Polkadot Development Strategy Report

Introduction

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

As a long-term research team focused on Polkadot, we have been hearing more and more voices of disappointment in the community, with many people seeing no hope and even leaving the Polkadot ecosystem, which is something we do not want to see. Recently, with the launch of OpenGov on Polkadot, we see that governance rights are increasingly being handed over to the community, and we can become a force to promote the development of Polkadot. Therefore, we decided to change our role from passive researchers to active participants. This article is a Polkadot growth strategy planning report that we believe outlines how Polkadot should grow, with many viewpoints being the result of our years of research.

This article will directly address the market rather than just technology and ideals. We face the most real issues head-on and put forward ideas and suggestions for improvement. Of course, we also see that many teams are actively proposing solutions to some of Polkadot's current issues in the official forums and communities. However, these solutions often target a single issue without addressing it from a more holistic perspective or solving multiple problems uniformly under a strategic framework.

We welcome everyone to point out the shortcomings in this article, and we also welcome any constructive feedback. We hope to receive 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 in its Roadmap. 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 of the Polkadot network remains strong, and the level of developer activity has significantly increased, currently ranking first among public chains, with the total number of developers rising to second place. This signifies that the number of developers attracted by Polkadot is continuously growing, and their contributions to its technological ecosystem are also increasing.

However, despite significant progress, Polkadot still faces some challenges. The price of DOT is volatile and subject to considerable fluctuations, which may bring a certain level of uncertainty to investors and ecosystem builders. At the same time, user activity is declining, 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 path of constant progress filled with innovation, it has also faced challenges.

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 has officially completed version 1.0, and at the end of June during Polkadot Decoded 2023, Dr. Gavin presented the vision for Polkadot 2.0.

OpenGov: A new governance model introduced by Polkadot that 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, it has been initiated for application through governance on Kusama. The release of XCM V3 brings innovative designs, supporting functions 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 being chain-centered to being application-centered, introducing several brand new concepts and technologies.

• Accord: A voluntary treaty across multiple chains, which means that the chains will voluntarily adhere to the treaty and ensure its faithful execution. In the process of achieving Accord, Polkadot has introduced two key technologies: SPREE and Project CAPI.
• SPREE Technology: Runtime logic fragments based on relay chains, functioning 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 (DApps) based on Polkadot. It provides developers with a lightweight client solution that enables 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 application platform. Polkadot will focus on constructing a ZK primitive library, with the first library nearing completion, which will provide privacy protection for on-chain fellowship. Polkadot will also invest in updates for several technologies, including Hermit Relay, Smoldot light 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 are pending implementation.

On-chain status

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. Here is a brief overview of the on-chain situation of Polkadot in the second quarter:

Development activity status:

• The developer participation of Polkadot and Kusama has maintained a good upward trend, reaching peak active developers of 613.71 and 600.29 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 submissions in terms of protocols and ecosystems, as well as the highest number of active developers, ranking first.

User activity and financial status:

• The number of 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.

Total Value Locked (TVL) in Parachain:

• In the Polkadot ecosystem, the top 6 parachains focused on DeFi are dominated by Moonbeam, Astar, Parallel, Acala, Moonriver, and Karura.
• The total locked value of the parallel chain 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 is 46%, lower than the ideal staking rate.
• The current return rate is approximately 9%, but it varies with changes in the staking rate.

Developer Information

According to data released by Electric Capital, Polkadot has a large developer base in the industry in the first half of 2023. 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 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.

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, offering advanced programmability, bridging capabilities with external networks, cross-chain locking, improved fee payment mechanisms, and support for non-fungible tokens (NFTs). In terms of total value locked (TVL) in parachains, Moonbeam and Nodle are the two projects with the most active accounts, with Moonbeam consistently being the leader in TVL, while the TVL of other 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, projects within the Polkadot ecosystem 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 constantly growing and developing, the Roadmap is progressing smoothly, and several key projects have been successfully implemented.

Market Capitalization Situation

As of the current date (October 11), Polkadot's market capitalization is approximately $3.375 billion, ranking 14th in the cryptocurrency market. It has shown a downward trend over the past few months, with prices remaining 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 problem 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% so far this year (with a brief rebound in June). However, overall, the market capitalization of Cosmos has decreased, 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 capitalization of approximately 1 billion USD.

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

social media situation

The official media of Polkadot mainly includes the Polkadot official website, Kusama network, Polkadot Twitter, Web3 Foundation Twitter, Reddit, YouTube, and other channels. The official website provides detailed information about the Polkadot project, including technical documentation, news updates, community governance, and ecosystem development; social media platforms like Twitter, Reddit, and Medium are used to publish the latest Polkadot updates and important events, facilitate community communication, and expand influence; YouTube provides video resources such as speeches from the Polkadot team, technical sharing, and community activities to help users better understand the Polkadot ecosystem.

In addition, there are Polkadot forums discussing technology and the future of Polkadot, platforms like Polkadot GitHub, and the Polkadot Support Knowledgebase that provide tutorial support and assistance for Polkadot. Overall, Polkadot's official social media is quite rich, offering users various forms of participation and communication, which is very important for strengthening community consensus and expanding influence.

Treasury Governance Situation

OpenGov is a new 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 spending.

Efficient governance handling: Compared to the original governance system Gov1, OpenGov improves the operational efficiency of the governance system, allowing for parallel processing of votes, with a large number of public votes significantly enhancing governance efficiency.

Currently, there are several issues with OpenGov governance:

The difference in voter turnout is significant: there are obvious differences in the voter turnout of referendums across different tracks, especially in.