Original title: "Polkadot 2023 Roundup"
Original author: Gavin Wood
Original translation: 0xAyA, Odaily Planet Daily
As the nights in the northern hemisphere lengthen, soma.fm’s Christmas music special comes to life on the radio in my home again, and it’s that time of year again when I write my annual diary on behalf of Polkadot. With the COVID-19 pandemic largely behind us, we can see a return to global normalcy, and with it, a resurgence in offline events. This year, conflict and artificial intelligence have been among the most prominent themes in the news cycle, and with them, some curious minds want to understand how they, along with blockchain, can change the world.
This year is also a special anniversary for me; I write these words at this moment, exactly ten years ago I wrote my first crypto-financial code. So, what does 2023 bring?
Industry Events
Given my position in the industry as perhaps close to a veteran, it seems to me that we have a seasonal system. Our new “crypto winter” has been underway for some time. Web3, and more specifically cryptocurrencies, have been in the news frequently, but often under more negative terms than the more optimistic headlines of a few years ago. (Indeed, one of the more pertinent reviews in the Economist found some similarities to the ancient pest, the cockroach.) This crypto winter, while likely inevitable, has been unsuccessfully aided by certain individuals who seem to believe that Web3 can be messaged and marketed in isolation from its technology and culture. I’m afraid this won’t be the last time we see this kind of behavior in the industry, but hopefully, it provides a constructive and illuminating lesson for everyone.
I’d wager that the negative press coverage and the unfair negative commentary that comes with it has probably reached the halls of power. At the same time, we’re also seeing the regulatory landscape for our industry evolve and change — sometimes wisely, sometimes ill-advisedly. Some major changes are happening around the world, especially in the UK, Switzerland, Japan, the EU, and the US; some of the developments in the latter are likely informed by the Web3 Foundation, which testified at the US House hearing and advises the Japanese Liberal Democratic Party. While each of these jurisdictional changes has its own nuances, we can see an emerging, increasingly clear position that places a strong emphasis on avoiding trust-based, custodial, and Web2 “solutions” and introducing true trustlessness and decentralization in all aspects: stakes, nodes, and governance. Thankfully, some of the more forward-thinking world regulators seem to be acknowledging that not all cryptocurrencies are equal, even if it’s only implicitly noted through certain omissions.
Polkadot’s Decentralization
Older Web3ers know that decentralization has always been Polkadot’s top priority, as stated in the Polkadot whitepaper. Idealistic and pragmatic interests rarely intersect, but this is real, and decentralization is not only a goal we should strive to achieve, but also a belief we must achieve.
While there is still much work to be done in this Web3 industry to create a truly resilient, decentralized, and self-sufficient system, by many metrics, Polkadot is already ahead. A recent independent report ranked Polkadot first in the Nakamoto coefficient (a metric used to measure the degree of decentralization of a blockchain network). We also witnessed a decentralization milestone this year with Polkadot's relay chain Kagome joining as a validator node for the Kusama network.
It seems that the push for decentralization is particularly evident in the recent structural changes of the Parity team. The Parity team's efforts to decentralize have meant a significant reduction in the number of people in its executive department, which has mainly occurred in areas supported by ecosystem activities and has little to do with the development of core technologies, the historical field of the Parity team. Behind this reorganization, the Web3 Foundation announced the launch of a $55 million "Decentralised Futures fund", whose stated purpose is to help our ecosystem work towards further decentralization and reach a sustainable state in which activities contribute to the utility and demand of Polkadot's block space (Coretime). The fund is immediately operational, has received dozens of high-quality applications, and will continue to be active and disbursed in the first half of 2024.
The Polkadot ecosystem continues to grow: On Polkadot and Kusama, we have 90 parachains from over 580 ecosystem projects; including 300 decentralized applications and 190 blockchains built on the Substrate framework. Polkadot now runs 50 enabled parachain cores, with 17,000 XCM messages per month being trusted and securely transmitted between them. On December 22, we saw a single relay chain, across all 50 Polkadot chains, process 6.9 million transactions in 24 hours — a sustained rate of 80 transactions per second over the course of a day. We now see over 2,000 active developers in the ecosystem on an almost monthly basis, and 83,000 active users. We saw a 10x growth in retail-friendly nomination pools throughout the year, covering over 180 pools of 10 million DOT.
Throughout the year, we saw 324 applications for the Web3 Foundation’s grant program, with 135 signed projects from 54 countries; the Foundation reached another milestone last month - the 600th grant since its founding in 2017.
crucial moment
Polkadot’s flagship event, Decode, took place in Copenhagen, Denmark, in June this year, with satellite events around the world, most notably in Hanoi (Vietnam), Buenos Aires (Argentina), and Shanghai (China). At these events, 1,500 people attended in person (and thousands more watched online) to hear from more than 100 speakers from across the ecosystem. These were a mix of virtual and real-life events, with more than 11,000 online registrations for the Copenhagen event alone.
Shortly before the Copenhagen event, the Polkadot Summit, which was attended by 150 of the key decision makers and developers within the ecosystem, took place. This was in my opinion quite successful, with one of the key outcomes being the introduction of a new metadata schema designed to optimize the ability of hardware wallets to operate trustlessly across the Polkadot ecosystem - describing the meaning of any transaction at any time is difficult to achieve due to the flexibility provided by Polkadot's parachain model and ingenious upgradability. Nonetheless, the integration of transaction metadata (and the human-readable meaning of transactions associated with it) provides an in-ecosystem solution that can be rolled out across solutions from a variety of prominent wallets. As we move further towards decentralization, programs like this ensure that the entire ecosystem can work together to create common opportunities in areas such as standardization, infrastructure, and tooling.
The Polkadot Developer Conference Sub 0 was held as a hybrid event for the first time this year, with live streaming and various facilities for those who could not attend in person. A total of 500 people attended (with hundreds more watching online) to hear key insights from more than 50 speakers on the foundation of Polkadot technology. The content included core developers discussing the latest developments, tools, APIs and processes, and industry technicians talking about their experiences finding solutions through the technology stack.
The Web3 Music Summit, hosted by Primavera Sound in partnership with the Web3 Foundation, provided a space to explore Web3 in the context of music. Of particular note was the viability of using DAOs (decentralized autonomous organizations) within the music industry to rebalance and optimize economic incentives for artists by allowing more direct economic interactions between artists and fans.
Many Polkadot-related conferences are held both inside and outside the community, including ParisDOT in Paris, France, and Polkadot Pulse in Bangalore, India. In addition, many Polkadot satellite events are held at the largest industry gatherings around the world, such as ETHDenver, SXSW in Austin, Korea Blockchain Week, WebX in Tokyo, Token 2049 in Singapore, Coindesk Consensus, and Messari Mainnet in New York. These events include workshops, booths, and attendee activities, showcasing Polkadot’s unique advantages and vibrant technical community.
Academic achievements
Polkadot Blockchain Academy is an original initiative to create a blockchain course worthy of being taught at a world-class academic institution. The project began last year with a five-week course at Cambridge University and continued this year around the world, at the University of Buenos Aires earlier this year and at the University of California, Berkeley during the summer.
The Buenos Aires program attracted 790 applicants for 76 places and was run in partnership with 12 universities across Latin America. The program is not for the faint of heart, with a comprehensive curriculum tested by the best minds in the industry, and passing is not a given, but 80% of students make it.
In the later course, with 344 applicants competing for 72 places, we introduced a new Founders Course which focused less on the deep technical programming elements and more on the broader technology and its social and industrial impact. We saw similar pass rates, with one individual passing with distinction. Our youngest graduate was 17 years old, from Eastern Europe, and attended the six-week course.
The Substrate Framework Developer Program, the main program of the Parity team to support teams that are building blockchains with the Polkadot SDK, had 124 projects apply for the program in 2023, and 23 projects from 55 reviews reached the first major milestone. At the same time, the team launched a sister program, Developer Heroes, which focuses on mentoring individual developers within the ecosystem, with 420 applicants throughout the year. The program currently has more than 200 members and 60 mentors.
Power to Parachains
This year saw the launch and further deployment of two major centralized stablecoins, Tether (USDT) and Circle (USDC). While these are not the panacea for decentralization we strive for, they provide some significant utility value to several parachain projects and users. USDC alone has $250M deposited on the Polkadot Asset Hub, with even more USDT deposits contributing to the ecosystem’s total stablecoins.
Kusama’s Asset Hub now has fully integrated direct token conversions. The wonder of this cross-chain magic is that it provides a neutral and easily accessible liquidity pool for DOT/KSM to various tokens by introducing a system-wide decentralized exchange. In addition, the liquidity pool has a fully integrated fee payment system, allowing all of these tokens to be easily used to pay Asset Hub fees and exchanged through the XCM language without going through a third party. This greatly simplifies cross-chain transactions and reduces complexity for users, collators, and developers.
The landscape of user tools within the ecosystem continues to evolve, with many well-known products seeing significant improvements. Parity Signer, an application designed to turn any old Android or iOS device into a fully functional, ultra-secure isolated wallet, has now been rewritten and released as Polkadot Vault. While I am still involved in setting the product direction, maintenance is moving from the Parity team to the Novasama team (more substantial notice will be given when this is finalized). Recently, Polkadot Vault has received new features designed to integrate tightly with the team's new Spectr Wallet. For those who don't know, it is a fund-backed, open source project designed to be a non-commercial, neutral desktop wallet for enthusiasts and advanced users. With good integration, the worries on Vault devices are reduced to almost zero, and the process of restoring and upgrading Vaults has become a pleasure.
This year also saw the launch of Smoldot 1.0, a fund-backed project that exists in a properly decentralized manner. While experimentally integrated into the well-respected Polkadot.js application in compatibility mode, it has played a major role in applications built directly for it, such as Novasama’s Spectr power-user wallet, and middleware built specifically for it, the Polkadot-API (PAPI), which is becoming the first fully functional example.
As time goes by
The Polkadot network is able to continue moving forward at an unprecedented pace with an impressive number of seamless upgrades and improvements, thanks to its Webassembly-based meta-protocol foundation and its integral canary network, Kusama.
2023 is the year that Polkadot’s three main codebases finally merge into a single codebase. Substrate (a general-purpose blockchain development framework used primarily by Polkadot, but now also used by Cardano’s Midnight, Mandala, and Polygon’s Avail), Polkadot Node (the Substrate-based Relay chain node software), and Cumulus (software for building cross-chains using Substrate) are now all part of a single Polkadot-SDK (i.e., a software development kit for building specific types of other software) codebase. This merger greatly simplifies and optimizes the development process.
While this merger itself does not help decentralization as they are still managed by the Parity team on GitHub, further changes taken this year do contribute to decentralization: part of the codebase, the production runtime that defines business logic specific to Polkadot and Kusama, is no longer hosted under Parity’s GitHub organization; instead, it is now managed by the decentralized Polkadot Fellowship organization (more on this below).
Secondly, the various components of the Polkadot SDK are now published on crates.io, the Rust ecosystem’s software publishing service, ensuring that teams building the Polkadot-SDK have greater stability metrics and less reliance on Parity’s internal development processes. Further improvements to the SDK’s stability are planned for next year, significantly reducing the workload of ecosystem teams in updating their code bases.
Unusual business
Frame, the framework that Substrate uses to build business logic components on-chain (similar to smart contracts in many ways), will receive several improvements in 2024. While some improvements are obvious, others are behind the scenes, but are just as important. One of the most important is the message queue system used to pass XCM messages around the ecosystem. Now ready for rollout, this allows for more and more complex messages to be sent between chains. There is also a new feeless_if API for feeless transactions, a task API that greatly improves the development experience of on-chain maintenance functions, and Default Configs, allowing a pallet to have its Config trait items have default values. Many other improvements have been made, but it is too difficult to list them all here.
OpenGov is a major revision of the Polkadot governance system, announcing the arrival of the Polkadot Council and Technical Committee, and bringing a leap forward in its decentralized credentials. In fact, we have already seen the community come together to turn the tide and resolutely cancel the first malicious referendum on Polkadot.
OpenGov brings with it the Polkadot Fellowship. This is an entity whose actions and membership are governed through complex on-chain code, the first of its kind and one of a series of concrete steps towards Polkadot becoming a fully functional autonomous DAO capable of attracting, retaining, and growing the talent and expertise it needs. There are currently around 60 members, with new members joining all the time. The project's development progress is tracked in the new OpenDev monthly public calls, which many team members participate in (including myself), led by Jay Chrawnna of Kusamarian and moderated by Tommi Enenkel of Mangata. In addition, the group (the Fellowship) is responsible for managing the codebase and releasing versions of the business logic (runtime) of Polkadot and Kusama (of course, their governance bodies must still perform any upgrades).
We saw OpenGov’s (sometimes acrimonious) treasury process spark a lot of online discussion, showcasing a variety of insightful groups competing to make their positions heard and felt. While this is instructive for a functional, inclusive democratic process, it doesn’t always produce the easiest way to make decisions, nor is it ideal for engaging rational discussion. OpenGov is far from that, and this year we saw decentralized governance and execution mature beyond basic stake voting into a sophisticated DAO, with the emergence of the Polkadot Fellowship as the first non-token element of Polkadot’s decision-making body, and others are sure to follow.
In such a groundbreaking moment, the Polkadot network began what it calls the first decentralized, autonomous sovereign wealth reserve, instructing the network through OpenGov to use treasury funds to regularly purchase USDT to fund the salaries of the Polkadot Fellowship.
Referendum#231is using 469,000 DOTs to buy over two million dollars of USDT (likely more as I write this) through XCM on the HydraDX Omnipool, a high-liquidity decentralized exchange based on parachains. The purchase mechanism uses an on-chain "scheduler" to make purchases in small amounts, averaging around $250 every half hour. These USDT will be placed in a dedicated network treasury specifically for autonomous distribution to members of the Polkadot expert community as part of the Fellowship salary program. The salary program itself is outlined in the manifesto and detailed in the Fellowship RFC #50.
The entire process was approved in a decentralized manner through OpenGov and is being executed autonomously on-chain in professionally audited logic code, written according to pre-published instructions. No specific individual or entity group holds any executive privilege or position during the entire process. While this was a one-time operation for placing stablecoin token purchases in the Fellowship Treasury, there is nothing unique to USDT, the Fellowship, or its sub-treasuries, and the same process can be applied to any token that exists on a decentralized exchange within the scope of Polkadot’s XCM, and to any treasury under any collective. Perhaps we will see a wealth management collective come together to create a decentralized sovereign wealth fund for Polkadot? Regardless, I expect to see a range of rule-based collectives hosting their own multi-asset treasuries in the future, perhaps with salary plans that meet the specific needs of the network.
Key highlights
Agile Coretime is an idea I first proposed at Decoded this year, and after a quickly written RFC and an intense development cycle, it is now live on Rococo and is expected to land on Kusama and Polkadot in Q1 next year. This fundamentally changes the way Polkadot obtains a key resource - parachain Coretime. Unlike unpredictable long-term pledges achieved through auctions, Coretime (the name of the resource) is sold in monthly sales before use at a more predictable price.
In the Agile Coretime model, blocks of Coretime are represented by XCM NFTs, which can be traded, exchanged, advertised, and sold within the Polkadot ecosystem in the same way as any other NFT. Additionally, these Coretime NFTs can be cut and diced in a variety of ways, and then these smaller blocks of Coretime can again be resold and ultimately used to support a cross-chain. A number of Coretime marketplaces have emerged, such as Lastic, that provide an easy way to trade this new resource class.
The direct impact is to avoid locking up DOT tokens to participate in slot auctions (usually funded by crowdlending). This greatly reduces the burden on new teams and reduces uncertainty for current teams. It works well with the "cross-chain on demand" model, allowing buyers of Coretime to contribute it to a shared pool where ODPs can be purchased as needed.
Road ahead
The new year is going to be a pretty busy time for Polkadot. Agile Coretime, On-Demand Parachains, Ethereum Snowbridge, and the Kusama bridge are four important infrastructures that are coming soon. Elastic Scaling is the fifth technology I expect to see in 2024. I’m also looking forward to the expansion of our DAO, including new teams, multi-asset sub-treasury, extended XCM, and some exciting new primitives we have in development.
Our innovative forkless block production consensus algorithm, Sassafras, has taken shape, and we can expect to start using it in testnets in 2024. Parity Labs is also working on many new technologies; a recent RFC (closed after some significant iterations in the prototype stage) called CoreJam may give interested parties some ideas about the direction here.
That's the end of my little review; I hope you enjoyed it. All that remains is to wish you all a happy holiday season and hope for a freer, more peaceful, and happier world.
See you next year.
——Gift
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