Polkadot 2023 Ecological Development Annual Report: Major Events and 10 Predictions

The year 2023 can be described as a year of reflection, turning points, and innovation. As an important player in Web3, Polkadot's technical updates and significant progress are often closely related to the development of the Web3 industry. This article will review the important events of the Polkadot ecosystem in 2023 and make 10 predictions for 2024 to help everyone grasp the development trends of Polkadot.

Background

October 2023 has become an important milestone, as the Federal Reserve hinted at pausing interest rate hikes, triggering a "sprouting bamboo" market for BTC, laying the groundwork for a small bull market that continues to this day. The global cryptocurrency market value has grown from over $830 billion at the beginning of the year to $1.7 trillion, an increase of over 100%.

Compared to the ups and downs of 2022, 2023 has been overall mild, but there have still been many noteworthy events, from the bankruptcy of Silicon Valley Bank to SBF's conviction, as well as CZ's temporary departure from a certain trading platform, and various regulatory issues that have persisted throughout the year. The Polkadot ecosystem also had many commendable aspects over the past year, but the calm market did not pay much attention until recently when improvements began to surface.

Review of Important Events in 2023

Layer2 is hot

In 2023, Layer 2 upgrades became the focus of the market. A certain DEX successfully launched its native governance token in March and held the most competitive airdrop in history. On April 12, a certain public chain officially completed the Shanghai upgrade, causing a market sensation. The Shanghai upgrade allowed users to withdraw staked native tokens, unlocking over 16 million tokens. Contrary to expectations, the market did not experience a sell-off, but instead saw a price increase.

Polkadot 1.0 officially delivered, Polkadot 2.0 proposed

In July last year, Polkadot officially announced the delivery of version 1.0, realizing all the functions planned in the white paper since 2016. This version broke the isolation effect between different blockchains by introducing innovative technologies such as parachains and relay chains.

To enhance the governance, security sharing, and other features of Polkadot, a controversy reduction and Polkadot OpenGov governance will be launched in the second half of the year as an upgrade to Polkadot 1.0. In June last year, Dr. Gavin proposed the 2.0 version of Polkadot - "Polkadot is a multi-core computer." Through the concept of core time, Polkadot 2.0 will bring a brand new way of resource allocation.

The rise of blockchain tools, multi-chain ecosystems become mainstream

The year 2023 has sparked a frenzy of chain-launching tool releases. Several Layer 2 networks have successively launched their own chain-launching tools, such as Arbitrum Orbit, ZK Stack, and Starknet Stack. These standardized and modular technology stack tools provide developers with the ability to build blockchain networks more quickly.

At the same time, Polkadot's multi-chain architecture introduces a more flexible concept. Each chain in the Polkadot ecosystem incorporates a new consensus algorithm, and each chain can have its own set of validators. Cross-chain information is transmitted via the relay chain or IBC protocol, which adds some complexity but also makes the entire Polkadot ecosystem more diverse.

Modular New Concept Proposal

The concept of modular blockchain has gained widespread attention in the industry in 2023, especially after a certain modular public chain launched a large-scale genesis airdrop at the end of September. Currently, there are over 30 modular blockchain concept projects, including EigenLayer, Saga, Fuel, etc., with nearly 10 projects having received investment from well-known institutions.

Modular blockchains better adapt to the ever-changing market demands by improving the system's scalability, maintainability, and financial efficiency. Polkadot, as a multi-chain ecosystem, places particular importance on the adoption and development of the modularity concept. The design philosophy of Polkadot itself embodies modular characteristics, achieving multi-chain collaboration through different parachains.

Inscription and Fairlaunch Spark a New Wave

In 2023, a highly anticipated new concept emerged in the digital asset field - Inscriptions. The rise of Inscriptions is mainly attributed to protocols within the BTC ecosystem, with the Ordinal protocol represented by ORDI becoming the leader in the Inscriptions space.

On November 7th, a certain trading platform announced the launch of the ORDI trading pair, marking the official start of BTC's inscription comeback. ORDI soared to over $90, achieving a ten-thousand-fold increase from a minting cost of less than 1 cent in less than 300 days. Subsequently, other chains followed suit by launching their own inscription protocols, and the Polkadot community also introduced Polkadot's inscription DOTA.

The success of inscriptions is not only a new form of asset but, more importantly, the concept of fair issuance (fairlaunch). Taking ORDI as an example, its issuance model avoids pre-mining and private placement, distributing tokens equally among community members, which has led to widespread community participation.

BTC Ecological Awakening

At the end of 2023, the BTC ecosystem has sparked a nearly 2-month craze, with several ecosystem projects built around BTC being brought to the forefront. A certain decentralized DeFi auction protocol has actively embraced the BTC ecosystem and launched multiple projects that have attracted significant market attention. With the popularity of inscriptions, these BTC ecosystem applications have also seen a continuous rise.

It is noteworthy that some platforms have successfully launched multiple projects, including the BRC20 asset protocol, the Ordinals aggregation platform, the Ordinals lending platform, and the BTC ecological gaming platform. This innovation in inscriptions has attracted a large amount of capital and users to BTC, and has also stimulated the rapid development of BTC ecological applications, filling the ecological gap of BTC.

The DePIN concept is gaining popularity

Another hot crypto narrative in 2023 must be DePIN(, the decentralized physical infrastructure network). The core goal of DePIN is to deploy physical infrastructure and hardware networks in the real world through cryptoeconomic protocols, leveraging the incentive mechanisms of blockchain to promote the joint construction of this network by various participants.

Currently, DePIN covers several major categories, including computing markets, wireless WiFi, wholesale data, service markets, vertical advertising, and energy, among others. Around October, DePIN concept tokens represented by decentralized hotspots like Helium Mobile and automotive data networks like DIMO began to surge, becoming a hot topic of interest.

The Bittensor project in the Polkadot ecosystem is committed to building a decentralized machine learning network and is expected to shine in 2023. The peaq network, on the other hand, focuses on decentralized energy supply chains, attempting to address the regulatory overhead in the energy industry and promote the development of decentralized energy.

Exploring Multi-Chain Development in the Polkadot Ecosystem Projects

In 2023, the Polkadot ecological projects are also actively exploring multi-chain development. Phala Network brings off-chain computing to the social protocol within a certain public chain ecosystem, providing next-generation computing services for Web3 social builders. Astar announced a partnership with a certain public chain to jointly launch the Layer2 network Astar zkEVM, aiming to become a gateway connecting two major ecosystems.

Manta Network has launched the first EVM-compatible ZK application platform, Manta Pacific, by adopting the development toolkit of a certain public chain. Parallel Finance, on the other hand, has partnered with a certain Layer 2 solution to implement Parallel's lending services running on Layer 2.

These collaborations are a practice of cross-chain communication and interoperability, enhancing the compatibility and openness of the Polkadot ecosystem, and winning more partners and users for Polkadot. At the same time, the value and innovation within the collaborations can increase the revenue of the Polkadot ecosystem and can also incentivize more investors and developers to support the Polkadot ecosystem.

Regulatory oversight continues to strengthen

With the continuous development and innovation of the cryptocurrency industry, regulatory authorities in various countries and regions have strengthened their oversight of the industry over the past year to guard against potential risks and adverse effects. Among them, some centralized exchanges have faced stricter regulatory requirements, such as the U.S. Securities and Exchange Commission charging a certain exchange with offering unregistered securities.

Regulatory authorities have also taken other punitive actions, such as submitting user identity information, adhering to anti-money laundering rules, and paying taxes. These regulatory measures have posed a certain threat to the circulation of some crypto assets, leading to a sharp decline in their prices and market values.

However, Polkadot's native token DOT has shown strong resilience amid the regulatory storm. The organization behind Polkadot, the Web3 Foundation, has publicly stated that through their communication and cooperation with the SEC over the past three years, DOT has ultimately been recognized as software rather than a security or currency. This means that DOT is not subject to regulatory restrictions from centralized exchanges and does not require additional taxation, thus maintaining its liquidity and value.

Polkadot further decentralization

Polkadot continues to advance the decentralization of its governance and market operations to ensure the security, stability, and innovation of the network. OpenGov and the Decentralized Future Plan are two important initiatives that represent Polkadot's ideas and practices of decentralization in governance and market operations.

OpenGov is an open decentralized governance platform launched by Polkadot, aimed at simplifying and optimizing its governance model. It abolishes centralized governance bodies such as the original council and technical committee, decentralizing all decision-making power to token holders, and governance decisions are made through public referendums.

The Decentralized Future Plan is a grant program launched by the Web3 Foundation, aimed at supporting and developing innovative projects within the Polkadot ecosystem. The program allocates $20 million and 5 million DOT, covering nine key areas across three main sectors: technology, development ecosystem, and community.

10 Predictions & Insights for 2024

1. The four key technologies of Polkadot are about to go live: Agile Core Time, On-Demand Parallel Chains, Ethereum Snowbridge, and Kusama Bridge. These infrastructures will make the Polkadot network more flexible, efficient, open, and interconnected, collectively promoting the development of the Polkadot ecosystem.

2. New developments after Polkadot 2.0: Elastic scaling technology ( includes asynchronous support and the Sassafras algorithm ), which will bring higher throughput, lower costs, and a better user experience to Polkadot. Additionally, Polkadot will implement the expansion of DAO primitives, including new Fellowship, multi-asset sub-treasuries, expanded XCM, and more.

3. ETFs can revitalize the industry: The approval of a BTC ETF will enhance overall market confidence and may attract more institutional investors into the BTC market. As a barometer of cryptocurrency, BTC is also likely to lead the entire industry in enjoying the benefits brought by a massive influx of funds.

4. The BTC ecosystem may experience explosive growth: With the launch of several BTC Layer 2 projects and the trend of expanding more applications around BTC, 2024 could be a year of explosive growth for the BTC ecosystem.

5. Inscriptions give rise to new gameplay: Inscriptions may combine with airdrop tokens or methods such as issuing NFT whitelists, becoming a preliminary operation for project parties to truly issue assets, making inscriptions a mainstream project marketing method.

6. RWA may become a hot track in 2024: With the official launch of the BTC ETF in the United States, the RWA market may experience rapid growth and even challenge the hundred billion dollar market to become a major hot track.

7. DePIN may usher in a wave of practical applications: As blockchain technology matures and more teams innovate and practice in the crypto space, hardware infrastructure projects that can be widely applied are likely to see a wave of implementation in 2024.

8. Further explosion of chains and applications: In 2024, we may witness a lively scene where chains and applications soar together, reminiscent of the industry's highlights in 2020.

9. More "Web2.5" cases: The Polkadot ecosystem may welcome more collaborations with traditional enterprises, pushing Polkadot toward the mainstream.

10. GameFi is worth looking forward to: Although GameFi still has a long way to go, there may be more high-quality, high-player GameFi products emerging in 2024, bringing new vitality to the Polkadot ecosystem.

Postscript

In 2024, the cryptocurrency market will