Gavin Wood: Polkadot Annual Summary for 2023.

Original Title: "Polkadot 2023 Roundup"

Original Author: Gavin Wood

Translated by: 0xAyA, Odaily

As the nights grow longer in the northern hemisphere, soma.fm's Christmas music special once again appears on my home radio, and we have come to the time of year when I write the annual diary on behalf of Polkadot. With the basic passing of the COVID-19 pandemic into our memories, we can see the world returning to normal and the revival of offline activities. This year, conflict 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 can change the world together with blockchain.

And this year is also a special anniversary for me; as I write these words, exactly ten years ago, I wrote my first cryptocurrency code in my life. So, what does 2023 bring?

Industry Events

Given my position as a practitioner in the encryption industry, it seems to me that we have entered a seasonal system. Our new "cryptocurrency winter" has been going on for some time. Web3, more specifically cryptocurrency, often appears in the news, but compared to the more optimistic headlines of a few years ago, it is often accompanied by more negative language and evaluations. (Indeed, a more balanced commentary in an economics magazine found some similarities between it and the ancient pest - cockroaches.) This cryptocurrency winter, although likely inevitable, has been aided by certain individuals who seem to believe that Web3 can communicate and market without its technology and culture. Unfortunately, this may not be the last time we see such behavior in this industry, but we hope that such behavior provides a constructive and inspiring lesson for everyone.

I bet that these negative news reports and the resulting unfair negative comments may have already reached the halls of power. At the same time, we are seeing changes in the regulatory environment of our industry - sometimes wise, sometimes inadequate. Significant changes are taking place around the world, especially in the UK, Switzerland, Japan, the EU, and the United States; some of the latter's progress may be known to the Web3 Foundation, which testified at a hearing of the US House of Representatives and provided advice to the Japanese Liberal Democratic Party. Although these changes in judicial regulations have their subtle differences, we can see a position that is forming and becoming increasingly clear, which strongly emphasizes the avoidance of trust-based, custody-based, and Web2 "solutions", and introduces true trustlessness and decentralization in all aspects: shares, nodes, and governance. Fortunately, some more visionary world regulators seem to recognize that not all cryptocurrencies are equal, even if this is only implicitly noticed by some omissions.

Decentralization of Polkadot

The older generation of Web3ers know 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 to achieve, but also a belief we must realize.

Although there is still a lot of work to be done to create a truly elastic, decentralized, and self-sufficient system in the Web3 industry, Polkadot is already ahead in many indicators. 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 decentralized milestone this year 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 at the Parity team. The team's efforts towards decentralization have resulted in a significant reduction in the number of executives, mainly in the areas supported by ecosystem activities, which are not related to the development of core technology, the historical domain of the Parity team. Behind this restructuring, the Web3 Foundation announced the launch of the $55 million Decentralized Futures Fund, with the stated goal of helping our ecosystem further decentralize and achieve a sustainable state in which activities contribute to the utility and demand of Polkadot's Coretime. The fund is immediately operational, has received dozens of high-quality applications, and will remain active and disbursing until the first half of 2024.

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 on the Substrate framework. Polkadot now runs 50 enabled parallel chain cores, between which 17,000 XCM messages are securely transmitted each month. On December 22nd, we saw a single relay chain in 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 and 83,000 active users in the ecosystem almost every month. We have seen a 10-fold growth in retail-friendly nomination pools throughout the year, covering over 180 pools with 10 million DOT in total.

In the Web3 Foundation's grant program, we received a total of 324 applications throughout the year, with 135 projects from 54 countries signing agreements. The foundation reached another milestone last month - its 600th grant since its establishment in 2017.

Key Moment

Polkadot's flagship event, Decode, was held in Copenhagen, Denmark in June this year, with satellite events held around the world, especially in Hanoi (Vietnam), Buenos Aires (Argentina) and Shanghai (China). At these events, over 1,500 people attended (with tens of thousands of viewers watching online), listening to speeches from over 100 speakers from across the ecosystem. These were hybrid events that combined virtual and real-world experiences, with over 11,000 online registrations for the Copenhagen event alone.

Shortly before the Copenhagen event, the Polkadot Summit was held, consisting of 150 key decision makers and developers in the ecosystem. In my opinion, it was quite successful, with one key outcome being the introduction of a new metadata pattern aimed at optimizing the ability of hardware wallets to perform trustless operations throughout the Polkadot ecosystem. Due to the flexibility offered by Polkadot's parallel chain model and unique 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 related transactions) provides an ecosystem-wide solution that can be promoted in the solutions of various well-known wallets. As we further decentralize, such programs ensure that the entire ecosystem can work together to create common opportunities in areas such as standardization, infrastructure, and tools.

The first-ever Polkadot developer conference, Sub 0, was held this year in a hybrid format, with live streaming and various facilities provided for those who couldn't attend in person. Over 500 people attended the event (with hundreds more watching online), listening to over 50 speakers share key insights into the technical foundations of Polkadot. The content included discussions by core developers on the latest developments, tools, APIs, and processes, as well as industry professionals sharing their experiences in finding solutions through their technology stacks.

The Web3 Music Summit, co-hosted by Primavera Sound and the Web3 Foundation, provides a space to explore Web3 in the context of music. Of particular note is the feasibility of using DAOs (decentralized autonomous organizations) within the music industry, allowing for more direct economic interaction between artists and fans to rebalance and optimize artist incentives.

Many conferences related to Polkadot have been held both inside and outside the community, including ParisDOT held in Paris, France and Polkadot Pulse held in Bangalore, India. In addition, many Polkadot satellite events have been held at major 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 attendance activities, showcasing Polkadot's unique advantages and vibrant technical community.

Academic Achievements

Polkadot Blockchain Academy is an innovative program aimed at creating a blockchain course worthy of being taught at world-class academic institutions. The project launched a five-week course at the University of Cambridge last year and continued globally this year, including at the University of Buenos Aires earlier this year and at the University of California, Berkeley during the summer.

The courses offered by the University of Buenos Aires attracted 790 applicants, competing for 76 spots, while collaborating with 12 universities in Latin America. This course is not for the faint of heart, as it offers a comprehensive curriculum that has been tested by the industry's top minds. While admission is not guaranteed, 80% of students ultimately pass.

In later courses, there were 344 applicants competing for 72 spots. We introduced a new founder course that focused less on deep technical programming elements and more on broader technology and its social and industrial impact. We saw similar pass rates, with one individual excelling. Our youngest graduate was only 17 years old, from Eastern Europe, and participated in a six-week course.

Substrate framework developer program is the main plan for Parity team to support teams building blockchains using Polkadot SDK. In 2023, there were 124 projects applying for the program, and 23 projects reached the first important milestone out of 55 reviews. Meanwhile, the team launched a sister program Developer Heroes, which focuses on guiding individual developers in the ecosystem, with 420 applicants throughout the year. The program currently has over 200 members and 60 mentors.

Empowering Parallel Chains

This year, we have seen the launch and further deployment of two major centralized stablecoins, Tether (USDT) and Circle (USDC). Although these are not the decentralized panacea we are striving for, they provide some important practical value for several parallel chain projects and users. Only USDC has $250 million deposited in the Polkadot Asset Hub, and USDT has even more deposits, contributing to the total amount of stablecoins in the ecosystem.

The Asset Hub of Kusama now has fully integrated direct token conversion. This 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. In addition, the liquidity pool is fully integrated with a fee payment system, allowing all these tokens to be easily used for paying Asset Hub fees and exchanged through the XCM language without the need for third parties. This greatly simplifies cross-chain transactions and reduces complexity for users, organizers, and developers.

Within this ecosystem, the usage environment of user tools is constantly evolving, and many well-known products have undergone significant improvements. Parity Signer is an application designed to turn any old Android or iOS device into a fully-featured, ultra-secure isolated wallet, and has now been rewritten and released as Polkadot Vault. While I am still involved in product direction, maintenance work is being transferred from the Parity team to the Novasama team (there will be more substantial notice when this is finally confirmed). Recently, Polkadot Vault has added some features aimed at tight integration with the new Spectr Wallet from this team. For those who are not familiar, this is a fund-supported, open-source project aimed at being a non-commercial, neutral desktop wallet for enthusiasts and advanced users. With good integration, concerns on Vault devices are reduced to almost zero, and the recovery and upgrade process of Vault becomes enjoyable.

This year, Smoldot 1.0 was also launched, which is a project supported by a fund and exists in a decentralized manner. Although it is experimentally integrated into the respected Polkadot.js application in compatibility mode, it plays an important role in applications built directly for it, such as Novasama's Spectr advanced user wallet and middleware built specifically for it, namely Polkadot-API (PAPI), which is becoming the first fully functional example.

As time goes by

Polkadot owes its unprecedented ability to continue advancing at an impressive pace of seamless upgrades and improvements to its meta-protocol foundation based on Webassembly and its indispensable canary network Kusama.

The referendum #231 is currently using 469,000 DOT to purchase over two million USDT (possibly more at the time of writing) through the HydraDX Omnipool, a high-liquidity decentralized exchange based on a parallel chain. The purchasing mechanism uses the on-chain "scheduler" to make purchases in small amounts, averaging around $250 every half hour. These USDT will be placed in a dedicated network sub-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 Fellowship RFC #50.

The entire process was approved in a decentralized manner through OpenGov and is being autonomously executed on-chain with professionally audited logic code according to pre-published instructions. Throughout the process, no specific individuals or entity organizations hold any administrative privileges or positions. Although this is an operation to place stablecoin token purchases in the Fellowship treasury, there is nothing unique about USDT, Fellowship, or its sub-treasury, and the same process can be applied to any token with a decentralized exchange within the scope of XCM on Polkadot, as well as any financial transactions 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 in the future, perhaps with salary plans to meet network-specific needs.

Core Highlights

Agile Coretime is an idea I first proposed on Decoded this year. After a quick RFC and a tight development cycle, it is now live on Rococo and expected to launch on Kusama and Polkadot in Q1 next year. This fundamentally changes the way Polkadot acquires a key resource - parallel chain Coretime. Unlike unpredictable long-term staking achieved through auctions, Coretime (the name of the resource) is sold at a more predictable price in monthly sales before use.

In the Agile Coretime model, Coretime blocks are represented by XCM NFTs, which can be traded, exchanged, promoted, and sold within the Polkadot ecosystem in the same way as any other NFT. In addition, these Coretime NFTs can be sliced and diced in various ways, and the resulting smaller Coretime blocks can be resold and ultimately used to support cross-chain functionality. Some Coretime markets have already emerged, such as Lastic, which provides a convenient way to trade this new asset class.

Its direct impact is to avoid locking DOT tokens from participating in slot auctions (usually funded by crowd loans). This greatly reduces the burden on new teams and reduces the uncertainty of current teams. It works well with the "on-demand cross-chain" model, allowing Coretime buyers to contribute to a shared pool that ODPs can purchase as needed.

Our innovation of non-forking block production consensus algorithm Sassafras has been developed, and we can expect to start using it in the test network in 2024. Parity Labs is also committed to many new technologies; the recent RFC (closed after some major iterations in the prototype stage) is called CoreJam, which may give interested parties some ideas about the direction here.

This is the end of my small review; I hope you enjoyed it. The rest is just wishing everyone a happy holiday season and hoping for a more free, peaceful, and happy world.

See you next year.

——Gav

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