DEVELOPMENT
Let’s cover the Polkadot ecosystem: what kind of network it is, the results of 2022, and development plans for 2023.
About Polkadot
What is Polkadot
Polkadot is a fully segmented blockchain, i.e. a L0-level multi-blockchain environment. Polkadot provides scalability by allowing specialized blockchains to communicate with each other in a secure environment.
Polkadot is designed to connect and protect unique blockchains, whether they are public networks, permissionless networks, private consortium blockchains, or other Web3 technologies. It creates an Internet in which independent blockchains can exchange information under common security guarantees.
How Polkadot works
The network architecture can be divided into 4 main components:
Relaychain
The relaychain is the heart of the network, responsible for consensus and interaction between blockchains, but has limited functionality. The relaychain cannot launch smart contracts, it provides security guarantees for the rest of the network.
Parachemes
Parachains are a diverse set of specialized blockchains that connect to a relay chain to achieve consensus. They are a core component of the Polkadot multichain model. There are also common good parachemes on the network, which serve as a utility infrastructure controlled by Polkadot’s management.
Parachemes are native blockchains that have the following features:
- Customizable management, blockchain production and tokenomics
- Overall security from the Polkadot relay chain
- Can publish inter-network transactions with other parachains
Paranity
Paranity is similar to parachains, but follows a pay-as-you-go model instead of renting an auction of parachain slots.
Bridges
Bridges are a special type of parachain that provides a link to blockchains outside of the Polkadot ecosystem. For example. Etherium, Solana and Bitcoin.
To communicate with blockchains that want to use their own finality process (such as Bitcoin), Polkadot has bridging parachains that provide two-way interoperability, which means that transactions can be executed between different parachains.
The Cross-Consensus Messaging Format (XCM) allows parachains to send any type of message to each other. Common security and relay chain checking logic provides a trust-free messaging environment that opens up true interoperability.
Essentially, interaction on Polkadot is achieved in two ways:
- If two parachemes want to communicate with each other, they communicate using the inter-blockchain messaging function (XCM).
- If a parachain wants to communicate with a blockchain that is outside the Polkadot ecosystem, it will communicate with another specialized parachain called a bridge. The bridge acts as a phone company, helping the parachain connect to the blockchain outside of the Polkadot ecosystem.
How much has been invested
Polkadot is known to have invested about $300 million.
See table for details.
Current capitalization is $7.2 billion, FDV is $7.7 billion.
The current price of DOT is $6.03. The price is down 89% from the highs.
What are the results of 2022
Polkadot development activity
Among the largest ecosystems (Ethereum, Chia, Aptos, Atom) Polkadot ranks solidly at the top throughout 2022.
Development activity – shows the project’s development activity over time based on a number of purely development-related “events” in the project’s publicly accessible Github repository. (does not take into account: release comments, forks, stars, etc.).
Summary information
To date, 74 parachains have won the Polkadot or Kusama auction, with more than 300 applications supporting the ecosystem.
A total of about 550 projects have been launched or are in development for Polkadot.
More than 130 million DOT and nearly 300,000 KSMs have been provided by the Polkadot community through crowdfunding to support parachain auction bids.
Some of the major achievements in ecosystem adoption in 2022 include Astar’s parachain smart contracts in partnership with NTT Docomo, Japan’s largest mobile operator, with a $4 billion investment for Final Fantasy, one of the best games of all time.
Centrifuge, a parachain leading the integration of real assets into the DeFi chain, is leading the largest investment to date in bringing real assets into the chain with a $220 million fund after receiving an investment from Coinbase.
Parachain privacy hub Manta Network has the world’s largest zero-disclosure technology with more than 13,000 participants from 177 countries. This technology is needed to create a better, more secure network that keeps information private and allows other developers within the ecosystem to use its privacy features.
It was also announced in 2022 that DSNP (Decentralized Social Networking Protocol) Project Liberty will first be deployed in Polkadot, ushering in a new era of social networking in which users control their own data, identity, which is essential for Web3.
Polkadot KILT’s decentralized parachain ID is also demonstrating a very effective implementation through partnerships with DENA, the German Ministry of Energy, Energy Web , a Polkadot ecosystem project creating a credential registry for the German energy market, and DeBio, an anonymous platform for medical and bioinformatics data.
The Polkadot DeFi community also received a big boost in 2022 with the integration of Tether (USDT) stabelcoin, and the announcement that USDC is also coming to Polkadot, and the launch of the decentralized Equilibrium and Polkadex exchanges.
Continuous Innovation
Polkadot has completed a total of 15 smooth no-fork updates in 2022, an unprecedented rate of innovation in the blockchain space, with nearly 50 in total to date.
In comparison, Ethereum has completed 3 updates via hard fork in 2022 and 4 in 2021.
To date, there have been about 1,000 unbranched blockchain updates built on Polkadot technology.
Parachains received a major update to their capabilities on May 4, 2022, when Polkadot management updated Relay Chain to v9190, unlocking secure data transfers between chains via XCM.
v9190 also marked the real launch of Statemint , which was first deployed to Polkadot in December 2021, but is now fully functional. Users can now mint assets, including NFTs, and move DOTs to and from the relay chain, providing fundamental functionality for the ecosystem.
One of the most active and growing communities of Web3 builders
Polkadot development has reached an all-time high. With an impressive peak of nearly 2,500 active developers per month in 2022, Polkadot was at the top of the list of most active developer communities outside of Ethereum throughout 2022.
In support of the Polkadot builder community, the Web3 Foundation’s grants program has surpassed its 400th milestone, with 150 new grants, 267 applications and 230 grants signed in 2022.
Polkadot’s decentralized online treasury has also paid out a record amount of DOT to support projects that benefit the network. To date, more than 4 million DOTs have been paid to teams and individuals for their work supporting the ecosystem, up from about 200,000 at the end of 2021.
Polkadot Blockchain Academy
2022 was the founding year of the Polkadot Blockchain Academy (PBA). An intensive academic program designed to give students all the knowledge they need to become a leading blockchain engineer.
The first wave of the Academy took place over the summer at Cambridge University with a group of 55 students selected from 560 applications. The program was a resounding success, guiding promising developers from the beginning of their Web3 journey to being hired to work in the Polkadot ecosystem after graduation.
2023 will begin with the second wave of PBAs, which will take place at the University of Buenos Aires (UBA) in January in collaboration with 12 universities in the Latin American region. Applications for the second wave reached nearly 800 in less than 1 month, reflecting a particularly high level of interest in Polkadot in the region. The organization of subsequent waves has already begun, creating a growing pool of talented builders who are helping to shape Polkadot’s future.
Development Plans for 2023
Polkadot is working on a number of important technologies related to ecosystem development. They combine a number of categories: parachain scalability, parachain development, relay-chain management, interconnectivity, connectivity with other ecosystems, and stacking.
Let’s take a look at the main technologies.
Asynchronous support
Asynchronous support is a big upgrade that is designed to do three things:
- reduce parachain block time from 12 seconds to 6 seconds,
- increase the amount of block space available for each block by 5-10 times.
- Allow “reuse” of parachain blocks if they don’t hit the relay chain on the first try.
This is a major scalability improvement that will increase the amount of work each parachain can do and optimize network performance so that more parachains can be registered.
This upgrade will increase the cumulative throughput of the TPS network from 100,000 to 1,000,000,000 without compromising the security guarantees provided by the network.
Asynchronous support will be ready for deployment on Polkadot in 2023.
Paranity / Next Generation Planning
One of Polkadot’s main goals is to make building the Polkadot ecosystem as easy as possible. While smart contract parachemes have made it easy to build networks and leverage their interoperability, Polkadot aims to improve this developer experience at all levels of the stack.
The first parachain auctions on Polkadot were an important event that received tremendous support from the community. Each auction winner received the right to run a network with guaranteed regular execution for the next 2 years.
Over time, it became much cheaper to buy a parachain slot as the offerings expanded, but the mechanics of building a community of supporters, waiting for the next auction, and opening a crowdsale made it difficult to enter the ecosystem.
Paranity is a solution to this problem.
Paranity is a pay-as-you-go parachain. Paranities give you the ability to run a blockchain with the ease of running a smart contract. They can be run and operated without waiting for the next auction and without doing anything other than loading your code into the relay chain and running a few funded pick nodes.
They provide a simple, easy and affordable entry point to run an L1 blockchain on top of Polkadot. Paranite blocks are as secure as parachain blocks. Paranite architecture is only possible in Polkadot because of Polkadot’s unique market mechanisms for block space allocation, data availability, and execution.
Paranity also allows a seamless transition to a full parachain with guaranteed bandwidth. Paranity will be able to participate in parachain auctions and transition to full parachain at runtime.
Paranity will be ready to launch in the first/second quarter of 2023.
XCMv3 – Cross-Consensus Messaging
XCM is short for Cross-Consensus Messaging.
XCM is a universal language for cross-network communication that can be used both inside and outside the Polkadot ecosystem.
XCM is already in use in the Polkadot ecosystem. With the release of XCMv3, parachains as well as contracts and applications deployed on them will gain additional functionality. This includes support for bridging, such as with external networks, improved transaction fees, NFT, and more.
Management System
Polkadot’s management system is being prepared for development.
In the future, there will be projects that are either fully decentralized or not decentralized.
Partial decentralization is a category that is quickly disappearing. To this end, Governance V2 has been designed as the next step to decentralize as much as possible the decision-making processes of the network that are binding on Polkadot.
The new governance system removes the board and technical committees, introduces Polkadot Fellowship, and brings every decision in Polkadot to a community referendum. Its flexible delegation system allows community leaders to assemble delegations either for all decisions or for a specific area or areas of focus. Actions to vote in a referendum, submit a referendum, or become a delegate are all completely unauthorized.
The governance system will be ready to launch on Polkadot in 2023.
Bridge Node
The Parity bridge team has been working on the Polkadot<>Kusama bridge for some time and is getting ready to start the launch process. Several other teams in the ecosystem also have bridge protocols, such as Snowfork and Centrifuge. Work is underway to launch parachains on both Kusama and Polkadot to serve as bridging nodes for each network.
The hub-bridge will be the message routing service for each network. That is, it will not store a lot of bridge chain information (such as wrapped assets), but will forward messages to other parachains, such as Statemint, for processing.
Nomination Pools and Fast Stacking Cancellation
Before nomination pools were created, the only way to participate in the nomination process and be rewarded for staking was to nominate validators directly, using DOT tokens to select up to 16 reliable validators.
However, direct nomination not only requires that users have a significant stake in DOT tokens to participate, but also requires a more active role in researching, selecting, monitoring and periodically re-evaluating their choice of validators.
One of the key features of Polkadot’s roadmap to improve stacking is nomination pools.
They are designed to work as a single nominator account and allow participants to pool their tokens into nomination pools.
With nomination pools, the time and effort required to participate in the nomination process is reduced because the pool creator (nominator) controls nominations on behalf of participants.
Nomination pools have removed the theoretical user limit on the system, allowing the number of nominators to increase to almost infinity. This makes steaking more accessible to people with fewer DOTs needed to directly participate. In fact, users only need 1 DOT (before it was 190 DOTs) to join the pool, which is a huge step toward more widespread participation.
Steaking Dashboard
Along with working to expand the capabilities of the Staking protocol itself, there is a need to make Staking as accessible as possible to end users and ordinary people.
To that end, the Staking Dashboard has been developed – this dashboard allows users to explore and assign validators, as well as view their staking revenue metrics.
Staking Dashboard also uses Polkadot’s best-in-class lightweight client technology, which allows users to interact with the blockchain without having to “call home” a centralized service provider such as Infura, which can either go out of business or limit access or collect user data.
The approach to blockchain user interface design is to allow the user to choose from a variety of different options so that they can agree to use centralized services to extend the application with additional features and data, while remaining confident that the application will continue to work even if those centralized services stop working for them.
Staking Dashboard will soon be out of open beta testing, but it already has full functionality and can be used.
Conclusion
Polkadot does a great job of developing its ecosystem. It is confidently keeping the level of development at the highest level.
New technologies will increase the network speed up to 1 million TPS, which will give a 10x increase in network performance.
Paranite technology is being improved so that teams can start working at Polkadot without any auctions.
They opened the “Polkadot Blockchain Academy.” The first course was held in Cambridge with great success.
Polkadot is moving steadily, keeping up the pace of development, offering new technologies, and interacting with the real world through education.
This blockchain is not about hype in the moment, but about technology and for the long term.
