Not yet a point: Polkadot is preparing updates and expanding its range of products

The zero-level network Polkadot, developed by Ethereum co-founder Gavin Wood, once ranked among the top 10 most capitalized crypto projects, reaching a peak of $50 billion. However, since mid-2022, it has struggled to emerge from a prolonged bearish trend.

Throughout 2024, the company’s management faced a series of criticisms from representatives of the blockchain industry related to the embezzlement of DAO funds, a toxic atmosphere, and even racial discrimination.

In the roadmap presented at the end of the year, the team shared a global vision for the future of the Polkadot 2.0 ecosystem and the implementation of the technical upgrade — JAM. According to analysts’ predictions, in 2025, DOT could become one of the growth leaders among “old” projects.

In the new article by ForkLog, we analyze the fresh economic model for the project’s development, upcoming upgrades, and the likelihood of the return of the once-powerful competitor Ethereum.

“Simplicity and Accessibility” of Gavin Wood

The idea of a “maximally simple” version of Ethereum - Polkadot - was born nine years ago. Co-founder and first CTO of the second largest cryptocurrency by market capitalization, Gavin Wood, driven by his vision of scaling, left the team. The talented scientist who developed the basis of smart contracts - the programming language Solidity, prepared the first version of the Polkadot white paper by October 2016.

In Ethereum, Wood, along with colleagues, founded a commercial company for the development of blockchain technologies — Parity Technologies. The team is behind the creation of the Polkadot network and the Substrate framework.

In 2017, Gavin Wood and developer Peter Chaban founded the non-profit organization Web3 Foundation to accelerate the development of decentralized internet protocols. That same year, a token sale took place. The project raised $145 million by selling 5,000,000 DOT.

In 2019, a token resale was conducted to cover production needs, and the developers launched the experimental network Kusama. On its basis, the first parachains were deployed. The “canary” network with the KSM token still exists, allowing for the testing of new capabilities of Polkadot.

At the end of 2022, Wood stepped down as CEO of Parity Technologies to make the project “more relevant to the general public.”

In August 2024, in an interview with Cointelegraph, he recalled a conversation from 2013 with Ethereum co-founder Vitalik Buterin. The main point of the discussion was to separate the token of the second largest cryptocurrency by market capitalization from its ecosystem to maximize user interaction with Web3.

“Vitalik and I discussed the possibility of completely getting rid of Ether as a currency. This now seems unthinkable,” noted Wood.

According to him, the main goal is to make Web3 technologies accessible to everyone. The concept is reflected in the very architecture of the network, where the zero level already simplifies life for creators of L1 networks (parachains), abstracting from unnecessary interactions. Polkadot sells infrastructure, but in a difficult-to-understand development environment.

Simplifying user interaction and promoting privacy is evident in another development by the programmer — tattoo-based proofs. The Proof-of-Ink algorithm suggests user authentication based on their distinctive body designs.

In July 2023, a new global concept was introduced — Polkadot 2.0. It proposes a fresh economic vision for the technology: a shift to on-demand slot leasing instead of auctions. A component of it is the technical upgrade JAM, which aims to embody the ideas of mass adoption of Web3.

“JAM achieves this by practically reducing transaction fees in the blockchain to zero, but a more sustainable solution will be individuality in Web3, which will eliminate the need for spam protection mechanisms and, consequently, transaction fees”, added the co-founder of Polkadot.

“Pancakes in Peas”: Polkadot 2.0

Polkadot 2.0 is a set of changes expressed in a concept that promotes a qualitative transformation of the blockchain.

According to Decrypt, the transition to the new version of the Wood network was metaphorically described using a pancake sales business:

“Imagine a company that sells exclusively pancakes: it produces sugar, water, milk, and eggs itself, but sells only pancakes. Pancakes are the parachains, and the company itself is Polkadot 1.0.”

In Polkadot 2.0, the “pancake company” decides to sell pancake mix as well, and possibly also individual ingredients: sugar, water, and eggs. The listed components are Coretime — units of computing power that can be rented in portions.

Clients will be able to use resources not only for parachains but also for other forms of applications and blockchains.

Previously, to launch a project, the team needed to win an auction and gain the support of the community that stakes tokens in favor of the startup. With the implementation of Polkadot 2.0, developers no longer need to participate in the complex, lengthy auction process for a parachain slot. Abandoning such a model will make the ecosystem more flexible and simplify entry for new organizations.

In the implemented orientation towards dapps, users will be able to experiment with the network, gaining access to the computing power of the “global supercomputer” without investing in infrastructure as they did before.

The technical update JAM, announced in April 2024, will fulfill many of the promises of Polkadot 2.0. The upgrade will completely replace the main chain — Relay Chain with a focus on implementing Agile Coretime.

The Web3 Foundation is actively incentivizing developers of the JAM protocol. The total prize pool for working on the new tech stack is 10,000,000 DOT and 100,000 KSM. The promotional tour with Gavin Wood — the JAM Tour, initially focused on Asia, began on February 17 in Hong Kong.

The architecture of Polkadot in 2025. Data: Polkadot.Polkadot 2.0 is being implemented in stages with key innovations:

• Asynchronous Backing. The update launched in May 2024 improved block processing efficiency. The creation time was reduced from 12 to six seconds, allowing for parallel transaction verification and block production. The technology provided nearly a 10-fold increase in throughput while simultaneously increasing the data storage capacity in each block fourfold, opening up the possibility of increasing the parachain limit from 100 to 1000;
• Agile Coretime. Implemented in September 2024. Opened new opportunities for developers: lowered the barriers to entry and allowed purchasing block space “on demand”, which is especially beneficial for projects with variable load;
• Elastic Scaling. Aimed at expanding the network’s throughput. Allows servicing a greater number of blockchains and increasing transaction volume. The technology helps to handle increased loads more efficiently through parallel processing.

The Coretime unit can be used to balance resource expenditure. Web3 game teams can purchase additional computing power during periods of high demand, avoiding unnecessary expenses during normal times. NFT projects, in turn, are capable of attracting power during launches when activity sharply increases.

Users can resell Coretime in bulk on secondary markets. This scheme is likely to increase the efficiency of trading computing power. All transactions are conducted using DOT, which in the long term can affect its value growth.

The first sale took place on October 6, 2024, less than a month after the mechanism was launched. One of the five available Cores was purchased for 69 DOT.

There is no such thing as too much advertising, just as there is no such thing as too much criticism.

In July 2024, after the team’s report on the state of the Polkadot treasury, criticism of the management emerged in the community.

“The Polkadot treasury is becoming increasingly complex and difficult to understand,” wrote the project’s chief ambassador Tommy Enenkel in the report for the first half of 2024.

“At the current level of expenditures, the treasury has about two years of reserves, although due to the volatility of assets denominated in cryptocurrencies, making accurate forecasts is difficult”, noted the influencer.

He also added that the effective use of the treasury capital will likely be associated with the creation of separate divisions, in the form of bounty programs and collectives.

Enenkel also called for a reduction in the inflation rate of DOT to ease selling pressure. According to the annual report of Polkadot, this measure has been implemented. In 2024, the community voted for mechanisms that could lead to a reduction in inflation to 8%.

The pilot of the car, Conor Daly, with the Polkadot emblem at the annual Indy 500 competition. Source: Cointelegraph. In turn, DeFi researcher under the nickname Ignas noted that Polkadot, despite large expenses, remains “invisible” on X and other platforms.

The Polkadot treasury spent $37 million on promoting the project in the first half of 2024. The expense report included advertising integrations, partnerships, shilling by influencers, and other marketing campaigns.

Polkadot activist Giotto di Filippo responded in a comment to Cointelegraph, reminding that about 7% of the total token inflation in the form of staking rewards goes back to the treasury:

“Inflation in Polkadot is distributed between stakers and the treasury to ensure that the treasury always has funds… So to say that ‘money will run out’ is simply meaningless.”

Lionel Messi in the Inter Miami club jersey with the Polkadot logo. Data: Marketing Registrado.The founder of the L2 protocol Manta Network under the nickname viktorji.eth added fuel to the fire. He stated that Polkadot does not possess real value in Web3 and is a “toxic” project.

According to the developer, there is discrimination in favor of teams from Europe and the USA in the ecosystem, which harms colleagues from Asia. He also hinted at the centralized nature of the network.

Viktorji.eth recalled the meeting with Gavin Wood, who allegedly had no idea that Manta Network is one of the largest projects in the ecosystem he founded.

Achievements of Polkadot in the field of decentralization. Data: Polkadot. According to the Polkadot report, the number of network validators in October 2024 approached 500, which is significantly higher compared to 297 in August. The Nakamoto coefficient, reflecting the level of decentralization, reached 132 by the end of 2024 — one of the best indicators among blockchains. By March 21, 2025, it surpassed the mark of 165.

On December 4th, a speed record for transaction execution was set on the Kusama network: during the synthetic stress test Spammening, the rate reached 143,000 TPS.

Sentiments in the ecosystem

The ecosystem showed a 150% increase in the number of unique accounts, from 5.2 million in January 2024 to 13.2 million by November. Almost 6 million new addresses belong to the Mythos network, which has significantly strengthened the Polkadot ecosystem since last year.

The company behind the parachain, Mythical Games, is engaged in the development of Web3 games. Their new application, FIFA Rivals, will be a continuation of the idea from the previous Mythical Games project called NFL Rivals — a popular mobile arcade game about American football. The project includes marketplaces for trading athlete NFT cards.

The team left Ethereum as part of their expansion strategy, choosing Polkadot for its high throughput, low fees, and excellent interoperability, which perfectly aligns with their goals.

Statistics on transactions and unique addresses. Data: Polkadot. The total number of transactions in the ecosystem increased by more than 200% — from 13.1 million in January 2024 to 39.6 million in November. The growth is partially attributed to the activity of the Mythos and DeSoc project — Frequency. They are followed by: Neuroweb, Phala, Moonbeam, and Litentry.

At the time of writing the article, there are 216 projects functioning in the ecosystem, according to the parachain observer.

General statistics on projects in the ecosystem as of April 17, 2025. Data: parachains.info.As of April 2025, Polkadot ranks fourth among L1 networks in the number of key developers with 95 specialists.

Statistics on key developers among L1. Data: Token Terminal. Given the current market instability, many blockchains, including Polkadot, are showing a decline compared to the beginning of January 2025. The previously presented data in the report is no longer relevant, and April continued the downward trend across several key metrics: the number of active addresses, new users, and unique accounts.

User activity on Polkadot ranks 21st among L1 in April 2025. Data: Token Terminal. Against the backdrop of bearish sentiment, the activity of developers and the transition of projects to Polkadot can be considered positive signals. Moreover, the upcoming major upgrades, which could fundamentally change the network’s economy, instill hope in DOT and KSM holders.

An important step is also being prepared by institutional players — the launch of spot ETFs on Polkadot. The crypto funds Grayscale Investment and 21Shares have already submitted the corresponding applications. Although some members of the community are skeptical about this event, it could act as a catalyst in the presence of other positive factors.

Some analysts expect to see Polkadot in 2025 among the first projects to make a comeback after the success of 2020-2021.

Conclusions

Thanks to the implementation of Polkadot 2.0, the resources of the network have become more efficient. The block creation time has been reduced to six seconds, and there is now the option to select resources for specific tasks instead of purchasing unnecessary capacities.

The guide has found a solution to previous issues related to high entry barriers for small projects, caused by the auction format for slots and the need to lock a significant amount of DOT. Previously, large projects often received priority in connection, pushing out smaller startups.

Technological improvements and updated tokenomics aimed at reducing inflation are designed to enhance scalability, reduce costs, increase network speed, and stimulate the growth of dapps in the Polkadot ecosystem.