Agile Coretime, On-Demand Parachains, Ethereum Snowbridge, and Kusama Bridge are the four important upcoming infrastructures.
Author: Gavin Wood
Translation: 0xAyA, Odaily
As the nights in the northern hemisphere grow longer, the Christmas music special from soma.fm once again appeared on my radio at home, and it's time for the annual diary writing on behalf of Polkadot. With the basic passing of the COVID-19 pandemic from our memories, we can see the world returning to normal and the subsequent revival of offline activities. This year, conflicts and artificial intelligence have become one of the most prominent themes in the news cycle, and some curious people also want to know how they are changing the world together with blockchain.
This year is also a special anniversary for me; as I write these words, it just so happens that ten years ago I wrote my first encrypted financial code. So, what does 2023 bring?
Industry Activities
Given my position in this industry, it seems to me that we have a seasonal system. Our new "cryptocurrency winter" has been going on for a while. Web3, more specifically cryptocurrency, often appears in the news, but compared to the more optimistic headlines of a few years ago, it often appears under more negative language evaluations. (Indeed, a more balanced commentary in an economics magazine found some similarities with ancient pests—cockroaches.) This cryptocurrency winter, although likely inevitable, has been aided by the lack of success of certain individuals who seem to believe that Web3 can disseminate messages and market promotions independent of its technology and culture. Unfortunately, this may not be the last time we see this behavior in the industry, but we hope that such behavior provides a constructive and inspiring lesson for everyone.
I bet that these negative news reports and the subsequent unfair negative comments have likely reached the halls of power. At the same time, we also see that the regulatory environment of the industry we are in is evolving—sometimes wisely, sometimes inadequately. Significant changes are taking place around the world, especially in the UK, Switzerland, Japan, the EU, and the US; the progress in the latter (the US) is likely known to the Web3 Foundation, which testified in the US House of Representatives and provided advice to the Liberal Democratic Party of Japan. Although these changes in regulatory provisions have subtle differences, we can see a forming and increasingly clear position, which strongly emphasizes avoiding trust-based, custodial, and Web2 "solutions," and introducing genuine trustlessness and decentralization in all aspects: ownership, nodes, and governance. Fortunately, some more visionary global regulatory agencies seem to recognize that not all cryptocurrencies are equal, even if this is only implicitly noted through certain omissions.
Decentralization of Polkadot
The older generation of Web3ers knows that, as stated in the Polkadot whitepaper, decentralization has always been Polkadot's top priority. The interests of idealism and pragmatism rarely intersect, but this situation is real and decentralization is not only a goal we should strive for, but also a belief we must achieve.
Although there is still much work to be done to create a truly resilient, decentralized, and self-sufficient system in this Web3 industry, Polkadot is already ahead in many indicators. A recent independent report placed Polkadot at the top of the centralization coefficient (a measure used to assess the degree of decentralization of blockchain networks). This year, we also witnessed the milestone of decentralization with Polkadot's relay chain Kagome joining as a validator node in the Kusama network.
It seems that the push for decentralization is particularly evident in the recent structural changes of the Parity team. The efforts of the Parity team towards decentralization have led to a significant reduction in the number of executives, mainly in areas supported by ecosystem activities, which are not closely related to the historical domain of the Parity team—core technical development. Behind this restructuring, the Web3 Foundation announced the launch of the $55 million "Decentralised Futures fund," with the stated purpose of helping our ecosystem further decentralize and achieve a sustainable state in which activities contribute to the utility and demand of Polkadot's block space (Coretime). The fund was immediately put into use, has received dozens of high-quality applications, and will remain active and disbursing in the first half of 2024.
The Polkadot ecosystem continues to grow: on Polkadot and Kusama, we have 90 parallel chains from over 580 ecosystem projects, including 300 decentralized applications and 190 blockchains developed based on the Substrate framework. Polkadot now operates 50 enabled parallel chain cores, between which 17,000 XCM messages are securely transmitted each month. On December 22, we saw a single relay chain among Polkadot's 50 chains process 6.9 million transactions in 24 hours—a sustained rate of 80 transactions per second throughout the day. We now see over 2,000 active developers almost every month in the ecosystem, as well as 83,000 active users. We have seen a 10-fold increase in retail-friendly nomination pools throughout the year, covering over 180 pools with 10 million DOT.
In the Web3 Foundation's funding program, we received a total of 324 applications throughout the year, of which 135 projects from 54 countries signed agreements; the foundation also reached a milestone last month—the 600th grant since its establishment in 2017.
Key Moments
Polkadot's flagship event, Decode, was held in Copenhagen, Denmark in June, and satellite events were held around the world, especially in Hanoi (Vietnam), Buenos Aires (Argentina), and Shanghai (China). In these events, over 1,500 people attended (with tens of thousands of viewers online), listening to speeches from over 100 speakers from the entire ecosystem. These were hybrid events of virtual and real, with over 11,000 online registrations for the Copenhagen event alone.
Shortly before the Copenhagen event, the Polkadot Summit, consisting of 150 key decision-makers and developers within the ecosystem, was held. This, in my opinion, was quite successful, with one key outcome being the introduction of a new metadata model aimed at enabling hardware wallets to operate trustlessly across the entire Polkadot ecosystem—due to the flexibility provided by Polkadot's parallel chain model and innovative upgradability, it is difficult to describe the meaning of any transaction at any time. Nevertheless, the integration of transaction metadata (and the human-readable meaning of the transactions) provides an ecosystem-wide solution that can be promoted in various well-known wallet solutions. As we further decentralize, such procedures ensure that the entire ecosystem can work together to create standardized opportunities in areas such as infrastructure and tools.
The first hybrid format Polkadot developer conference, Sub0, with live streaming and various facilities for those unable to attend in person, was attended by 500 people (with hundreds watching online), listening to over 50 speakers presenting key insights into Polkadot's technical foundations. The content included core developers discussing the latest developments, tools, APIs, and processes, as well as industry tech personnel discussing their experiences in finding solutions through the technology stack.
The Web3 Music Summit, organized by Primavera Sound in collaboration with the Web3 Foundation, provided a space to explore Web3 in the context of music. Of particular note is the feasibility of using DAOs (Decentralized Autonomous Organizations) in the music industry, allowing for more direct economic interaction between artists and fans to rebalance and optimize artists' economic incentives.
Several Polkadot-related conferences were held within and outside the community, including ParisDOT in Paris, France, and Polkadot Pulse in Bangalore, India. Additionally, numerous Polkadot satellite events were held at major industry gatherings worldwide, 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 included workshops, booths, and conference activities, showcasing Polkadot's unique advantages and vibrant technical community.
Academic Achievements
The Polkadot Blockchain Academy is an innovative program aimed at creating a blockchain course worthy of being taught at top academic institutions worldwide. The program offered a five-week course at the University of Cambridge last year and continued globally this year, including a course at the University of Buenos Aires at the beginning of the year and at the University of California, Berkeley in the summer.
The course at the University of Buenos Aires attracted 790 applicants competing for 76 spots and collaborated with 12 universities in the Latin American region. The course, not for the faint-hearted, offered a comprehensive curriculum tested by the industry's top minds, and 80% of students ultimately passed, although admission was not guaranteed.
In subsequent courses, 344 applicants competed for 72 spots, and a new founder's course was introduced, focusing less on deep technical programming elements and more on broader technology and its social and industrial impact. Similar pass rates were observed, with one individual excelling. The youngest graduate was only 17 years old, from Eastern Europe, and participated in a six-week course.
The Substrate Framework Developer Program is a major initiative by the Parity team to support teams building blockchains using the Polkadot SDK. In 2023, 124 projects applied for the program, with 23 projects reaching the first significant milestone out of 55 reviews. Additionally, the team launched a sister program, Developer Heroes, focused on mentoring individual developers within the ecosystem, with 420 applicants throughout the year. The program currently has over 200 members and 60 mentors.
Power to the Parachains
This year saw the launch and further deployment of two major centralized stablecoins, Tether (USDT) and Circle (USDC). While these are not the decentralized panacea we strive for, they provide significant practical value for several parallel chain projects and users. USDC alone has $250 million deposited in the Polkadot Asset Hub, and USDT deposits contribute even more to the total stablecoin amount in the ecosystem.
Kusama's Asset Hub now fully integrates direct token swaps. This miraculous cross-chain magic is achieved by introducing a system-level decentralized exchange, providing a neutral and easily accessible liquidity pool for DOT/KSM to various tokens. Additionally, the liquidity pool fully integrates a fee payment system, allowing all these tokens to be easily used for paying Asset Hub fees and exchanged via the XCM language without the need for third parties. This greatly simplifies cross-chain transactions, reducing complexity for users, collators, and developers.
The usage environment for user tools continues to evolve within the ecosystem, with significant improvements to many well-known products. Parity Signer, an application designed to turn any old Android or iOS device into a fully-featured ultra-secure air-gapped wallet, has been rewritten and released as Polkadot Vault. While I am still involved in product direction, maintenance work is transitioning from the Parity team to the Novasama team (there will be more substantial notifications when this is finalized). Recently, Polkadot Vault has added features aimed at tight integration with the team's new Spectr Wallet. For those unfamiliar, this is a project supported by the fund, an open-source initiative aimed at being a non-commercial, neutral desktop wallet for enthusiasts and advanced users. Through good integration, concerns on Vault devices have been reduced to almost zero, and the recovery and upgrade process for Vault has become enjoyable.
This year also saw the launch of Smoldot 1.0, a fund-supported project that exists in a properly decentralized manner. While experimentally integrated in compatibility mode into the respected Polkadot.js application, it has played a significant role in applications built directly for it, such as Novasama's Spectr advanced user wallet, and middleware specifically built for it, namely Polkadot-API (PAPI), which is becoming the first fully-featured example.
As Time Passes
The unprecedented ability of the Polkadot network to continue advancing at an impressive pace of seamless upgrades and improvements is also attributed to the WebAssembly-based meta-protocol foundation and its indispensable canary network, Kusama.
2023 is the year when the three major codebases of Polkadot were finally merged into a single codebase. Substrate (a general blockchain development framework mainly used by Polkadot but now also used by Cardano's Midnight, Mandala, and Polygon's Avail), Polkadot nodes (Relay chain node software based on Substrate), and Cumulus (software for building cross-chains using Substrate) now belong to a single Polkadot-SDK codebase. This merger greatly simplifies and optimizes the development process.
While the merger itself does not help with decentralization, as they are still managed by the Parity team on GitHub, further changes made this year have contributed to decentralization: a part of the codebase, namely the production runtime that defines specific business logic for Polkadot and Kusama, is no longer hosted under Parity's GitHub organization; instead, it is now managed by the decentralized Polkadot Fellowship organization (details will be provided in the following).
Furthermore, various components of the Polkadot SDK are now released on the software distribution service crates.io in the Rust ecosystem, ensuring the team building the Polkadot-SDK has greater metrics on stability and reducing reliance on Parity's internal development processes. Next year, there are plans to further improve the stability of the SDK, significantly reducing the workload for ecosystem teams in updating their codebases.
Unusual Business
Frame is a framework used in Substrate to build on-chain business logic components (similar in many ways to smart contracts) and has undergone multiple improvements in 2024. While some improvements are obvious, others are behind the scenes but equally important. One of the most significant is the message queue system for passing XCM messages within the ecosystem. It is now ready for rollout, allowing for more and more complex messages to be sent between chains. There is also a new feeless_if API for feeless transactions, the task API greatly improves the development experience for on-chain maintenance functions, and Default Configs allow pallets to have default values for their Config trait. Many other improvements have been made, but they cannot all be listed here.
OpenGov is a major revision of the Polkadot governance system, announcing the era of the Polkadot Council and Technical Committee, bringing a leap in its decentralized qualifications. In fact, we have seen the community come together to firmly cancel the first malicious referendum on Polkadot.
OpenGov has brought about the Polkadot Fellowship, an entity whose actions and members are managed through complex on-chain code, making it the first of its kind and one of a series of concrete steps towards Polkadot becoming a fully functional, talent-attracting, retaining, and nurturing autonomous DAO. There are currently about 60 members, with new members joining continuously. The progress of the project is tracked in the new OpenDev monthly public calls, with many team members participating (including myself), led by Jay Chrawnna of Kusamarian and hosted by Tommi Enenkel of Mangata. Additionally, the Fellowship is responsible for managing the codebase and releasing versions of the business logic (runtimes) for Polkadot and Kusama (of course, their governance bodies still have to execute any upgrades).
We have seen that the (sometimes sharp) financial processes of OpenGov have sparked a lot of online discussions, demonstrating various insightful groups vying to have their positions heard and perceived. While this is inspiring for functional, inclusive democratic processes, it is not always the most straightforward way to make decisions or the ideal way to attract rational discussions. OpenGov is far from that, and this year we have seen decentralized governance and execution mature into a complex DAO beyond basic token voting, with the emergence of the Polkadot Fellowship as the first non-token element of Polkadot's decision-making body, with other bodies sure to follow.
At this groundbreaking moment, the Polkadot network has begun its first decentralized, autonomous sovereign wealth reserve, namely by directing the network to use treasury funds to regularly purchase USDT to fund the salaries of the Polkadot Fellowship through OpenGov.
Referendum #231 is using 469,000 DOT to purchase over two million USDT (possibly more at the time of writing) through the XCM of the Omnipool of HydraDX, a parallel chain-based high-liquidity decentralized exchange. The purchase mechanism uses an on-chain "scheduler" to make small purchases, averaging around $250 every half hour. These USDT will be placed in a dedicated network sub-treasury, specifically used as part of the Fellowship salary program, autonomously distributed to members of the Polkadot Fellowship. The salary program is outlined in the manifesto and detailed in Fellowship RFC# 50.
The entire process is approved in a decentralized manner through OpenGov and is autonomously executed on-chain with professionally audited logic code, written according to pre-published instructions. Throughout the process, no specific individual or entity holds any administrative privileges or positions. While this is an operation to place stablecoin token purchases 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 with a decentralized exchange within the XCM scope of Polkadot, as well as any fiscal affairs under any collective. Perhaps we will see a wealth management collective come together to create a decentralized sovereign wealth fund for Polkadot? In any case, I expect to see a series of rule-based collectives managing their own multi-asset treasuries, perhaps with salary programs to meet network-specific needs.
Core Highlights
Agile Coretime is an idea I first proposed on Decoded this year, and after rapid RFC writing and a tense development cycle, it is now live on Rococo, with plans to launch on Kusama and Polkadot in Q1 next year. This fundamentally changes how Polkadot acquires critical resources—parallel chain Coretime. Unlike unpredictable long-term staking 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, Coretime blocks are represented by XCM NFTs, which can be traded, exchanged, promoted, and sold within the Polkadot ecosystem just like any other NFT. Additionally, these Coretime NFTs can be sliced and diced in various ways, and these smaller Coretime blocks can then be resold and ultimately used to support a cross-chain. Some Coretime markets have emerged, such as Lastic, providing a convenient way to trade this new asset class.
The direct impact is to avoid locking DOT tokens to participate in slot auctions (usually funded by crowdloans). This greatly reduces the burden on new teams and reduces uncertainty for current teams. It works well with the "on-demand cross-chain" model, allowing Coretime buyers to contribute to a shared pool, which ODPs can purchase as needed.
The Road Ahead
The new year will be a quite busy time for Polkadot. Agile Coretime, On-Demand Parachains, Ethereum Snowbridge, and the Kusama bridge are the four upcoming major infrastructures. Elastic Scaling is the fifth technology I expect to see in 2024. I am also looking forward to the expansion of our DAO, including new teams, multi-asset sub-treasuries, expanded XCM, and some exciting new primitives we are developing.
Our innovative non-fork block production consensus algorithm Sassafras has taken shape, and we can expect to start using it in test networks in 2024. Parity Labs is also working on many new technologies; the recent RFC (closed after some significant iterations in the prototype phase) is called CoreJam, which may give some idea of the direction here.
That's the end of my little review; I hope you enjoyed it. All that's left is to wish everyone a happy holiday season and hope for a world that is more free, peaceful, and happy.
See you next year.
— Gav
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