A few of the things we’re excited about in crypto (2023)

Michael BlauJoseph BonneauNoah CitronValeria NikolaenkoCarra WuGuy WuolletMichael Zhu

Editor’s note: a16z just released an omnibus list of  “big ideas” tech builders may tackle in the year ahead, according to various a16z domain partners spotlighting a big idea that startups in their fields may tackle in 2023. The list spans everything from consumer tech and games to enterprise and American Dynamism to enterprise and AI to fintech and of course, crypto. Below is a shortlist of just some of the things that excite partners across the engineering, research, and investing teams about what’s ahead. For more trend updates, resources, and reports (including our annual State of Crypto), please be sure to subscribe to our newsletter.

Blockchain’s Mobile Moment

How far or close are we to the “mobile moment” for crypto? There is a large group of blockchain users and others whose main access to the internet is through their smartphones, but which relies on centralized infrastructure — which is convenient, but also risky. Users have traditionally solved this problem by running their own nodes — a time- and resource-intensive endeavor that, at the very least, requires a constantly-online machine, hundreds of gigabytes of storage, and around a day to sync from scratch… not to mention special skills.

But more people are now starting to care about decentralizing access to blockchains for all users — even those who cannot run a node themselves. With the introduction 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’m hoping to see similar trust and decentralization improvements in other parts of the stack, such as event indexing and user data storage. Taken together, all of these can help achieve true decentralization for mobile frontends.

—Noah Citron, engineering partner, crypto team (@noahcitron@ncitron on Farcaster)

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

Zero knowledge systems are powerful, foundational technologies that hold the keys to blockchain scalability, privacy-preserving applications, and much more. But there are a lot of tradeoffs between prover efficiency, proof succinctness, and the need for a trusted setup. It would be fantastic to see more constructions for zk-proofs that fill the gaps in the multidimensional space of these tradeoffs. For me, it would be most interesting to see whether trusted setups are required for constant-size proofs (and constant-time verification), which would further justify the need for more transparent trusted setup ceremonies.

We also need better constructions for threshold ECDSA (elliptic curve digital signature algorithm) signatures. Attaining thresholds removes the need to trust a single signer, which is why threshold signatures are important for multi-party, distributed computation on private data and have several applications in web3. The most interesting threshold ECDSA signatures would be those that minimize the overall number of rounds — including the pre-signing rounds where the message is not known yet. Finally: As new post-quantum signatures near the end of standardization, per NIST, it would be great to explore which of these could be made friendly to aggregation or thresholdization.

—Valeria Nikolaenko, research partner, crypto team (@lera_banda)

Developer Onboarding for Zero Knowledge

Zero knowledge systems have been a long time coming. In recent years, they moved from theory to practice, but in 2022 it felt like we turned the corner on developer onboarding for ZK. Specifically, we saw the proliferation of educational materials and the maturation of high-level programming languages (such as Noir and Leo) that made it easier than ever for engineers to start writing ZK applications. I expect these developments, along with continued theoretical advances, will lead to an influx of application developers, given how significant zero knowledge is to so many use cases. Putting things into the hands of developers often leads to unexpected new use cases; I’m excited to see what comes next.

—Michael Zhu, engineering partner, crypto team (@moodlezoup)

VDF Hardware

Verifiable Delay Functions (VDFs) are an exciting cryptographic tool with many applications, from verifiable lotteries to leader election to preventing front-running. But the biggest catch has long been hardware implementations, which are needed to have confidence that attackers can’t compute the VDF faster. I’m excited for the first generation of VDF hardware to be available, paving the way for practical deployment.

—Joseph Bonneau, research partner, crypto team (@josephbonneau)

Fully On-Chain Games and Autonomous Worlds

What if you could create a game world that could not be taken down or censored, had no need for servers, and could live far beyond any of our individual (or even organizational) lifetimes? For the first time ever, we can. We are at the very beginning of crypto-native, fully “on-chain games,” or — as others prefer to call its superset — “autonomous worlds,” built on top of blockchain technology.

Whatever you call it (and the lexicon is still forming!), the nascent movement toward maximally decentralized games offers new affordances that make it possible to actually build these games online. Specifically, the ability to put a game’s entire state and logic on a publicly verifiable, censorship-resistant, and decentralized blockchain… as well as advances in on-chain procedural generation, which not only overcome constraints like storage, but are essentially “a trick to compress a complex world into an executable.” What new games, and gameplay, become possible that were never possible before? Are such games still… games?

—Carra Wu, investing partner, crypto team (@carrawu@carra on Farcaster)

Non-Transferable Tokens

I much prefer the term “non-transferable tokens” over “soulbound” tokens (a term borrowed from gaming by Vitalik Buterin for NFTs); these tokens are for cases where it doesn’t make sense to transfer NFTs. I’m excited to see the various web3 applications that will be built on top of not just this primitive, but also with decentralized identifiers and verifiable credentials. While the discussion of these primitives usually revolves around decentralized identity, there are many other applications to be explored as well: For instance, tickets, digital <> physical, reputation… and much more ahead.

—Michael Blau, investing partner, crypto team (@blauyourmind, @michaelblau on Farcaster)

Decentralized Energy

How can we apply the decentralization ethos to energy? For instance, power grids are dated, centralized, and face several other issues like high upfront capital expenditures and misaligned incentives. There are great opportunities to build microgrids and storage and transmissions networks, by solving issues such as high capital expenditures and disparate incentives solved through tokens. There are also burgeoning markets for renewable energy certificates (REC), and carbon credits on-chain. I’m excited to see builders continue to expand what’s possible in this category of decentralized energy coordinated by blockchains.

—Guy Wuollet, investing partner, crypto team (@guywuolletjr@guy on Farcaster)

Editor: Sonal Chokshi

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