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Polkadot 2023 Roundup

December 24, 2023 in Blockchain, Governance, Parachains, Polkadot
Avatarby Gavin Wood

As the (northern hemisphere) nights have drawn in and soma.fm’s Christmas Lounge finds its rightful place on my household radio, we once again find ourselves at the time of the year where I write my annual diary entry on behalf of Polkadot. With Covid now largely consigned to the collective memory of a generation, we see a global return to normalcy and resurgence of (in-person) events with it. Conflict and AI present some of the most prominent themes of the news cycle this year with some of the more inquisitive wondering how, along with blockchain, the world might be changed with them. This year it is also a special anniversary for me; as I write this, exactly 10 years ago I wrote the first lines of crypto-economic code in my life. So, what did 2023 bring?

Industrial Activity

As my status in this industry would, perhaps, approach that of a veteran, it seems to me that we have rather a seasonal system going. Our new “crypto-winter” has been well underway for some time now. Web3, but perhaps more accurately cryptocurrency, has found itself in the regular news rather a lot but under a somewhat more negative light than the more optimistic headlines of several years ago. (Indeed, one of the more balanced commentaries was in The Economist which saw fit to make a not altogether endearing comparison to that of the ancient pest, the cockroach.) This crypto-winter, while probably inevitable, must surely have been helped along by the failings of certain individuals who seem to think the messaging and marketability of Web3 can be successfully divorced from its technology and culture. I fear it’s not the last time we’ll see this behaviour in this industry, but let’s hope that this provided a constructive and enlightening lesson for everyone.

I would wager that those same headlines, and the predictable ire and criticism of the partially-informed commentators which followed, likely made their way to the halls of power. For, we also see the regulatory environment our industry finds itself in evolving, sometimes sensibly, sometimes less so. Some large developments are now happening all over the world, not least in the UK, Switzerland, Japan, the EU and the US; the latter might even be partially informed by the Web3 Foundation whose representatives have testified to the US House of Representatives and advised the LDP, Japan’s ruling party. While the changes in these jurisdictions each have their own nuances, we are seeing an increasingly intentional position taking shape, strongly underlining the importance of avoiding trust-bound, custodial and Web2 “solutions” and bring in true trustlessness and decentralisation in all terms: stake, nodes and governance. Thankfully, some of the more enlightened regulators of the world do appear to recognise that not all cryptocurrencies are equal, even if only implicitly noted through certain absences.

Polkadot Decentral

Those of the old guard know that decentralisation has been a priority of Polkadot through from its very conception, as mentioned in the original vision paper. It is rare for the interests of idealism and pragmatism to overlap, but in this case it is real and decentralisation is not just something we should work towards, but something we truly must deliver on.

While there is still much work to do in this industry to create truly resilient, decentralised and self-reliant systems, by many metrics Polkadot is already ahead of the game. A recent independent report placed Polkadot top in terms of the Nakamoto coefficient (one means of measuring structural decentralisation) among the industry’s major networks and second out of all proof-of-stake protocols. This year also saw a decentralisation milestone hit with a second implementation, Kagome, of the Polkadot Relay-chain protocol joining the active validator set on Kusama!

It might seem that the push to decentralise is starker nowhere more so than Parity’s recent structural changes. Parity’s efforts to decentralise have meant a substantial reduction in the headcount which falls under its executive, mostly in areas involved with the support of ecosystem activity and not so much involved in areas associated with Parity’s historical domain, the development of core technology. On the back of this restructuring, the Web3 Foundation announced the launch of the impressive $55m Decentralised Futures fund whose stated purpose is to aid our ecosystem in its efforts to further decentralise itself and arrive in a sustainable position where activity is contributing to the utility and demand of Polkadot’s main resource, Coretime. This fund is available immediately, and has already received dozens of high quality applications and will continue to be active and disbursing over the first half of 2024.

The Polkadot ecosystem continues to grow: Across Polkadot and Kusama we have 90 parachains from over 580 ecosystem projects; 300 of which are decentralised applications and 190 are Substrate-based blockchains. Polkadot runs with 50 of its parachain cores enabled now, with 17,000 XCM messages being shuttled trustlessly and securely between them each month. On the 22nd of December, we saw the Relay-chain alone—that’s one of 50 chains on Polkadot and one which already has quite a lot of other stuff to be doing— handle 6.9m transactions in 24 hours, a sustained rate of 80 per second over the day. We now see almost 2,000 monthly active developers and 83,000 monthly active users across the ecosystem. We’ve seen over 10x growth of the small-hodler-friendly nomination pools through the year to over 180 pools covering 10m DOT staked.

In the Web3 Foundation’s grants programme we’ve seen 324 applications over the year of which a huge 135 have been signed over 54 countries; and last month, the foundation hit a milestone as it signed its 600th grant since the programme began in 2017.

Momentous Occasions

Polkadot’s flagship event Decoded took place in Copenhagen, Denmark, June this year and with satellite events around the world, not least in Hanoi (Vietnam), Buenos Aires (Argentina), and Shanghai (China). Across both events, 1,500 people turned up (and many thousands more tuned in) to hear from more than 100 speakers from across the ecosystem. Both were hybrid events, and for the Copenhagen event alone more than 11,000 virtual registrations were made.

Immediately prior to the Copenhagen event, the Polkadot Summit took place, a symposium of 150 of the key decision-makers and builders within the ecosystem. This, I feel was rather successful, with one key result being the introduction of a new metadata schema designed to optimise hardware wallets for trustless operation throughout the Polkadot ecosystem: Given the unprecedented levels of flexibility offered by Polkadot’s parachain model and its — again — unprecedented upgradability, the ability to describe the meaning of any given transaction at any given time is not easily achieved. Nevertheless, the integration of transaction metadata (and along with it a human-readable meaning of the transaction being signed) provides an ecosystem-wide solution capable of being rolled out to the wallet solutions across various well-known manufacturers. As we decentralise further, programmes like this ensure the ecosystem as a whole can work together to help create common opportunities in areas like standardisation, infrastructure and tooling.

Sub0, the Polkadot Developer Conference took place for the first time this year as a hybrid event, with all material live streamed and various facilities in place for those unable to attend in person. 500 people attended in person (with many hundreds more tuning in online) to listen to more than 50 speakers present key insights into Polkadot’s technology base. Speakers included both core developers talking about the latest developments, tooling, APIs and processes, as well as industry technologists talking about their experience of arriving at solutions through the tech stack.

The Web3 Music Summit, organised by Primavera Sound in collaboration with the Web3 Foundation, provided a space for exploring Web3 within the context of the music industry. Of particular note was the possibility of using DAOs within the industry to rebalance and optimise the economic incentives for artists by allowing for more direct means of economic interaction between artists and fans.

There were numerous Polkadot-focussed conferences organised by and within the community including ParisDOT (in France) and Polkadot Pulse (in Bangalore, India), not to mention numerous Polkadot satellite events around the globe at the biggest industry gatherings such as ETHDenver, Austin’s SXSW, Korea Blockchain Week, Tokyo’s WebX, Singapore’s Token 2049, Coindesk Consensus and NYC’s Messari Mainnet with seminars, stands and side-events presenting Polkadot’s unique strengths and vibrant community of technologists.

Academic Achievements

The Polkadot Blockchain Academy, a first-of-its-kind programme to create a blockchain course worthy of being taught in world-class centres of academic excellence, proceeded to grow with its second and third cohort of students. Having started as a five week course taught in Cambridge University last year, this year it continued on a global tour, taught at the historic University of Buenos Aires at the beginning of the year and then again in the famous Berkeley campus of the University of California during summer.

Buenos Aires saw 790 applicants compete over 76 places on the course, which was conducted in collaboration with 12 universities in the wider Latin America region. The course is not for the faint of heart and with comprehensive coursework examined by some of the best minds in the industry, a pass cannot be taken for granted, though 80% of the students ultimately managed it!

In the latter course where 344 applicants applied over 72 places, we introduced a new Founders’ Track, a variation of the course focussing less on the deeply technical programming elements and more on the wider technology and its social and industrial implications. We saw a similar pass rate with one individual passing with distinction. Our youngest graduate came for the six week course all the way from Eastern Europe at the tender age of 17.

The Substrate Builders Programme, Parity’s premier support programme for teams embarking on building a blockchain using Polkadot SDK, continued unabated, with 2023 seeing 124 projects applying to the programme and 23 projects making their first major milestone from 55 reviews. Meanwhile a sister programme launched, Developer Heroes, focussing on mentoring individual developers within the ecosystem, saw 420 applicants throughout the year. It continues with well over 200 members and 60 mentors.

Power to the Parachains

This year saw the launch and further deployment of both major centralised stablecoins Tether (USDT) and Circle (USDC). Hardly the panacea of decentralisation we’re working towards, these nonetheless provide some important utility for several parachain projects and users where pragmatism must take front seat. $250m of USDC alone sits on the Polkadot Asset Hub, with more in USDT contributing to the ecosystem’s stablecoin total.

Kusama’s Asset Hub now has fully integrated direct token conversions. This wonder of cross-chain magic works by introducing a system-level decentralised exchange to provide a neutral and easily accessible pool of liquidity for DOT/KSM to various tokens. Moreover, this liquidity pool is fully integrated with the fee payment system allowing all such tokens to easily be used to pay for fees on the Asset Hub and for exchanges to happen with the XCM language without needing to go through third-parties. This dramatically simplifies cross-chain transactions and reduces complexity for users, collators and developers.

Within the ecosystem, the user-tooling landscape continues to evolve with major improvements to a number of well-known products. Parity’s Signer, an app designed to transform any old android or iOS device into a fully-featured ultra-secure air-gapped wallet, has now been rewritten and released as the Polkadot Vault. While I’m still involved in product direction, maintenance is transitioning out of Parity to the Novasama team (expect a more substantial notification when this is finalised). It has lately received several features designed to bring tight integration to said team’s new Spektr Wallet. For those that don’t know, this is a treasury-funded and open-source project designed to be a non-commercial, neutral desktop wallet for enthusiasts and power-users. By integrating well, the amount of faff done on the Vault device is reduced to near zero and the process of Vault restoration and upgrading becomes a joy to behold.

This year saw the introduction of the Bridge Hub and Identity chain, which together with the Collectives chain and the Asset Hub further develops Polkadot’s system-level functionality across four system chains and moves it away from an architecture bottlenecked by the Relay-chain. The two industry-leading trustless bridges are now feature-complete and audited and are moving into deployment on the bridge hub(s) with activity expected to begin shortly into the new year. The bridges are the first of their kind, using special purpose cryptographic protocols grown within the Web3 Foundation’s research team in order to provide their service in a trustless fashion. They avoid use of any special “governance” trapdoor administration body and unlike Ethereum bridges to date are not limited to token transfers, but fully integrate with XCM in order to allow for totally arbitrary contract interactions. This opens up all sorts of design space for solutions which involve straddling two sovereign networks like Ethereum and Moonbeam. Of course the bridges are still limited by the underlying security of the weaker network, but if this is a limitation you’re willing to eat up, then this is some revolutionary technology not worth missing.

Big Beats are the Best

2023 has seen some notable newcomers to the Polkadot ecosystem. Beatport, the music portal beloved of DJs, announced plans for blockchain integration covering NFTs with various platform integrations through their own parachain to be launched on Polkadot.

Energy Web announced their intention to transition from their current EVM-based chain to Polkadot technology. For those that do not know, Energy Web is the world’s largest ecosystem of companies using open-source, decentralised technologies and home to the blockchain projects of many major enterprises in the energy sector.

OpenZeppelin, a giant in blockchain security auditing, has been collaborating with Polkadot’s Ink! smart contracts team; it recently announced it has begun building a library of Polkadot parachain runtimes, funded by the Polkadot (on-chain) Treasury, adding another major player to help support the burgeoning number of teams building Polkadot parachains on Substrate.

Mythical Games, the number one gaming chain, announced their move to bring millions of in-game assets on to their parachain as NFTs and helping to showcase Polkadot as the scalable interoperable network of blockchains set out in the original vision paper over seven years ago.

The New Album(en) is Out Now

This year saw the final release of Polkadot 1.0 in July signalling that the Polkadot Relay-chain is feature-complete according to said vision paper. It has been a long slog, but it’s very nice to have arrived! With the feature set delivered, focus will shift into two directions; firstly, a long-term strategic plan to pivot Polkadot into a more general platform for generating, utilizing and selling Coretime, Polkadot’s version of blockspace. Secondly, managing a near-term priority list of features, tools and fixes specifically for getting the most out of the existing Polkadot 1 platform.

Already we can see this with Polkadot 1.1, released at the end of the year, bringing with it a slew of new technology including, importantly, Asynchronous Backing which has already been rolled out on Kusama with Polkadot to follow imminently. Asynchronous Backing is an improvement to the parachain technology stack largely invisible to developers which introduces a form of pipelining. This allows for more than a doubling of parachain block production (going from an average of one block every 12 or so seconds to one every six) and a large improvement in the amount of work which can be done in those blocks. The upshot is a near transparent performance boost for parachains of up to 800%.

Impressive third-party infrastructure is being built to help utilise Polkadot such as the new Metamask Snap functionality allowing the ever-popular Metamask browser wallet to be used for Polkadot apps and the Tanssi appchain deployment system for simplifying the process of, you guessed it, deploying appchains.

Another important technology whose roll-out began this year was On-Demand Parachains (ODP) which the Polkadot veterans might remember as parathreads, dating back to late 2018 in Shanghai. On-Demand Parachains, as the name might suggest, allows for the possibility of parachains purchasing their Coretime (that is, the Polkadot resource allowing them to be advanced securely) immediately before usage, rather than as at present with long-term rented “slots”. Alongside Agile Coretime, ODP promises to be a step change in how Polkadot’s “blockspace” can be utilised.

Polkadot 1.0 arrived alongside the fourth major revision of XCM (version three — in true computer science fashion we began at zero). This brought with it numerous important improvements for the ecosystem including the groundwork for a huge increase in secure message throughput by correctly attributing the resource costs of each instruction.

This year also saw the release of Smoldot 1.0, which now exists in proper decentralised fashion as a treasury-funded project. While experimentally integrated into the venerable Polkadot.js apps in compatibility mode, it very much comes into its own with applications built directly for it such as Novasama’s Spektr power-user wallet and alongside purpose-built middleware, of which Polkadot-API (PAPI) is shaping up to be the first functional example.

Rolling with it

The Polkadot Network rolls on with its impressive rate of seamless upgrades and improvements without breakage or downtime, a first in this industry and something which owes itself not least to the Webassembly-based meta-protocol foundations and Kusama, its veritable canary network.

2023 was the year where the three major codebases of Polkadot were finally merged into a single codebase. Substrate (the general blockchain development framework, used primarily by Polkadot, but now also by Cardano’s MidnightMandala, and Polygon’s Avail), Polkadot node (the Relay-chain node software, based on Substrate) and Cumulus (the software which allows parachains to be built using Substrate) are now under a single Polkadot-SDK (that’s Software Development Kit, the software used for building particular kinds of other software) codebase. This merging dramatically simplifies and streamlines development.

While this merge per se does nothing to help decentralise since they were and continue to be under the Parity organisation on Github anyway, further change taken this year does contribute toward decentralisation: the parts of the codebase which define the business logic specific to Polkadot and Kusama, the so-called production runtimes, are no longer hosted under the Parity Github organization; instead, these are now administered by the decentralised Polkadot Fellowship organisation (more on this below).

Secondly, the various pieces of Polkadot SDK are now released on the Rust-ecosystem software publication service crates.io, ensuring a greater degree of stability for teams building on Polkadot-SDK and reducing the reliance on Parity’s internal development processes. Further changes are planned next year to increase the SDK stability and substantially reduce the workload of ecosystem teams in keeping their codebases up to date.

Business as Unusual

Frame, Substrate’s framework for building components of business logic which sits on-chain (not unlike smart contracts in many ways), has had more than its fair share of improvements over 2024. While some of them are obvious, others sit under the hood but are equally important, if not more so. One of the most important is the message-queuing system used for ferrying XCM messages around the ecosystem. Now ready for roll-out, this allows for a much greater number and complexity of messages to be sent between chains. There’s also the new feeless_if API for feeless transactions, task API which massively improves the DevEx for on-chain maintence functions and Default Configs, allowing pallets to have their Config trait items have default values. Many more improvements were made, but too many to list here!

OpenGov, the major revision of Polkadot’s governance apparatus, launched calling time for the Polkadot Council and Technical Committee and ushering in a step-change to its decentralised credentials. Indeed, we already saw the community gather and defend Polkadot from its first malicious referendum by forcefully cancelling it.

OpenGov brought with it the Polkadot Fellowship. This is an entity whose actions and membership are governed through sophisticated on-chain code, the first of its kind and one of a number of concrete steps towards Polkadot becoming a functional, self-sovereign DAO capable of attracting, retaining and developing the talent and expertise it needs to survive and prosper. At present there are around 60 members, with a steady inflow of individuals joining the ranks. The project’s developments are tracked in the new OpenDev monthly public call attended by many of the fellows (myself included) and directed by Jay Chrawnna of the Kusamarian and hosted by Mangata’s Tommi Enenkel. Furthermore it is the Fellowship who administer the codebase and make the releases for the business logic (runtimes) of Polkadot and Kusama (though of course their governance apparatus still must actually execute any upgrades).

We’ve seen OpenGov’s (at times raucus) treasury process giving plenty of popcorn-worthy online chatter, showcasing opinionated parties competing to have their positions heard and felt. While this is instructive of functioning, inclusive democratic processes, this doesn’t always yield the most streamlined means of decision-making, nor it is ideal in attracting reasoned discourse. OpenGov is much more than this and this year, we see the unmistakable beginnings of decentralised governance and execution maturing beyond basic stake-voting into a sophisticated DAO with the materialisation of Polkadot’s Fellowship inserted as the first non-token element of Polkadot’s decision-making apparatus. Others will surely follow.

In a groundbreaking moment, the Polkadot network began what amounts to its first decentralised, autonomous sovereign wealth reserve when OpenGov instructed the network to use treasury funds to make a periodic purchase of USDT to fund the Salary Programme of the Polkadot Fellowship.

Referendum #231 is using 469,000 DOT to acquire upwards of $2m worth of USDT (quite a bit more than that, as I write this) over XCM from the HydraDX Omnipool, a parachain-based high-liquidity decentralised exchange. The purchase mechanism uses the on-chain scheduler to conduct the purchase process in small amounts, averaging $250 every half-hour or so. This USDT will be placed in a special-purpose network sub-treasury to be used specifically for the autonomous disbursement to Polkadot Fellowship members as part of the Fellowship Salary Programme. The Salary Programme itself was outlined in the Manifesto and detailed and introduced as part of Fellowship RFC#50.

The entire process was approved in a decentralised manner through OpenGov and is being executed autonomously and trustlessly on-chain in professionally audited logic coded according to pre-published description. No specific individual or meatspace organisation held any administrative privilege or office throughout. While this was a stablecoin token purchase to place in the Fellowship treasury, there is nothing unique about USDT, the Fellowship or its sub-treasury and the same process can be applied to any token for which a decentralised exchange exists within reach of Polkadot’s XCM, and for any treasury under any collective. Perhaps we’ll see a wealth management collective coming together to create a decentralised sovereign wealth fund for Polkadot? In any case I would expect to see a proliferation of rules-based collectives hosting their own multi-asset treasuries, perhaps with attached salary programmes to fulfil specific needs of the network in the future.

Core Blimey!

Agile Coretime, which I first presented as an idea at Decoded this year is, after a swiftly written RFC and period of intense development, now going live on Rococo and expected on Kusama and Polkadot in Q1 next year. This fundamentally alters the means by which Polkadot’s key resource — time on parachain cores — is acquired. Rather than long-term leases with difficult-to-predict deposits arrived at by auction, instead Coretime (as the resource is called) is sold off at more predicable prices in a monthly sale just ahead of usage.

In the Agile Coretime model, chunks of Coretime are represented by XCM NFTs, and they can be traded, exchanged, advertised and sold in much the same way as any other NFT within the Polkadot ecosystem. Moreover, these Coretime NFTs can be sliced and diced in myriad ways before these smaller bits of Coretime are resold and eventually used for powering a parachain. Already Coretime marketplaces such as Lastic are taking shape to provide an easy way to trade this new resource class.

Its immediate consequences are to avoid the need to lock up DOT tokens in slot auctions (and take part in the crowdloans which often capitalised them). This hugely reduces the burden on new teams and the uncertainty for current teams. It works well with the “On-Demand Parachains” model, allowing those purchasers of Coretime to contribute it to a shared pool from which ODPs can purchase as needed.

The Road Ahead

The new year promises to be a rather busy time for Polkadot. Agile Coretime, On-Demand Parachains, Ethereum Snowbridge and the Kusama bridge are four major pieces of infrastructure imminently landing. Elastic Scaling adds a fifth technology which I’d expect to see in 2024. I can also say I’m looking forward to the expansion of our DAO primitives, between new fellowships, multi-asset sub-treasuries, expanded XCM and some exciting new primitives which we have in development.

Sassafras, our novel forkless block-production consensus algorithm, has taken shape and we can expect this to begin being used in testnets over 2024. Parity Labs is also working on a number of new technologies; a recent RFC (closed as it goes through some major iteration in the prototyping phase) known as CoreJam might give the interested some ideas about the direction being taken here.

This brings my little retrospective to its close; I do hope you enjoyed it. All that is left is for me to wish everyone a happy holiday season and a bit more freedom, peace and happiness in the world.

Until next year, Gav.

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