Following a long and dark crypto winter, the industry finally began to bounce back in the second half of 2023, with the market capitalization of almost every top token showing significant growth.
There are several reasons for crypto’s resurgence, not least the fact that the global economic climate appears to be showing signs of a recovery. Meanwhile, regulatory controls around crypto have strengthened, increasing the perception that crypto as an industry is slowly maturing. That has helped to enhance interest among institutional investors, aided by the ongoing progress of governments in their efforts to introduce their very own Central Bank Digital Currencies, or CBDCs. In addition, crypto finally seems to be making its mark on traditional investment venues, with reports suggesting that institutions like BlackRock and others are close to offering Bitcoin ETFs for trading.
It’s becoming clear that the crypto industry is on a big upswing, and numerous projects have been making considerable progress over the last year. In this article, we’ll take a look at some of the leading lights in terms of crypto innovation in 2023.
1. Orbs
The Orbs Layer-3 infrastructure protocol has come on really strong this year, providing a platform for decentralized applications to scale and enable mass adoption.
With Orbs, developers can access a decentralized backend that significantly enhances the capabilities of their smart contracts to open up new possibilities for advanced Web3, DeFi, and GameFi applications. Orbs works in tandem with L1 and L2 solutions as part of a tiered blockchain layer. dApps can leverage Orbs’ execution services without moving their liquidity onto a different chain, while integrating more complex logic and scripts within their smart contracts to enhance their functionality. One example of a dApp using Orbs is The Open DeFi Notification Protocol, which uses its rapid infrastructure to keep DeFi users up to date with the most critical, on-chain events.
Orbs is uniquely able to bring traditional trading tools to DeFi protocols, with innovations such as its decentralized Time-Weighted Average Price protocol. Launched earlier this year, dTWAP gives DEX platforms a way to execute TWAP orders that have long been a staple of the traditional financial trading industry, allowing traders to minimize the impact of large orders on asset prices by breaking them down into more manageable chunks through a series of trades.
Also this year, Orbs made its debut on the popular StakingRewards website, getting its own, dedicated page that explains how users can stake its native ORBS token to earn substantial rewards by validating transactions.
2. Spacemesh
Billed as the Layer-1 cryptocurrency that “puts home miners first”, Spacemesh is a new cryptocurrency that aims to stay true to the original ethos of Bitcoin’s creator Satoshi Nakamoto.
The idea is to create a more accessible network that anyone can participate in. Bitcoin’s proof-of-work consensus algorithm is flawed because, as the computational problems that must be tackled to process transactions become more complex, more computing power is required. As a result, the Bitcoin mining industry has become dominated by a handful of major players who have invested millions of dollars into powerful computer hardware such as ASIC.
Others cannot compete and this is what Spacemesh wants to change. Its novel Proof-of-Space Time consensus mechanism uses idle data storage resources to process transactions, coupled with a race-free approach that ensures mining is much fairer and simpler to do.
“Spacemesh is doing something that no blockchain before has ever attempted to do,” CEO Tomer Afek told Bitcoin.com in an October interview. “[It’s trying] to make mining from home both accessible and economically sustainable for ordinary Internet citizens forever.”
Spacemesh launched in July and has made strong progress among younger crypto enthusiasts who cannot easily invest in powerful mining rigs. Since launching, it has seen strong adoption, with its network growing from 2,807 downloads in epoch 2 to 32,034 by the end of epoch 4, highlighting the big demand for a more accessible network anyone can participate in.
Because Spacemesh only requires users to have a standard PC with spare storage space, and a reliable internet connection to participate, it promotes a more diverse and inclusive mining ecosystem that has the potential to grow significantly as its adoption accelerates.
3. SSV.Network
Another project making good progress this year is SSV.Network, which aims to solve some of the challenges around centralization and security within the Ethereum ecosystem. The startup is one of the leading players in distributed validator technology or DVT development. Its DVT protocol holds decentralization as one of its core values, and enables Ethereum validatory duties to be shared by multiple parties participating as a single network node. With SVV.Network, a validator can be created as a node that’s hosted by multiple fault-tolerant machines, so that if one of them becomes faulty or goes offline, the validator itself will remain viable.
One of SVV.Network’s advantages is that validators can remain entirely anonymous, safeguarding them against cyberattacks and coercion. It’s a strategy that enhances the overall security of Ethereum by making it more difficult for malicious actors to target a specific validator. It also fosters greater accessibility, as just about anyone can participate in a node, even with minimal financial resources.
SVV.Network hit the big time in December with the launch of its permissionless mainnet, enabling anyone to start participating in the Ethereum network by staking ETH to validate transactions for rewards. The launch followed a gradual rollout beginning in September with the selection of permissioned node operators. Once the network’s stability was tested and its code validated through security audits, the mainnet launched to battle test its infrastructure.
The launch has gone well, with more than $160 million worth of ETH staked by a total of 74 nodes since September. All told, more than 2,200 validators are using SSV.Network’s DVT infrastructure. As we enter 2024, SVV.Network expects to accelerate its growth and become one of the most popular platforms for more accessible Ethereum staking.
4. Space and Time
Web3 data warehouse creator Space and Time is bidding to become the infrastructure layer of the “verifiable Web” enabling transactional queries on any blockchain network with low latency. Queries are performed using its novel “proof-of-SQL” technique, which employs cryptographic zero-knowledge proofs to prove that each query is accurate and tamper-proof. The goal is to support automated queries by smart contracts, which will lead to the creation of more sophisticated dApps.
Data querying has always been inaccessible, as it requires knowledge of the Structured Query Language that’s used to manage information within databases. Due to this, the task of creating a data pipeline to funnel information to any application is both time-consuming and tricky.
By eliminating the need to know SQL, Space and Time makes it possible for any user to create a data pipeline and query information held in almost any database, in seconds, using natural language prompts. It recently integrated with OpenAI’s GPT-4 generative AI model to create its very own chatbot, called Houston, which is able to answer questions about data from any source. It works by translating user’s queries into SQL, with responses submitted to an API, dashboard or another application.
Scott Dykstra, co-founder and CTO of Space and Time, told SiliconANGLE in a July interview that the company’s Web3 data warehouse will be a game changer for smaller businesses that can operate big data analytics teams.
“Space and Time users can generate SQL or Python scripts from prompts, ask natural-language questions about data and get back an accurate visualization of the answer, and load in new datasets all by simply conversing with our chatbot,” he said.
5. Azarus
Decentralized video game streaming platform Azarus hit the headlines in October when it was acquired by the well known software developer Animoca Brands to bring live streams to Web3 games.
Using the Azarus platform, which debuted way back in 2018, video game players can stream their gameplay to their fans and interact with those audiences, while offering incentives in the form of crypto tokens.
Azarus is the creator of an Overlay Games layer that provides video game streamers with a way to overlay ads and interactive games on their live streams. In this way, it can incentivize creators to broadcast across the metaverse and engage with their audiences through various channels. Because it’s a native Web3 platform, Azarus enables streamers to bring their fans to any platform they decide to play on. To date, it has distributed more than $2 million worth of crypto rewards across more than 20 million unique players.
Animoca intends to leverage Azarus to unlock new sponsorship opportunities through live streaming events and reward fans for playing and watching its own Web3 games. In a statement, Animoca’s executive chairman Yat Siu said the acquisition of Azarus attests to its belief in the transformative power of Web3.
“Azarus evokes the early days of The Sandbox, with that same energy and upside that makes it such an attractive proposition,” Siu said. “Together, we look forward to redefining the streaming landscape, making it more interactive, rewarding, and aligned with the open metaverse.”
6. Fhenix
Last but not least, there’s the confidential blockchain platform developer Fhenix, which aims to offer the crypto industry an alternative to zero-knowledge proofs as an enabler of private transactions.
Fhenix’s EVM-compatible blockchain is said to be a developer-focused project that implements an entirely originally form of cryptography, which it calls homomorphic encryption or FHE. With FHE, computations can be performed while the data that’s used remains fully encrypted. Whereas traditional systems require data to be decrypted prior to being computed, FHE makes it possible to perform those computations while the information remains encrypted, ensuring that transaction data remains completely private during every step of the process.
Fhenix says that this kind of secrecy is required, due to the public nature of blockchains. While this transparency is often said to be a benefit, it does come at the sacrifice of user privacy, and that simply isn’t good enough for many people, who want their transactions to remain secret.
Guy Itzhaki, CEO of Fhenix, told Decrypt in a September interview that the lack of confidentiality in blockchain is one of the industry’s major challenges. He argues that unless privacy can be assured, many enterprises will continue to reject the technology.
Fhenix, which raised $7 million in funding in September, launched its public testnet this year. That followed a private devnet that went live in June and attracted 60 individual developers, verifying the company’s blockchain model.
According to Itzhaki, Fhenix’s cryptographic model is needed because ZK-proofs are not suited to mainstream adoption due to their complexity. As a result, he believes they will only ever see very limited use cases. However, Itzhaki said Fhenix’s built-in EVM compatibility will enable it to support a much wider range of applications and use cases, including blind auctions, on-chain identity attestation, private voting for DAOs, confidential real world asset tokenization and more.
One of the main advantages of Fhenix’s blockchain is that transactions don’t have to be private. Instead, users can choose when they want to obscure their transactions. “The beauty of what we are introducing is that it enables developers to decide what they want to encrypt,” Itzhaki said.