Author: MINA Protocol
2023 will be a landmark year for Zero-knowledge Proof.
In 2021, my predictions focus on ZK's recent rapid progress and its transformation from a development place to a developer-ready place.
In 2022, I focus on the macro trends (privacy and scale) that we should expect ZKPs to participate in Web3.
These predictions were originally published on The Defiant.
By 2023, I predict that ZK's potential impact on cryptography and cryptographic applications will become more concrete. We're already starting to see this in zkEVM. But zkEVM is just the tip of the iceberg of what is concretely possible with Zero-knowledge Proof.
As we approach 2023, we are already seeing the emergence of several new trends that highlight practical applications of zero knowledge. These are more specific than privacy and security, and demonstrate the integration of ZK's fundamental principles with the real world.
Fixing Computational Trust in Crypto
A grand challenge that cryptocurrencies have faced from the beginning has been: how can we achieve trusted computing at scale? This is one of the main reasons we started the MINA Protocol - building blockchains around this principle.
In the last cycle, we have seen how important extended computational trust still is in cryptocurrencies. It appears in two main places:
- The first is known for a while. When using chained applications at any practical scale, the constrained throughput makes transactions prohibitively expensive. One of the main ways to solve this problem is to develop zkEVM, which will make it very cheap to fully verify a large number of EVM transactions. I expect these projects to start sooner than people think, these projects to go deeper than people realize, and zkEVM companies scrambling to launch and establish themselves before people believe they will return to the high activity, high fee market. Case in point: Polygon intends to release a Beta zkEVM this spring, while Matter Labs’ solution, zkSync, opened Mainnet for deployment this winter.
- The second is bridging. Insecure bridging was also one of the prevalent themes in the last cycle. If the risk tolerance is high, connecting chains using multisig is fine - but ideally we should have some secure, verifiable way of connecting multiple chains together. ZKPs are also starting to be applied here, zkBridging. The first public operation may be =nil; Foundation's zkBridge, which connects MINA and Ethereum. But hopefully others will follow, as Crypto is poised to create trusted, secure connections between all L1s in Crypto.
- The third one that is not yet there (but we think it is important and has been preparing) is to provide a decentralized wallet client. At the tail end of the last bull market, we started to see more privacy and censorship risks from centralized providers like MetaMask, which collects IPs, and Infura, which blocks apps and geolocation.
This can all be solved if everyone runs a full node; while usually the computational and logical costs of doing so are too high for users to afford, recursive ZKPs for efficient verification lead to an elegant solution that That is the solution we provide at MINA .
I expect all of this (except decentralized wallet clients) to happen soon. Projects working on zkEVM and ZK bridges have been established and funded for quite some time, several of them more than a year old, and many have started beta releases. 2023 could see them launch and take over due to their superior trust properties.
I predict that during the next bull market, the demand for trustless full nodes may start. The disadvantages of relying on centralized wallets and data providers are becoming more and more obvious, making the need for secure and decentralized node solutions more and more obvious and urgent.
Financial use cases for cryptocurrencies are getting serious
Another trend expected this cycle is that cryptocurrencies are increasingly ready to participate in traditional finance. Many powerful players are working towards this goal and they will need verifiability and privacy to make it happen. Many of these will likely be built using ZKPs as one of the best solutions to achieve the desired functionality.
These are starting to show up in KYC, private transactions, and private voting. Traditional financial institutions seek a compliance environment that protects privacy. As these existing financial players move closer to cryptocurrencies for their interoperability and efficiency, they will want to interact with these protocols in a way that respects their traditional way of working. This means technologies like zkKYC, private, scalable Order-book, and private voting for key on-chain decisions are needed to create a regulatory-compliant environment.
This set of use cases also has tight synergy and improves computing trust. For example, secure bridging is one area where improvements can increase certainty for financial institutions. Apparently, with $3.1B stolen from bridge hacks last year, it was necessary.
All of these unlocks collectively bring existing players and substantial Liquidity into the cryptocurrency, cementing its position as the new backbone of global finance.
I hope to see this set of use cases and features change during this bear market. While waves of computing trust companies have all been funded in previous years and are now being released, the wave of serious financial use case features is likely to come from companies funded in the previous cycle and are now being funded. So, as these services come online, as these new features exist, as the credibility of cryptocurrencies increases, and financial institutions begin to gradually increase their participation, I expect slow and steady progress.
Building more user-aligned platforms using privacy and zkIdentity
The last place I would like ZK to see more usage is in building better trustless, user-owned platforms.
There is a huge disconnect between the centralized nature of monolithic platform companies and the users they intend to serve. Most of the time, platforms work as expected - but we're increasingly seeing platforms breaking down with increasing frequency due to a lack of internal alignment with users.
Just last year we had a huge instance in crypto and one that didn't. Of course, one of them is FTX. We all know that centralized exchanges are risky. The scale at which FTX leverages its users is said to be unprecedented.
Outside of cryptocurrencies, we have one outcome that remains a question mark, while the risk of platform failure remains clearly increased: the acquisition of Twitter by single stakeholder Elon Musk. It's unclear where that's headed -- changing a system can sometimes have positive results -- but it's clear that it risks undermining the value and user interest Twitter has created so far. Due to the risk, this takes it out of user alignment even if the experimental results are not yet known.
Other examples, such as Facebook's amplification algorithm optimizing profits for social good, help fill in the picture.
The power and risks of a single digital platform will only increase. We increasingly live digitally and rely on digital platforms to organize and engage in our lives. This growing usage only increases the need for these platforms to be reliable and consistent with our users.
This points us in the direction of decentralized systems based on cryptocurrencies as a way of enabling alternative platforms. However, previously, decentralized systems were unable to achieve large-scale verifiable computation or user privacy. Zero-knowledge Proof change this and provide the missing functionality needed to build a decentralized platform.
However, when this will happen is the question. On the one hand, it seems logical that these decentralized systems will only have a real chance of gaining market share and be worth pursuing if they are disruptive, and we are not quite there yet.
On the other hand, the rate at which platform power accumulates will only increase, leading to further failures and apparent dislocations, making public awareness that user-owned platform disruption more feasible.
AI may further accelerate this process. AI systems in particular are subject to centralized control due to the high cost of training the most impactful models and the organizational requirements to build and deploy them.
Further advances in artificial intelligence will increase the need for alignment platforms as their ability to profit from existing dislocations within existing platforms comes into play, and the centralized control of powerful artificial intelligence systems themselves becomes questionable. The increased need for decentralized systems that respect user privacy and provide verifiable computation appear to be increasingly useful in this upcoming environment.
Use Cases and Trust
One of the common themes that people should notice; it's not just about privacy and security, it's about using those things to improve trust. This should make sense in the context of cryptocurrencies. Perhaps the main added value of blockchain is the trust machine. ZKPs, given their trusted computing capabilities, could complement this well, and would go a long way towards cryptocurrencies succeeding in this possibility.
what's next
If these are trends, what's next for protocols like MINA ? These applications are all very exciting and made possible by new technologies. This means our goal must be...
Our direction is to continue to support developers with the best tools - we believe we have on SnarkyJS - to increase protocol capabilities for effective funding and decision making (like we are doing with zkIgnite Cohort 1 and MINA improvement proposals) - And continue to support improvements to the core protocol.
in conclusion
I'm excited to see how these predictions bear out in the months and years to come, and how the Mina Foundation can provide support.
The one question I'm left with unanswered is: How does this all get into the real world, into real people? And not just indirectly through finance, but directly. This seems most likely to happen via a platform outage, if at all possible. This seems increasingly feasible as the existing platform misalignment becomes more apparent. But what can we do to support these things?
One request I have is that if you have any comments on this or have seen good research on this, I'd like to hear from you. I think this is one of the biggest opportunities for MINA, cryptocurrencies, and ZKPs to have a positive impact on ordinary people, and I'm curious to see how I and our foundation can support it. So if you have any clues, reach out on Telegram or Twitter! I'd love to hear your thoughts.
