioning that may attract customers in the middle ground.

Rollup Framework and RaaS

• The Rollup market is basically saturated and needs a new direction for development.
• Some L2/L3 frameworks have received significant resource support.
• Specific applications ( such as DePIN ) may use customized execution environments.
• New technologies such as RISC0 Zeth, FHE rollup, etc. are worth paying attention to.

Cosmos Ecosystem

• Cosmos Hub will strengthen its ecological position, such as promoting PSS, multi-hop IBC, etc.
• Plan to add Megablocks and Atomic IBC features
• Application chain development is influenced by L2, but there is still room for growth.

Security

• The products cover various aspects, such as on-chain detection, tracking tools, auditing services, etc.
• Tool combinations cannot fully replace a complete audit.
• Pay attention to the project maintenance update speed, vulnerability database size, etc.

AI and Crypto Integration

• Main directions: underlying computing power infrastructure, specific data source training, chat tools, data labeling platform
• Focus on ZKML and projects with data advantages in the crypto vertical.
• Optimistic about to C products closely integrated with AI

DeFi

• The actual yield rate products ( such as LSDfi and RWA ) are becoming more popular.
• DEX opportunities increase, especially for high-performance applications on L2
• High proportion of perpetual DEX fees
• The growth of liquid staking continues, remaining the largest DeFi track.

Games and Entertainment

Game Studio

• Different types of games have distinct characteristics and focus on different aspects.
• Improvement in overall quality and team professionalism
• Focus on UGC direction, optimistic about teams with web2 creator resources.

Game UA

• Focused on building user profiles, integrating on-chain, off-chain, and social dimensions.
• Facing user retention challenges
• Game data analysis can capture some value

User/Fan Interaction

• Involving entertainment, sports events, and the film and television industry
• Divided into two models: direct IP operations and authorized cooperation.
• Focus on targets with high IP value and overlapping user groups

Institutional Services

• Mainly divided into trading/brokerage services, asset management, banking/payment, etc.
• Compliance is an important trend.
• The market share of PB service companies is expected to increase.
• The ETF application window period affects the market structure.
• Europe is a hotspot region, emerging markets have potential.

Bitcoin Ecosystem

• A different approach from Ethereum is required for construction.
• Focus on new technologies such as Taproot Assets, Rollup, Lightning Network, etc.
• Sidechains, Layer 2, client verification and other directions are worth paying attention to.
• BRC20 assets face technical implementation risks.
• The application of DLC technology may become widespread

DePIN

• Bull markets are easy to generate volume and can easily convert traditional users.
• Key elements: decentralized mechanism, timing, industry fundamentals
• High-frequency hardware used in ToC may bring revolutionary changes
• Hardware improvements require careful evaluation
• The specific analysis is needed for the unique mining machine direction.