Polkadot Rise Strategy Planning Report

Introduction

Hello to all friends interested in 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 continuously received support from the Polkadot treasury six times.

As a team that has been researching Polkadot for nearly five years, we have heard an increasing number of voices of discouragement within the community regarding Polkadot. Many people see no hope and have even left the Polkadot ecosystem, which is something we do not want to see. Recently, with the launch of OpenGov on Polkadot, we have observed that governance rights are being increasingly 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 Polkadot growth strategy planning report that outlines how we believe Polkadot should rise, and many of the viewpoints presented are the results of our years of research.

This article will directly address the market rather than just technology and ideals. We confront the most real issues head-on and propose ideas and suggestions for improvement. Of course, we also see that many teams are actively proposing solutions to some of Polkadot's current issues on the official forum and in the community. However, these solutions are often singularly focused on specific problems, lacking a more holistic approach to address them comprehensively or to unify multiple issues under a strategic thought system.

We welcome everyone to point out the shortcomings in this article, and we also welcome you to generously offer your advice, providing practical suggestions for improvement as much as possible. 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 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 technological ecosystem are also on the rise.

However, despite the remarkable progress, Polkadot still faces some challenges. The price trend of the DOT token is unstable, with significant fluctuations, which may bring some uncertainty 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 issues in treasury governance that need to be addressed.

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

1. Technology update status

Polkadot has been committed to continuously improving its technology and features. In the first half of this year, Polkadot has achieved 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 the vision for Polkadot 2.0.

OpenGov: Polkadot's new governance model 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 launched for application on Kusama through governance. The release of XCM V3 brings innovative designs, supporting 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 brand new concepts and technologies.

• Accord: A voluntary treaty across multiple chains, where the chains voluntarily comply with the treaty and ensure its faithful execution. In the process of achieving Accord, Polkadot introduces two key technologies: SPREE and Project CAPI.
• SPREE Technology: Runtime logic fragments based on relay chains, functioning 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 (DApps) based on Polkadot. 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 application platform. Polkadot will focus on constructing a ZK primitive library, and the first library is nearing completion, which will provide privacy protection for the on-chain fellowship. Polkadot will also invest in updates for several technologies including 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 realized.

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 in the second quarter.

Development activity status:

• The developer participation of Polkadot and Kusama has maintained a good rise 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 remains 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 daily active accounts of Polkadot in the second quarter decreased from 6,290 in the first quarter to 5,810 currently.
• The second quarter Polkadot revenue decreased from over $120,000 to nearly $81,000.

Total Value Locked (TVL) in Parallel Chains:

• In the Polkadot ecosystem, the top 6 parachains focused on DeFi, Moonbeam, Astar, Parallel, Acala, Moonriver, and Karura, dominate.
• The total locked value of parallel chains experienced a decline trend after a period of rise 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%, lower than the ideal staking rate.
• The current return rate is approximately 9%, but it varies with changes in the staking rate.

3. Developer Information

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 the number of full-time developers; the total number of developers is 1923, rising from third to second place, and has maintained 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 15th, 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 highest number of active accounts, with Moonbeam consistently being the leader in TVL, while the TVLs of parachains such as Acala, Astar, and Parallel remain at high levels.

Slot auctions are the process of assigning access rights to the relay chain, with the winners gaining the permission to operate a parachain. Additionally, Polkadot's 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 evolving, 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, it has shown 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.

Polkadot and Cosmos are both committed to solving the issue of cross-chain communication, but they have taken different technological approaches. Compared to Cosmos, the price of ATOM is currently at a relatively low state, with ATOM having dropped approximately 27.42% so far this year (except for a brief rebound in June). However, overall, the market capitalization of Cosmos has declined, with a current market cap of about $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 around 1 billion USD.

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

6. Social Media Situation

The official media for Polkadot currently 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 documents, news updates, community governance, ecosystem development, and more; social media platforms like Twitter, Reddit, and Medium are used to release the latest Polkadot updates and important events, facilitate community communication, and expand influence; YouTube offers video resources such as speeches by the Polkadot team, technical sharing, community activities, etc., helping users better understand the Polkadot ecosystem.

In addition, there are platforms such as the Polkadot Forum for discussions on technology and the future of Polkadot, Polkadot GitHub, and the Polkadot Support Knowledgebase that provide 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 crucial for strengthening community consensus and expanding influence.

7. National 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, 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 concurrent processing of referendums, with a large number of referendums greatly enhancing governance efficiency.

Currently, there are several issues with OpenGov governance:

The difference in voter turnout is significant: there is a noticeable disparity in voter turnout for referendums across different tracks, especially with lower turnout for votes related to treasury spending. This may result in some treasury funds being spent without sufficient attention from the community.