Review of 2023, Outlook for 2024: Annual Report on the Development of the Polkadot Ecosystem

The year 2023 can be described as a year of reflection, turning points, and innovation. As observers of the Polkadot ecosystem, we need to pay attention not only to the development of Polkadot itself but also to the overall progress of the cryptocurrency industry and the macro policies that impact the industry. This report will summarize the major events in the Polkadot ecosystem over the past year, as well as the important trends affecting the entire industry, and will make 10 predictions and outlooks for 2024.

Review of Important Events in 2023

Ethereum upgrade Layer2 is heating up

In 2023, Ethereum Layer 2 upgrades became the market focus. The Arbitrum project successfully launched its native governance token ARB in March and held the hottest airdrop in history. In April, Ethereum completed the Shanghai upgrade, allowing users to withdraw staked ETH, unlocking over 16 million ETH. This heralds the beginning of the DeFi 2.0 era, marking a new milestone for "finance as a service."

Polkadot 1.0 officially delivered, Polkadot 2.0 proposed

In July, Polkadot officially announced the delivery of the Polkadot 1.0 version, realizing all the functions planned in the white paper since 2016. Through cross-chain messaging, token staking, on-chain governance, and seamless upgrades, Polkadot 1.0 provides a powerful infrastructure for the development of the multi-chain ecosystem and the construction of Web3.

In June, Dr. Gavin proposed the Polkadot 2.0 version at the Polkadot Decoded 2023 event - "Polkadot is a multi-core computer." Through the concept of Coretime (, Polkadot 2.0 will bring a brand new resource allocation method, addressing some issues in version 1.0.

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) The rise of blockchain tools, multi-chain ecosystems become mainstream.

The year 2023 has sparked a frenzy of chain launching tool releases. Optimism, Arbitrum, zkSync, Starknet, Polygon, and others have successively launched their own chain launch suites, providing developers with the ability to build blockchain networks more quickly. This means that Layer 2 networks are no longer limited to the development of a single chain; the market is shifting towards a more open multi-chain platform.

Proposal of a new modular concept

The concept of modular blockchain has attracted widespread attention in the industry in 2023, especially after Celestia's large-scale genesis airdrop at the end of September. Modular blockchains better adapt to the changing market demands by improving the system's scalability, maintainability, and financial efficiency. Polkadot, as a multi-chain ecosystem, is particularly important for the adoption and development of modular concepts.

Inscriptions and Fairlaunch Spark a New Wave

In 2023, an emerging concept in the digital asset field gained significant attention—Inscriptions, becoming the focus of the industry. The rise of the Inscriptions concept can be traced back to early 2023, with the BRC20 protocol represented by ORDI once being the leader in the Inscriptions track. The success of Inscriptions is not just a new form of asset, but more importantly, the concept of fair issuance ###fairlaunch(.

) BTC Ecosystem Awakening

At the end of 2023, the BTC ecosystem sparked a nearly 2-month frenzy, with several eco-projects built around BTC taking center stage. Platforms like Bounce and TurtSat successfully launched multiple projects that garnered significant market attention. This innovation in inscriptions attracted a large amount of capital and users into BTC, also stimulating the rapid development of BTC ecosystem applications.

The concept of DePIN is heating up

Another hot crypto narrative in 2023 must be DePIN, which stands for Decentralized Physical Infrastructure Network. The core goal of DePIN is to deploy physical infrastructure and hardware networks in the real world through cryptoeconomic protocols. Projects like Bittensor and peaq network in the Polkadot ecosystem are actively building in the DePIN space.

Exploring Multi-Chain Development in the Polkadot Ecosystem Projects

In 2023, Polkadot ecosystem projects are also actively exploring multi-chain development. Phala Network brings off-chain computing to the Polygon ecosystem, Astar announced a partnership with Polygon to launch the Ethereum Layer 2 network Astar zkEVM, and Manta Network launched the first EVM-compatible ZK application platform Manta Pacific, among others. These collaborations enhance the compatibility and openness of the Polkadot ecosystem.

Regulatory oversight continues to strengthen

In 2023, regulatory agencies in various countries and regions strengthened their oversight of the industry. Some centralized exchanges faced stricter regulatory requirements. However, Polkadot's native token DOT demonstrated strong resilience amid the regulatory storm. The Web3 Foundation has publicly stated that through their three years of communication and cooperation with the SEC, DOT was ultimately classified as software, rather than a security or currency.

Polkadot further decentralization

Polkadot has been continuously advancing its decentralized governance and market operations in 2023 to ensure the security, stability, and innovation of the network. OpenGov and the Decentralized Future Plan are two important initiatives that represent Polkadot's decentralized philosophy and practices in governance and market operations.

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10 Predictions & Outlook for 2024

1. The four key technologies of Polkadot are about to go live: Agile Core Time, On-Demand Parachains, Ethereum Snowbridge, and Kusama Bridge.

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2. New developments after Polkadot 2.0: Elastic scaling technology ) includes asynchronous support and the Sassafras algorithm (, which will bring higher throughput, lower costs, and better user experience for Polkadot.

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3. ETFs can revitalize the industry: The approval of BTC ETFs will enhance overall market confidence and may attract more institutional investors to the BTC market.

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4. The BTC ecosystem may experience explosive growth: With the launch of BTC Layer 2 and more applications embracing BTC, the BTC ecosystem will form a pattern where "various inscription protocols on the BTC main chain compete to generate assets, while other Layer 1 or Layer 2 build applications around the assets on BTC."

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5. Inscriptions give rise to new gameplay: Inscriptions will combine airdrop Tokens or issuance methods like NFT whitelist to become a preliminary operation for project parties to truly issue assets, making inscriptions a mainstream project marketing method.

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6. RWA may become a hot track in 2024: With the official launch of the BTC ETF in the United States, the RWA track is expected to quickly become a market worth tens of billions of dollars in 2024, and may even challenge the hundred billion dollar market.

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7. DePIN may usher in a wave of practical applications: those hardware infrastructure projects that can truly be widely applied are gradually stepping onto the historical stage.

8. The further explosion of chains and applications: 2024 is likely to witness a lively scene where chains and applications soar together, reminiscent of the industry's highlight moment in 2020.

9. More "Web2.5" cases: Polkadot will welcome more collaborations with traditional enterprises, which will also become one of the engines for Polkadot to move towards the mainstream.

10. GameFi is worth looking forward to: The Polkadot ecosystem needs its own "Axie Infinity" or "StepN" to validate this, as high-quality and high-player GameFi products can also emerge in this ecosystem.

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Afterword

In 2024, with the improvement of the macroeconomic environment, the gradual perfection of industry regulations, and the further implementation of emerging concepts, the Web3 industry will welcome new development opportunities. Polkadot and its ecosystem will also demonstrate new vitality under these broader contexts and narratives. May there be more freedom, peace, and happiness in the world!