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Expert Opinions: What is the Path for Layer 1 Blockchains in 2024?

Layer 1 blockchains form the foundation of the blockchain ecosystem, and, going deeper, Layer 2 and 3 solutions are designed to enhance the operation of these infrastructure platforms and solve the blockchain trilemma.

That trilemma? The trade-off between security, scalability, and decentralization.

But Layer 1 developers — examples including Bitcoin (BTC), Ethereum (ETH), Cardano (ADA), and Solana (SOL) —- are adding native functionality to increase support for decentralized apps (dApps), security, and user privacy.

As new solutions emerge, the blockchain industry is expected to undergo a significant shift in the Layer 1 landscape in 2024. Techopedia spoke to several blockchain leaders about the outlook for the year ahead.

How Will L1 Infrastructure Develop?

Richard Wang, Chairman of Layer 1 blockchain developer Waterfall Association:

Q: How do you expect Layer 1 blockchains to evolve in 2024?

Years Past and Future

Lars Seier Christensen, Co-Founder and Chairman of identity-focused Layer 1 blockchain Concordium:

Q: What obstacles has the industry faced in 2023? Have you seen significant efforts to overcome them?

A: The industry is still characterized by too much promise and too little actual usage. It remains critical to onboard significant, industrial-scale use cases that add real value to processes through security and transparency.

Blockchain has a lot to offer, but it needs to come of age and really begin to prove itself. That being said, corporate interest is really only going one way – up – so I believe it is a matter of when, not if.

Q: Do you think 2024 will see greater adoption of blockchain-based digital identity frameworks? If so, what are the most significant use cases you expect to see?

A: ID and various personal credentials are some of the more obvious use cases for blockchain and are only becoming more and more important with virtual reality and avatars, especially given the rise of deepfakes and identity theft. A reliable and trustworthy ID solution is becoming an absolute necessity, and blockchain is the obvious infrastructure to support this.

Q: What are your expectations for stablecoin adoption in the next year?

A: In their current stage, stablecoins make a lot of sense when it comes to transfers, settlement and finality. For these reasons, they will be embraced further in 2024, both in private solutions and new public sector experiments.

I think stablecoins?right now are the most important use case for blockchain, eventually to be replaced or expended by more general RWA tokenization.

Scalability and Interoperability

Karel Kubat, Founder, zk-proof powered blockchain bridge developer Union:

Q: What tools do you believe will be in the spotlight as the Web3 industry focuses on scalability and interoperability?

A: The use and awareness of ZK technology have grown substantially in 2023, and while this is inherently positive, the current fragmentation of ZK algorithms?will continue to impede acceleration unless addressed this year.

To overcome this, there should be a new focus on hardware accelerators for arbitrary circuits, such as Cysic, gnark, and other low-level circuit builders, such as Lasso and Jolt.

Highlighting the significance of these tools will not only provide essential education to individual projects that need them but, on a broader scale, prepare the entire ecosystem for frictionless scalability.

Builder education, an impetus in VC backing, and the maturation of backend systems mean that applications that were previously impossible on-chain are now being built and deployed without hindrance. We are finally realizing successful Web3 applications without the requirement of trusted intermediaries – this is quite exciting to observe!

Q: What use cases for ZK-proof technology do you expect to see grow or emerge in 2024?

A: The value proposition of Zk-proof technology is limitless within and beyond Web3. The tech will be evident in myriad use cases across financial services and DeFi concerning privacy-preserving transactions and cross-border payments.

It also stands to revolutionize identity, governance, and supply-chain solutions. However, only the use cases that apply the tech by also prioritizing security, efficiency, and privacy, in addition to fulfilling their intended purposes effectively, will emerge as the killer use cases in the arena.

With the expansion of the ecosystem, interoperability between chains is paramount. Zk-trustless bridges are the solution to this growing demand. Considering this, the tech’s offering of improved scalability, and increasing privacy concerns from users, the industry will be primed for mass adoption of zk-trustless bridges in 2024. By 2025, zk-trustless bridges are set to become the default transport layer.

The Impact of Regulation

Sunny Lu, CEO at enterprise-grade, Layer 1 public blockchain VeChain:

Q: What are your expectations for the cryptocurrency landscape this year?

A: The entire crypto market is going through a major change. The impact regulation is having on the market is becoming more significant than the impact of the Bitcoin Halving. The attention of the entire crypto market is on [exchange-traded fund] ETF progress for Bitcoin spot, which I believe may be the biggest milestone in crypto’s history.

The ETF will open the door for the world’s biggest institutional investors to enter the crypto space. Major progress on the regulatory side, such as with MiCA in Europe, will also pave the way for the mass adoption of blockchain and crypto in the real world. I am quite excited about driving real-world value through blockchain.

Q: What were the biggest challenges the blockchain industry faced in 2023 and to what extent do you think they will be addressed in 2024?

A: The biggest challenges in 2023 were the lack of user-friendly interfaces, limiting accessibility, and generally negative perceptions about the blockchain industry, which has been an issue for many years.

In 2024, we’ll see the development and implementation of greater crypto regulation. Additionally, there will be an increase in use cases and applications with seamless interfaces and tangible value for everyday people, enabling the industry to onboard mainstream users, who in turn will have greater access to and utility for crypto and blockchain.

This year, we will also experience the development of enterprise use cases, mainly thanks to the major progress to be made on the regulation side and with MiCA coming into effect in Europe.

Clearer regulation will pave the way not only for institutional investors but for enterprises as well.

And I believe enterprise applications will fully embrace the utility of blockchain technology, enabling them to experience major “upgrades” and integrate tokens into their applications. I also believe onboarding enterprises to the Web3 sustainability ecosystem will draw the most attention and be the main driver of mass adoption.

Web3 Security

Sipan Vardanyan, CEO and Co-Founder of cybersecurity solutions provider Hexens:

Q: Do you think 2024 will be the year Web3 makes cybersecurity a top priority?

A: We’re convinced that the two biggest obstacles to the mass adoption of Web3 are inadequate regulatory oversight and critical cybersecurity shortcomings, which are deeply interconnected.

Securing decentralized technologies needs to be an absolute priority if investors are to operate in the space without the fear of financial devastation looming overhead. It’s not just about the money either. Inadequate security also negatively impacts the reputation of thousands of Web3 companies and conditions the global narrative around crypto as a specialized technology vulnerable to hacks and scams.

Like the famed gold rushes of the 19th and 20th centuries, the early birds are bound to be more prone to failure and fall victim to malicious practices. But risk is a necessary part of growth. A secure and regulated Web3 environment is the key to success here.

Q: What are the biggest threats from 2023 that will be a key area of focus in 2024?

A: Security vulnerabilities in Web2. In the complex world of information systems, security is as much about minimizing risks as it is about increasing the cost of exploiting its vulnerabilities. As the global Internet market moves towards new cybersecurity solutions for the Web3 domain, companies need to start allocating more funds towards reducing its attack surfaces while also spending more on protecting themselves from malicious practices in Web2, such as phishing and front-end hacking.

Q: What has been the biggest cybersecurity development that will help shape the industry in 2024?

A: As smart contracts have proven to revolutionize digital transactions, the strides that have been made in securing these and the continuing efforts to do so will be game-changing in the coming year.

Smart contracts play a crucial role in the development of the broader blockchain landscape, cutting out intermediaries and maximizing efficiencies.

Despite representing a pillar of the industry, they are also host to recurring vulnerabilities and require robust tools and systems to safeguard. Those in Web3 are also desperate for a scalable solution with unlimited growth potential that will bring cybersecurity in the domain up to standard.

Q: Which industry services or tools will take on more important roles in 2024?

A: Without a doubt, continuous security monitoring (CSM) tools. Security isn’t a static thing that can be addressed once and for all. It involves a steady process. Traditionally, a significant portion of the security budgets of companies operating in Web3 has been spent on smart contract audits, with CSM tools taking a bit of a back seat. This will need to change if the security landscape in Web3 is to become robust enough to incentivize the widespread adoption of this technology.

The other tools to look out for are value-based bug bounty platforms. A stark reality has emerged: the current market offerings are predominantly inefficient, operating primarily as financial intermediaries rather than as empowering tools for businesses and security researchers. This inefficiency represents a significant missed opportunity in an era where emerging technologies should be a driving force for empowerment and progress.