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Upcoming DeFi Smart Contract Development Trends (From ZKPs to Oracle Integration)
Vishaal
October 21, 2023
Last updated: October 30, 2023
Table of Contents
Blockchain has been one of the biggest technological forces for the past few years. It has the potential to entirely transform the way we use the internet and how transactions take place online. Although we are witnessing cryptocurrencies getting adopted worldwide and an increase in the overall market value.
During this phase, we are also witnessing the growth of DeFi smart contract development trends and it is expected to revolutionize the finance industry. In this blog, let us take a look at the trends of 2024 with regards to DeFi smart contracts.
Zero Knowledge Proof based privacy solutions (ZKP)
ZKP-based privacy solutions on the blockchain are cryptographic techniques that allow users to prove something without revealing sensitive information. They have many potential applications, such as privacy-preserving authentication, secure voting, and data sharing. ZKPs can also enhance privacy, reduce fraud, and increase scalability on blockchain networks.
To understand this better, let us assume a real-world scenario where ZKP can be used is voting. When you vote in a traditional election, your identity card is typically linked to your vote. This means that anyone can see how you voted, which could lead to voter intimidation or coercion. ZKP can be used to create a privacy-preserving voting system. In this system, you would use this method to prove that you are eligible to vote without revealing your identity. And, you can cast your vote correctly without revealing who you voted for which would be a game changer.
ZKPs are still under development, however, they have the potential to revolutionize the way we interact with blockchains.
Bitcoin-based smart contracts
Bitcoin-based smart contracts are automated agreements that use Bitcoin’s blockchain to execute transactions. They have many potential applications, such as Pay-to-Public-Key (P2PK) multisig, time-locked transactions, and more. However, they also face some challenges, such as the limitations of Bitcoin’s programming language and the high cost of Bitcoin transactions.
BSV, Trust Machines, Rootstock, and Liquid are some of the organizations that are working on Bitcoin-based smart contracts more scalable, affordable, and accessible. BSV is a forked blockchain from Bitcoin that has a larger block size and lower transaction fees making it more feasible to run smart contracts. Trust Machines is a developing platform that allows developers to create and deploy smart contracts on Bitcoin without having to learn a new programming language. Rootstock is a sidechain to Bitcoin that enables smart contracts and other features that are not possible on the main Bitcoin blockchain. Liquid is a network that provides faster and cheaper Bitcoin transactions. It is also supported by many organizations which makes it a strong ecosystem and ideal for running defi smart contracts.
Blockchain validators as a service (BaaS)
BaaS is a cloud computing service that allows businesses to delegate the validation of their blockchain transactions to a third-party provider. This can help businesses to save time and money and to improve the security and scalability of their blockchain networks. BaaS can be used in various real-world scenarios, such as supply chain management, financial services, and more.
However, BaaS also has some challenges, such as trusting the BaaS provider and setting up the BaaS solution. Nonetheless, the future of BaaS is promising, as the technology becomes more accessible and affordable.
Oracle integration with real-world data
Oracle is an essential component in DeFi smart contract development as they are the ones that connect smart contracts with real-world data. Oracle has proved to be an essential addition to smart contracts as it helps to overcome the challenges that exist in accessing real-world data. Since they act as a bridge between the contracts and the data sources, we can expect a significant increase in their usage.
Although it is not an easy task, incorporating blockchain can help with cost efficiency and accelerate operations. It can also open up new avenues for people to tap into, paving the way for more monetary opportunities. Furthermore, this data can then be fed into an AI model to identify customer trends, predict customer needs, and personalize marketing campaigns. This can help to improve customer satisfaction and increase sales.
Conclusion
The smart contract development trends have been growing rapidly and it keeps opening up new avenues for blockchain use-cases in various industries. They are at the forefront of innovation and have the potential to revolutionize the market. As a result of its growing popularity, it could become a significant part of the modern economy.
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