Current Development Status and Future Strategic Report of Polkadot

Introduction

Hello to all friends who are concerned about Polkadot. We are a team focused on researching Polkadot and its ecological development opportunities and prospects, and we have received support from the Polkadot treasury six times in a row.

As a team that has been researching Polkadot for the past five years, we have heard an increasing number of voices in the community expressing disillusionment with Polkadot. Many people see no hope and have even left the ecosystem, which is something we do not want to see. With the launch of OpenGov for Polkadot, we see governance power increasingly being handed over to the community, and we can become a driving force for the development of Polkadot. Therefore, we have decided to shift from a previously passive research role to an active participation role. This article is a growth strategy planning report that we believe outlines how Polkadot should grow, and many of the viewpoints within it are the results of our years of research.

This article will address the market directly rather than merely discussing technology and ideals. We confront the most real issues and propose improvement ideas and suggestions. Of course, we also see many teams actively proposing solutions to some of Polkadot's current issues in official forums and communities. However, these solutions are often aimed at a single issue and do not comprehensively address the problems from a broader perspective, or resolve multiple issues uniformly under a strategic thought framework.

We welcome everyone to point out the shortcomings of this article and also encourage practical modification suggestions. 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 in its 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 Polkadot's functionality and interoperability, laying a solid foundation for future development.

The infrastructure construction of the Polkadot network remains strong, with a significant increase in developer activity levels, currently ranking first among public chains, and the total number of developers has also risen to second place. This signifies a continuous growth in the number of developers attracted to Polkadot, and their contributions to its technical ecosystem are also increasing.

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

Overall, while Polkadot is on a continuous path of innovation, it has also been facing challenges.

1. Technical Update Status

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

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

XCM V3: As the latest version of the cross-consensus message format, XCM has been initiated for application through governance on Kusama. The release of XCM V3 brings innovative designs that support 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 brand new concepts and technologies.

• Accord( Agreement): A voluntary treaty across multiple chains, where chains voluntarily comply with the treaty and ensure its faithful execution. In the process of realizing Accord, Polkadot introduced two key technologies: SPREE and Project CAPI.
• SPREE Technology: Runtime logic fragments based on relay chains, acting like a secure tunnel, ensuring 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 light client solution, enabling them to create cross-chain applications with a good user interface.

In the vision of Polkadot 2.0, Polkadot reaffirms its commitment to building a resilient application platform (Resilience). Polkadot will work on constructing a ZK primitive library, and the first library is about to be completed, which will provide privacy protection for on-chain collective (Fellowship). Polkadot will also invest in updates for various technologies such as Hermit Relay, Smoldot light client, 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 are yet to be implemented.

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 peaks of 613.71 and 600.29 active developers on May 28 and June 16, respectively.
• 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 contributions in terms of protocols and ecosystems, as well as the most active developers, ranking first.

User Activity and Financial Status:

• The daily active accounts for 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.

Cross-chain lockup value ( TVL ):

• In the Polkadot ecosystem, the top 6 parachains focused on DeFi are Moonbeam, Astar, Parallel, Acala, Moonriver, and Karura.
• The total locked value of parallel chains experienced a decline after a period of increase in the second quarter, dropping 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%, which is 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 the number of full-time developers; the total number of developers is 1,923, rising from third to second place, and has maintained a relatively stable proportion compared to last year, with full-time developers accounting for about 33.54% of the total. This data indicates that Polkadot's developer community 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 15th, the launch of XCM V3 attracted widespread attention, offering advanced programmability, bridging capabilities with external networks, cross-chain locking, an improved fee payment mechanism, and support for non-fungible tokens (NFT). On the parallel chain lock-up value (TVL), Moonbeam and Nodle are the two projects with the highest number of active accounts, with Moonbeam consistently being the leader in TVL, while the TVL of parallel chains like 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 permission to operate on the parachains. Additionally, the Polkadot ecosystem projects are attracting increasing attention and collaboration, with significant progress made by entities 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 Status

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

Both Polkadot and Cosmos are committed to solving the issue of cross-chain communication, but they have taken different technical approaches. Compared to Cosmos, the price of ATOM is currently at a relatively low level, having dropped about 27.42% year-to-date, ( with a brief rebound 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 an increase of up to 227% at the beginning of the year, and Optimism now has a market cap of approximately 1 billion USD.

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

6. Social Media Situation

The official media of Polkadot currently mainly includes the Polkadot official website, the Kusama network, Polkadot Twitter, Web3 Foundation 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, facilitate communication within the community, and expand influence; YouTube provides video resources of speeches, technical sharing, community activities, and more from the Polkadot team, 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 and Polkadot GitHub, as well as the Polkadot Support Knowledgebase (, which provides tutorials and support 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.

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) 7. Treasury Governance Situation

OpenGov is a new type of governance system introduced by Polkadot, launched on the Kusama network in November 2022. It has significant advantages in improving governance efficiency and promoting community participation. However, OpenGov also faces some challenges, such as uneven voting rates and rapid treasury expenditures.

Efficient governance handling: Compared to the original governance system Gov1, OpenGov has improved the operational efficiency of the governance system, allowing for parallel processing of referendums.