This special edition of the Protocol looks at the innovative developments of 2024 and previews what the coming year could bring for blockchain technology.
Let’s delve into the milestones, trends, and predictions that will shape the next era of cryptocurrencies.
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1. A look back: major crypto milestones of 2024
Ethereum Duncun Update: 2024 marked Ethereum’s biggest network upgrade yet. Ethereum has activated the Cancun-Deneb (Dencun) upgrade, a landmark upgrade designed to improve scalability and reduce data rates, marking a critical step in the network’s evolution. Duncun introduced proto-danksharding, a mechanism aimed at reducing the costs of Layer 2 accumulators by simplifying data availability and improving transaction performance. The changes, although immensely debated, were intended to benefit developers and pave the way for future innovations in Ethereum’s roadmap, reinforcing its position as the leading smart contract platform.
Solana locks the value: Solana’s DeFi TVL reached $9 billion in total value locked (TVL) for the first time in three years, and its DeFi ecosystem saw even greater growth. This achievement reflects increased user engagement and the expansion of decentralized applications on the platform. This growth was significantly helped by institutional adoption and major integrations. Financial giants like Franklin Templeton and Société Générale leveraged Solana for tokenized asset projects. Solana also expanded its reach with Robinhood adding SOL to its trading platform and Cboe Global Markets filing for Solana-linked ETFs, signaling greater confidence in its infrastructure.
Quantum computing warning bell: Google’s advances in quantum computing, particularly with its revolutionary quantum chip, raised alarms within the crypto community about potential threats to blockchain security. The chip’s ability to solve problems far beyond the reach of classical computers has reignited debates about Bitcoin’s dependence on traditional encryption methods and the broader implications for the crypto ecosystem. Experts emphasized the urgency of transitioning to quantum-resistant encryption to safeguard cryptocurrencies against future vulnerabilities. While current quantum computers are not yet capable of compromising blockchain networks, Google’s progress underscored the need for proactive measures to ensure the long-term security and resilience of digital assets.
Layer 2 adoption soars: Layer 2 adoption increased as projects like Arbitrum, Optimism, and Base played critical roles in addressing Ethereum’s scalability challenges. Arbitrum continued to dominate the Layer 2 ecosystem, surpassing 1 billion in transactions, driven by its strong support for DeFi developers and integrations. Optimism continued to expand its influence with its OP Stack technology, which enables modular Layer 2 solutions and fosters collaboration across the ecosystem through its integration into the Optimism Superchain. Base, a Layer 2 incubated by Coinbase, gained significant traction by leveraging Coinbase’s extensive user base and on-ramps, and Franklin Templeton became the first asset manager to launch a tokenized treasury fund on the network.
DeFi Leaders Innovate: Aave became the focus of a new fund launched by Grayscale Investments in October, giving institutional and accredited investors exposure to its governance token (AAVE) through a traditional investment vehicle; Uniswap Labs announced Unichain, a decentralized Layer 2 blockchain built on Optimism’s OP Stack, designed to improve transaction speed, reduce costs, and improve cross-chain interoperability, with plans for mainnet launch in 2025 ; and MakerDAO rebranded as Sky as part of its Final Plan, introducing new governance (SKY) and stablecoins (USDS), autonomous “Sky Stars,” deflationary tokenomics, and a roadmap for the complete transition from MKR tokens to SKY.
2. Emerging trends for 2025
- AI x blockchain: The integration of artificial intelligence and blockchain will revolutionize identity verification, predictive analytics and smart contract automation and hopefully reduce the negative side effects of AI.
- Regulated crypto centers: Jurisdictions such as Hong Kong, Dubai and Singapore are positioning themselves as cryptocurrency-friendly innovation hubs, attracting both startups and institutional investors.
- Interoperability takes center stage: Cross-chain protocols will dominate development, enabling seamless asset transfers and collaboration across blockchain ecosystems.
3. Featured Developers: 2024 in numbers
Electric Capital Developer Report: The report highlighted sustained growth in blockchain development with a 35% increase in active developers. Ethereum, Solana, Polkadot, Base and Polygon led the pack, showing off their strong developer communities. Solana was the biggest draw for new developers, attracting 7,625 new developers in 2024, surpassing Ethereum. Solana’s appeal, driven by its low fees, fast transactions, and many memecoins, positions it as a formidable competitor in the smart contract field.
4. What to watch in 2025
- Ethereum Pectra Update: Ethereum’s upcoming Pectra upgrade has been split into two phases, Prague and Electra, to ensure a smoother rollout of key improvements to the consensus and execution layers. The Electra phase will improve validator efficiency, strengthen network security, and introduce improved mechanisms to manage validator outputs.
- Scaling solutions: ZK rollups and modular blockchains will drive the next wave of scalability, ensuring smoother user experiences. Zero-knowledge proofs are emerging as a transformative technology, enabling improved privacy and efficiency, while paving the way for a future where blockchain networks can scale seamlessly without compromising decentralization.
- Decentralized identity: The rise of decentralized identity solutions could redefine the way users interact with Web3 platforms, emphasizing privacy and ownership. These systems leverage blockchain technology to give users control over their personal data, allowing them to verify their identities without relying on centralized authorities.
5. Final thought
2024 set the stage for the next chapter of cryptocurrencies, with advances in scalability, DeFi, and security shaping a transformative year ahead.
