Polkadot 2022 Annual Review and 2023 Outlook

As the crypto industry enters another winter, the Polkadot community has been busy over the past year building and launching the world's largest and most diverse Layer 1 blockchain ecosystem, and has introduced multiple core technologies to prepare for 2023.

Looking back at the development of the Polkadot ecosystem in 2022, it has been a fruitful year. Let's review the important milestones and development trends of Polkadot over the past year.

The Rise of the Web3 Leading Ecosystem

Since the launch of the parachain at the end of 2021, Polkadot has become the largest and most diverse dedicated Layer 1 blockchain and application ecosystem in just over a year. It is the only ecosystem fully protected by a shared set of validators, benefiting from security and trustless cross-chain interoperability.

A total of 74 parachains have secured slots on Polkadot or Kusama, supporting over 300 decentralized applications. Approximately 550 projects have been launched or are being developed for Polkadot, marking an impressive start for the first year of parachain deployment.

Over 200 teams have launched or built dedicated blockchains on the Polkadot tech stack. They recognize that this model is better suited to their needs than smart contract solutions, as Polkadot offers shorter time-to-market, lower building costs, and the scalability and interoperability needed for continuous innovation.

The Polkadot community contributed over 130 million DOT and nearly 300,000 KSM through crowd loans for parachain auctions, reflecting great confidence in the future of the Polkadot ecosystem.

With such a diverse ecosystem, Polkadot has proven to the world that Web3 is not limited to DeFi and NFT application scenarios. While the Polkadot ecosystem team leads the industry in the forefront of DeFi and NFTs, Polkadot's parachains and dapps encompass the full potential of blockchain technology, from social media to supply chains, identity, gaming, tokenization of physical assets, carbon credits, privacy, robotics, the Internet of Things, and more.

Some groundbreaking adoption events in the ecosystem this year include: the smart contract parachain Astar partnering with a mobile operator to invest $4 billion to promote Web3 adoption, and the NFT parachain Efinity collaborating with a gaming giant to develop Polkadot-powered NFTs for a well-known game series.

Centrifuge is a parallel chain that brings real-world assets onto the chain in DeFi. After receiving investment from a certain exchange, it led the largest investment to date in bringing physical assets onto the chain with $220 million in funding.

The privacy hub parallel chain Manta Network has the largest trusted setup in history using zero-knowledge technology, with over 13,000 participants from 177 countries/regions. This technology is crucial for building a more secure network to protect sensitive information, and other developers in the ecosystem can utilize its privacy protection features.

In 2022, it was also announced that the decentralized social network protocol DSNP of Project Liberty would be first deployed on Polkadot, ushering in a new era of social media where users can control their own data, identities, and relationship networks, which is a key requirement of Web3. Under public pressure, the music industry also saw some important innovations on Polkadot, creating a music NFT marketplace that generated 2 million dollars in revenue within a few days of its launch.

The decentralized identity parachain KILT of Polkadot has also gained some high-impact adoption through collaborations with a certain energy department, a certain energy market identity registration project, and a certain medical bioinformatics data platform.

The DeFi community of Polkadot has also been greatly boosted this year due to the integration of a certain stablecoin, the announcement of a certain stablecoin soon joining Polkadot, and the launch of Equilibrium and a certain decentralized exchange.

With its unparalleled technology stack in flexibility, scalability, upgradability, and security, Polkadot is proving to be the ideal platform for all-encompassing, rapidly evolving Web3 opportunities.

Leading the True Path to Decentralization

In 2022, Polkadot took a significant step towards becoming the most decentralized, trustless, and unstoppable Web3 ecosystem.

Last year's events proved the importance of these design considerations that underpin Web3. As we have seen, centralized systems that require users to place blind trust put user funds, data, and identities at risk. At the same time, they also face the risks of censorship and malicious external influences.

Polkadot has been gradually increasing its level of decentralization and eliminating potential bottlenecks of centralized areas, becoming one of the largest true DAOs in existence.

Crucially, 2022 witnessed the launch of Polkadot's next-generation governance system OpenGov on a network for the first time. OpenGov is the most advanced and sophisticated blockchain governance system designed to date, eliminating the relatively centralized council role and decentralizing the entire governance process of the network into a community-driven referendum system. This ensures that decisions can always be made and executed in an unstoppable, fully autonomous manner.

The Polkadot Fellowship was also launched this year, which is an important component of OpenGov. The Fellowship is a decentralized, on-chain, ranked group of technical experts that replaces the Technical Committee and provides a knowledge base for the Polkadot community. As the Fellowship has no "control" over network decisions, it aims to help optimize the decision-making process of the network without directly influencing the outcomes of these decisions, which are still controlled by all network stakeholders.

Due to these efforts to achieve true decentralization, a foundation announced in November 2022 that DOT has transitioned from a security to software, marking a milestone achievement in realizing Web3.

Among other initiatives on the path to decentralization, Polkadot is advancing the industry's most sophisticated light client technology, allowing users to no longer rely on third-party node services to verify data and interact with functionalities hosted on Polkadot or any Substrate-based chain.

The staking system of the Polkadot network also underwent some key upgrades in 2022, including the nomination pool, which increases the opportunity for local staking on Polkadot by reducing the minimum staking amount to 1 DOT, and further achieves decentralization and trustlessness by allowing more people to stake directly on Polkadot using their private keys.

Unstoppable Innovation

Without Polkadot's industry-leading upgradeability features, these upgrades would not be possible. In 2022, Polkadot completed 15 seamless, non-fork upgrades, demonstrating an unparalleled pace of innovation in the blockchain space, totaling nearly 50 to date. In contrast, a certain blockchain completed 3 upgrades via hard forks in 2022 and 4 in 2021. Considering that in the non-blockchain world, a certain tech company conducted 16 upgrades to its mobile operating system in 2022, Polkadot's upgradeability matches that of more traditional software updates, ensuring that technology can continue to evolve at an innovative pace. So far, nearly 1000 non-fork upgrades have been completed on blockchains based on Polkadot technology.

The parallel chain underwent a significant upgrade on May 4, when Polkadot governance upgraded the relay chain to v0.9.19, unlocking secure cross-chain data transmission via XCM. After a period of practical testing on certain networks, the launch of XCM on Polkadot showcased the magic of secure cross-consensus bridges to the world. Coupled with the upcoming XCMv3, this will address the "weakest link" issues faced by the previous generation of bridge technology, which resulted in losses of $2.5 billion just last year.

The parallel chain team quickly began using XCM, opening over 100 channels and sending an impressive 10,000 messages within the first month. So far, over 160,000 XCM messages have been sent on Polkadot alone, with more than 200,000 messages sent on another network, ushering in a new era of secure cross-chain interoperability.

v0.9.19 also marks the official launch of Statemint, which was first deployed on Polkadot in December 2021 but is now fully operational. Users can now mint assets, including NFTs, and transfer DOT to and from the relay chain, providing essential functionality to the ecosystem.

This year, the second system parachain of Polkadot, Collectives, was launched, enabling people to organize and act as a group without relying on third parties such as lawyers and courts, which is an important feature of Web3. The first initiated collective of this kind is the Polkadot Alliance, a community initiative aimed at recognizing positive contributions to the ecosystem and establishing ethical guidelines around issues such as scams, malicious activities, abuse of the Polkadot brand, and uncredited source code.

One of the most active and continuously evolving developer communities in Web3

If you closely follow the thriving developer community of Polkadot, it is not surprising that Polkadot's development activity has reached a historic high this year. Polkadot peaked at nearly 2,500 monthly active developers in 2022, making it one of the most active developer communities outside of any blockchain throughout the year.

Substrate Builders Program (SBP) guides builders to initiate projects and selected 32 new teams from 127 applications in 2022. So far, 60% of Polkadot parachains have become part of SBP.

To support the Polkadot developer community, a foundation's funding program has surpassed the milestone of 400 projects this year, distributing 150 new grants in 2022, receiving 267 applications, and delivering 230 grant projects.

Polkadot's decentralized on-chain treasury has also disbursed a record amount of DOT this year to support projects that benefit the network's development. So far, over 4 million DOT has been paid to teams and individuals supporting the ecosystem, up from about 200,000 at the end of 2021.

Recognizing that the evolving ecosystem requires a large number of new engineers to fuel it, 2022 was also the founding year of the Polkadot Blockchain Academy (PBA). A rigorous academic curriculum aims to provide students with all the knowledge needed to become top blockchain engineers, with the first cohort taking place this summer at a certain university, where 55 students were selected from 560 applicants. The program has been a tremendous success! In the process, many promising developers began their Web3 journey and were employed to work within the Polkadot ecosystem after graduation.

The second phase of the Polkadot Academy in 2023 is about to kick off, to be held in January in collaboration with 12 universities in a certain region and a certain university. The number of applications for the second phase reached nearly 800 in less than a month, reflecting the particularly high interest in Polkadot in the region. Subsequent organization has already begun, and we are building a talented developer talent pool to help shape the future of Polkadot.

Looking to the Future

With the accomplishments of 2022 and everything that is about to come in 2023, the future of Polkadot is bright! This year, the founder of Polkadot has developed a vision for the new technology development of Polkadot, which we will launch in 2023 if approved by Polkadot governance.

Perhaps first and foremost is the launch of OpenGov on Polkadot, which will be submitted to the Polkadot community for voting after a period of practical testing on some network. OpenGov will not only bring more decentralization to the governance process but will also increase the number of collective decisions that the network can make at any given time, significantly enhancing the upgrade path of Polkadot.