Polkadot Strategic Report: Token Application Scenarios Are Lacking, Data Metrics Growth Has Stagnated, How to Break the Impasse?

Introduction

Hello to all the friends concerned about Polkadot, we are the Polkadot Ecosystem Research Institute. We are a team focused on researching Polkadot and the development opportunities and prospects within the Polkadot ecosystem, and we have consecutively received support from the Polkadot treasury six times.

As a team that has been researching Polkadot for nearly five years, we have heard increasingly more voices of despair within the community regarding Polkadot recently, with many seeing no hope and even leaving the Polkadot ecosystem, which is something we do not wish to see. With the recent launch of OpenGov on Polkadot, we see that governance rights are increasingly being transferred to the community, and we can become a driving force for Polkadot's development. Therefore, we have decided to shift from a previously passive research role to an actively participating role. This article is a Polkadot growth strategic planning report that we believe outlines how Polkadot should rise, and many of the viewpoints are the results of our years of research.

This article will directly refer to the market rather than just technology and ideals. We are directly facing the most real issues and proposing ideas and suggestions for improvement. Of course, we also see many teams actively proposing solutions to some of the current problems of Polkadot in official forums and communities. However, these solutions are often singularly focused on a specific issue and do not address the problems comprehensively from a broader perspective or solve multiple problems uniformly under a strategic thought system.

We welcome everyone to point out the shortcomings in this article, and we also welcome any constructive feedback. Please provide practical suggestions for improvement. Our only hope is to make Polkadot better, so let's work together.

The Current Status of Polkadot

In the past six months, Polkadot has made significant progress, successfully achieving two important milestones outlined in the Roadmap. Among them, the launch of OpenGov introduced an advanced governance model, providing community members with broader participation and decision-making power; the release of XCM V3 improved the messaging format, enhancing the functionality and interoperability of Polkadot, laying a solid foundation for future development.

The infrastructure construction of the Polkadot network remains strong, and the level of developer activity has significantly risen, currently ranking first among public chains, with the total number of developers also rising to second place. This signifies that the number of developers attracted by Polkadot is continuously increasing, and their contributions to its technical ecosystem are also on the rise.

However, despite achieving remarkable progress, Polkadot still faces some difficulties. The price trend of the DOT Token is unstable, with significant fluctuations, which may bring certain uncertainties to investors and ecosystem builders. At the same time, user activity has declined, the development of ecosystem projects is sluggish, and there are some urgent governance issues in the treasury that need to be addressed.

Overall, Polkadot is on a path of continuous innovation, but it has also faced challenges.

1. Technical Update Status

Polkadot has been dedicated to continuously improving its technology and functionality. In the first half of this year, Polkadot has implemented two significant technical updates, releasing OpenGov and XCM V3 on June 15. Currently, Polkadot announces that it has officially completed version 1.0, and at the end of June during Polkadot Decoded 2023, Dr. Gavin presented Polkadot's vision for 2.0.

OpenGov: The new governance model introduced by Polkadot achieves decentralization through community voting and checks and balances of power, adopting a structured implementation lifecycle. The Technical Fellowship has replaced the old technical committee and serves as the developer DAO.

XCM V3: As the latest version of the cross-consensus messaging format, XCM has been launched for applications through governance on Kusama. The release of XCM V3 brings innovative designs that support features such as external network bridging, NFT transfers, and asset locking.

With the full delivery of Polkadot 1.0, Polkadot will enter a new stage of development. Polkadot 2.0 is a multi-core computer that will shift from a chain-centric to an application-centric approach, introducing several new concepts and technologies.

• Accord( Agreement): A voluntary treaty across multiple chains, whereby chains voluntarily comply with the treaty and ensure its faithful execution. In the process of achieving Accord, Polkadot introduced two key technologies: SPREE and Project CAPI.
• SPREE Technology: Runtime logic segments based on relay chains, acting like a secure tunnel, ensure that information and value can be safely transmitted between different parallel chains.
• Project CAPI: A middleware project aimed at promoting the development of decentralized applications based on Polkadot (DApp). It provides developers with a lightweight client solution, enabling them to create cross-chain applications with a good user interface.

In the vision of Polkadot 2.0, Polkadot reiterates its commitment to building a resilient (Resilience) application platform. Polkadot will focus on constructing a ZK primitive library, and currently, the first library is nearing completion, which will provide privacy protection for on-chain collective (Fellowship). Polkadot will also invest in updates for various technologies including Hermit Relay, Smoldot lightweight clients, Sassafras consensus, and Internode Mixnet.

In addition, technologies such as parallel threads developed by Parity, system parallel chains, and asynchronous support are also being fully supported and await implementation.

2. On-chain situation

As of the writing of this article, according to Messari's report on Polkadot for the second quarter of 2023, Polkadot's on-chain progress has experienced some ups and downs. Below is a brief overview of Polkadot's on-chain situation for the second quarter.

Development Activity Status:

• The developer engagement of Polkadot and Kusama has maintained a good upward trend, reaching peak active developers of 613.71 on May 28 and 600.29 on June 16.
• The number of core active developers reached a historical high of 181 on March 22 and has remained relatively stable.
• Polkadot has the highest number of submissions in terms of protocols and ecosystems, and ranks first in the number of active developers.

User activity and financial status:

• The daily active accounts of Polkadot in the second quarter decreased from 6,290 in the first quarter to the current 5,810.
• Polkadot revenue in the second quarter fell from over $120,000 to nearly $81,000.

Parachain lock-up value ( TVL ):

• In the Polkadot ecosystem, the top 6 parachains focused on DeFi, namely Moonbeam, Astar, Parallel, Acala, Moonriver, and Karura, dominate.
• The total locked value of the parachain experienced a downward trend after a rise in the second quarter, decreasing from a peak of $236.12 million on April 14 to $146.77 million on June 30.

DOT staking rate and return rate:

• The staking rate of DOT in the second quarter of 2023 was 46%, below the ideal staking rate.
• The current return rate is approximately 9%, but it varies with changes in the staking rate.

3. Developer Situation

According to data released by Electric Capital, in the first half of 2023, Polkadot has a large developer base in the industry. As of September 17, Polkadot currently has 645 full-time developers, ranking second in terms of full-time developer numbers; the total number of developers is 1,923, rising from third place to second, and maintaining a relatively stable ratio compared to last year, with full-time developers accounting for about 33.54% of the total. This data indicates that the developer community of Polkadot is continuously expanding and plays an important role in the development of the Polkadot ecosystem.

4. Ecological Situation

The Polkadot ecosystem is a rapidly developing and diverse blockchain ecosystem aimed at providing cross-chain interoperability and innovative solutions.

According to PolkaProject statistics, there are currently 580 ecological applications related to Polkadot, including DeFi, infrastructure, NFTs, browsers, wallets, forums, etc., developed based on Substrate.

On June 15, the launch of XCM V3 attracted widespread attention, providing advanced programmability, bridging capabilities with external networks, cross-chain locking, improved fee payment mechanisms, and support for non-fungible tokens (NFT). In terms of the total value locked (TVL) in parachain, Moonbeam and Nodle are the two projects with the highest number of active accounts, with Moonbeam consistently leading in TVL, while the TVL of parachains such as Acala, Astar, and Parallel also remains at a high level.

Slot auctions are the process of allocating access to the relay chain, with the winners gaining the right to operate a parachain. Additionally, the Polkadot ecosystem projects are attracting increasing attention and collaboration, with significant progress made by projects such as Mythical Games, Kilt, Frequency, Composable Finance, and Aventus Network.

Overall, the Polkadot ecosystem is continuously growing and developing, the Roadmap is progressing smoothly, and several key projects have been successfully implemented.

5, Market Capitalization

As of the current date ( October 11, ), the market capitalization of Polkadot is approximately $3.375 billion, ranking 14 in the Crypto market. In the past few months, it has shown a downward trend, with prices remaining relatively stable from early May to mid-June. Overall, the price of DOT has decreased by 31.87% in recent months.

Polkadot and Cosmos are both dedicated to solving the problem of cross-chain communication, but they have taken different technical routes. Compared to Cosmos, the price of ATOM is currently in a relatively low state, having fallen about 27.42% so far this year, except for a brief recovery in June. However, overall, the market capitalization of Cosmos has declined, currently standing at approximately $2.598 billion.

The migration of stablecoins to Layer 2 solutions has become a major highlight of 2023, such as Optimism. OP is one of the best-performing crypto projects of 2023, with a rise of up to 227% at the beginning of the year, and Optimism now has a market capitalization of approximately 1 billion USD.

Arbitrum(ARB) is another highly regarded Layer 2 solution, with a trading volume exceeding 1.7 billion dollars and a current market capitalization of 1 billion dollars.

( 6. Social Media Situation

The official media of Polkadot currently mainly includes the Polkadot official website, the Kusama network, Polkadot's Twitter, Web3 Foundation's Twitter, Reddit, YouTube, and other channels. The official website provides detailed information about the Polkadot project, including technical documents, news updates, community governance, ecosystem development, and other aspects; social media platforms such as Twitter, Reddit, and Medium are used to publish the latest Polkadot updates and important events, communicate with the community, and expand influence; YouTube provides video resources such as speeches by the Polkadot team, technical sharing, and community activities, helping users better understand the Polkadot ecosystem.

In addition, there are discussions about technology and the future of Polkadot on platforms such as the Polkadot Forum, Polkadot GitHub, and the Polkadot Support Knowledgebase ), which provides tutorial support and assistance for Polkadot. Overall, Polkadot's official social media presence is quite rich, offering users various forms of participation and communication, which is very important for strengthening community consensus and expanding influence.

7. Treasury Governance Situation

OpenGov is a new governance system introduced by Polkadot, which went live on the Kusama network in November 2022. It has significant advantages in improving governance efficiency and promoting community participation. However,