a16z is excited about a few things in the crypto space in 2023

Original Title: 《A few of the things we're excited about in crypto》

Written by: a16z

Compiled by: Biscuit, ChainCatcher

Note: a16z has just released a list of technological bottlenecks that technical builders may break through in the coming year. According to various a16z partners, they focused on a list of innovations (big ideas) that startups in their respective fields might solve in 2023. This list covers general innovative technologies, game developers, growth drivers for U.S. businesses, AI fintech, and of course, cryptocurrency. Below are some things that have the engineering, research, and investment team partners excited about the future.

The Mobile Era of Blockchain

How far are we from the "mobile era" of cryptocurrency? Blockchain users primarily access the internet through smartphones but rely on centralized infrastructure—convenient, but also risky. Traditionally, users could solve this by running their own nodes, but this is a time-consuming and resource-intensive task that requires at least one machine to be continuously online, hundreds of GB of storage, and about a day of synchronization time… not to mention special programming skills.

However, more and more people are beginning to care about providing infrastructure for users to access the blockchain in a distributed manner, especially for those who cannot run nodes themselves. With the emergence of "light" clients that provide similar functionality to running a full node, such as Helios (released by a16z crypto), Kevlar, and Nimbus, users can now verify blockchain data directly from their devices. I hope to see similar trust and decentralization improvements in other parts of the crypto tech stack, such as event indexing and user data storage. In summary, all of this contributes to achieving true decentralization on mobile.

---Noah Citron, Engineering Partner, Crypto Team (@noahcitron, @ncitron on Farcaster)

Zero-Knowledge, Multi-Party Computation, and Post-Quantum Cryptography

Zero-knowledge systems are powerful foundational technologies and are key to achieving blockchain scalability, privacy-preserving applications, and more. However, there are many trade-offs between proof efficiency, proof succinctness, and the need for trusted setups. It would be fantastic innovation to see more zk-proofs structures filling the gaps in these multidimensional spaces. For me, the most interesting aspect is exploring whether a trusted setup is needed for constant-size proofs (and constant-time verification), which would further develop more transparent trusted setups.

We also need better ECDSA (Elliptic Curve Digital Signature Algorithm) threshold signature structures. Achieving a threshold can eliminate trust in a single signer, which is why threshold signatures are important for multi-party distributed computation of private data, applicable to multiple applications in Web3. The most interesting threshold ECDSA signatures are those that minimize the total number of rounds— including pre-signing rounds where the message is unknown.

As post-quantum signatures approach the end of standardization, according to NIST, it will be a good technical premise to explore which innovations are suitable for aggregation or thresholding.

---Valeria Nikolaenko, Research Partner, Crypto Team (@lera_banda)

Zero-Knowledge Developer Onboarding

Zero-knowledge systems have been around for a long time. In recent years, the technology has shifted from theory to practice, but in 2022, ZK developers in the crypto space experienced a turning point in onboarding. Specifically, we saw a surge in educational materials and the maturation of high-level programming languages (such as Noir and Leo), making it easier for engineers to start writing ZK applications. Given how important zero-knowledge is for so many use cases, I expect these developments, along with ongoing theoretical advancements, to lead to a flood of application developers, who will often derive even more unexpected new use cases. I’m excited to see what happens next.

---Michael Zhu, Engineering Partner, Crypto Team (@moodlezoup)

VDF Hardware

Verifiable Delay Functions (VDF) are an exciting cryptographic tool with many applications, from verifiable lotteries to leader elections to preventing front-running. But the biggest challenge has always been hardware implementation, as the entire verification logic requires hardware involvement to ensure that attackers cannot compute VDF faster. I’m excited that the first generation of VDF hardware has achieved usability, paving the way for practical deployment.

---Joseph Bonneau, Research Partner, Crypto Team (@josephbonneau)

On-Chain Games and Autonomous Worlds

What if someone could create a game world that cannot be deleted or censored, does not require servers, and can live far beyond an individual's lifespan? We can now accomplish this unprecedented feat. We are in the early stages of native crypto, fully "on-chain games," or what others prefer to call a superset— "autonomous worlds," where all transactions are built on blockchain technology.

Regardless of what you call it, the crypto space is currently providing new affordances for maximally decentralized games, making it possible to build these games online. Specifically, placing the entire state and logic of a game on a publicly verifiable, censorship-resistant, and decentralized blockchain, along with continuously improving on-chain programs, these technological innovations not only overcome limitations like storage but are essentially "adopting techniques to compress complex worlds into an executable file." What games or gameplay that were previously impossible to create will become possible? Are such games still… games?

---Carra Wu, Investment Partner, Crypto Team (@carrawu, @carra on Farcaster)

Non-Transferable Tokens

I prefer "Non-Transferable Tokens" over "Soulbound Tokens" (a term borrowed from games by Vitalik Buterin). These tokens are suitable for situations where NFTs do not need to be transferred. I’m excited to see various Web3 applications not only built on this primitive but also featuring decentralized identifiers and verifiable credentials. While discussions around these primitives often revolve around decentralized identity, there are many other applications to explore: for example, tickets, digital-physical, reputation, and more.

---Michael Blau, Investment Partner, Crypto Team (@blauyourmind, @michaelblau on Farcaster)

Distributed Energy

How can we apply the spirit of decentralization to energy? For example, outdated, centrally managed power grids face other issues such as high upfront capital expenditures and misaligned incentives. By addressing high capital expenditures and solving incentive issues through tokens, there is a significant opportunity to build microgrids and storage and transmission networks. Renewable Energy Certificates (REC) and on-chain carbon credit markets are also thriving. I’m excited to see builders continue to expand the possibilities of distributed energy intervened by blockchain.

---Guy Wuollet, Investment Partner, Crypto Team (@guywuolletjr, @guy on Farcaster)