As Jeff Bezos says, “Innovation moves at the speed of imagination, and in today’s world, that speed is faster than ever.”

As self-learning AI becomes more prevalent and automation speeds up, many believe that the technological singularity is much closer than we anticipated. Unlike the earlier eras of technology, this new era—marked by AI, Internet of Things, and quantum computers—seeks to further amplify the pace of innovation, and also can create confusion with everything that is going on.

As Daniel Rutishauser Partner, Head Web3 Solutions from Inacta Ventures says,

“Frequently, I overhear people remarking, “Yet another blockchain,” when they encounter a new Layer-1 or Layer-2 Blockchain protocol. It is understandable that some may start to feel overwhelmed by the sheer number of blockchain protocols.”

Brand new blockchain protocols are tackling practical issues that were once thought impossible to solve. After a long wait, governments and regulatory bodies worldwide recognised the importance of the blockchain technology, they started establishing frameworks to accelerate mass level adoption of blockchain.

As we watch blockchain technology evolve and mature, it points to a need for a dynamic resource of information which synthesises what is happening to make sense of it all.

This led UAE
UAE
Crypto Oasis and DLT Science Foundation in collaboration with the Swiss Crypto Valley Association to analyse the blockchain sector and launch the Global Protocol Report.

The report analyses 50 blockchains and how they perform and compare with each other.

By geography, the United States and Switzerland host 15 and 10 of the top protocols respectively. When looking at market capitalisation, 68.6% of value sits in Switzerland. This statistic underscores Switzerland’s pivotal role in the cryptocurrency world and highlights its status as a global leader in blockchain technology.

The diverse range of protocol categories deserves attention, with Smart Contract & dApps Platforms taking the lead in 2023, featuring a total of 30 protocols. This emphasis on decentralised applications reinforces the industry’s focus on creating solutions innovates beyond traditional centralised systems.

Scalability has long been a persistent challenge for blockchain technology. To address this concern, the top 50 protocols showcase a recognition of the need for scalable solutions through layered architecture, sharding innovations and third generation protocols.

The report reveals that of the top protocols, 42 are Layer 1s and 8 are Layer 2s. Sharding, a method that enables parallel transaction processing, is implemented in eight of the 42 protocols. These interventions attend to scale, but present other challenges.

One widely recognised challenge in blockchain technology is the blockchain trilemma, which refers to the perceived difficulty of simultaneously achieving scalability whilst maintaining decentralisation and security.

The report acknowledges this trilemma and highlights the prevalence of Proof-of-Stake (PoS) as a consensus mechanism for better energy efficiency, which represents about half of the protocols analysed.

Unlike Proof-of-Work, Proof-of-Stake consensus mechanisms are favoured for high energy efficiency and better decentralisation due to the low entry barrier and no need for energy intensive hardware capabilities.

Layer 2s are one way of solving scalability challenges but third-generation PoS protocols are another way to achieve scalability whilst maintaining decentralisation.

Blockchain technology finds versatile use cases in NFT
NFT
marketplaces, decentralised social media platforms, data management and cloud storage, decentralised exchanges, and smart energy grids, showcasing its transformative impact across various industries.

Regulatory frameworks are seen to play an important role in the maturation of any industry, and the blockchain sector is no exception. The European Union’s introduction of the Markets in Crypto-Assets Regulation (MiCA) sets a precedent for global crypto regulations. This development signifies industry maturation and provides a regulatory blueprint that other jurisdictions around the world may draw upon.

To sum up, the Global Protocol Report 2024 encapsulates a key principle: in the face of technological complexities, the industry’s commitment to adaptability and collaborative innovation is the driving force.

This principle underscores a transformative journey towards a decentralised and progressive future, shaping the evolution of blockchain technology.