Polkadot 2023 Ecosystem Development Annual Report: Major Events and 10 Predictions

2023 is a year of reflection, turning points, and innovation for the Web3 industry. As a research institution that has focused on the Polkadot ecosystem for three consecutive years, we will share the important events of Polkadot in 2023 and our predictions for 2024 through two main sections: reviewing and looking ahead.

Review of Important Events in 2023

Ethereum upgrade Layer 2 is heating up

In March 2023, Arbitrum successfully launched its native governance token ARB and held the most competitive airdrop in history. On April 12, Ethereum completed the Shanghai upgrade, allowing users to withdraw staked ETH. The Shanghai upgrade not only unlocked staking but also promoted the decentralization process of the Ethereum network, heralding the beginning of the DeFi 2.0 era.

Polkadot 1.0 officially delivered, Polkadot 2.0 proposed

In July 2023, the Polkadot official announced the delivery of Polkadot version 1.0. Through technologies such as parachains and relay chains, Polkadot 1.0 breaks the island effect between different blockchains. In June, Dr. Gavin proposed Polkadot version 2.0 - "Polkadot is a multi-core computer." Polkadot 2.0 will bring a brand new resource allocation method through the core time (Coretime) concept.

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

In 2023, multiple Layer 2 networks launched their own chain-building tools, such as Arbitrum Orbit and zkSync's ZK Stack. These tools provide developers with the ability to build blockchain networks more quickly. The market is shifting from competition based on a single-chain ecosystem to a more open multi-chain platform development.

Proposal of a Modular New Concept

The concept of modular blockchain gained widespread attention 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 system scalability, maintenance, and financial efficiency.

Inscriptions and Fairlaunch are creating a new wave.

In 2023, a prominent new concept emerged in the digital asset field—inscriptions, sparking intense discussions about whether it is a technological hype or a valuable innovation. The popularity of the inscription concept can be traced back to early 2023, when ORDI achieved a ten-thousand-fold increase in just 300 days. More importantly, the success of inscriptions is underpinned by the idea of fair issuance (fairlaunch).

BTC Ecological Awakening

At the end of 2023, the BTC ecosystem sparked a nearly 2-month craze. Several ecosystem projects built around BTC were pushed to the forefront. Platforms like Bounce and TurtSat successfully launched multiple projects that garnered significant market attention, such as BitStable and MultiBit. The rapid development of BTC ecosystem applications filled the ecological gap of BTC.

The concept of DePIN is gaining popularity

Decentralized Physical Infrastructure Network ( DePIN ) became a popular narrative in the crypto industry in 2023. 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 active in the DePIN field.

Exploration of multi-chain development in the Polkadot ecosystem projects

In 2023, Polkadot ecosystem projects actively explored multi-chain development. Phala Network brought 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 Manta Pacific through the Polygon CDK. These collaborations enhanced the compatibility and openness of the Polkadot ecosystem.

Regulatory oversight continues to strengthen

In 2023, regulatory agencies in various countries strengthened their oversight of the crypto industry. Polkadot's native token DOT demonstrated strong resilience amid the regulatory storm. The Web3 Foundation publicly stated that DOT was classified by the SEC as software, rather than a security or currency, which helped DOT maintain its liquidity and value.

further decentralization of Polkadot

Polkadot has advanced its decentralization of governance and market operations in 2023. OpenGov and the Decentralized Future Plan are two important initiatives that represent Polkadot's ideas and practices of decentralization in governance and market operations.

10 Predictions & Outlooks 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.

2. New developments after Polkadot 2.0: Elastic scaling technology ( asynchronous support and Sassafras algorithm ) will enhance the efficiency and scalability of the Polkadot network.

3. ETFs can revitalize the industry: The approval of a BTC ETF may enhance overall market confidence and potentially attract more institutional investors into the crypto market.

4. The BTC ecosystem may experience explosive growth: In 2024, numerous BTC Layer 2 solutions are expected to emerge, along with cross-chain applications that will bridge BTC to other Layer 1 or Layer 2 networks.

5. Inscriptions give rise to new gameplay: Inscriptions may combine with airdrop Tokens or issue NFT whitelists, becoming a mainstream method for project marketing.

6. RWA may become a popular track in 2024: With the official launch of BTC ETF in the United States, the RWA track could quickly grow into a billion-dollar market.

7. DePIN may usher in a wave of application implementation: DePIN projects like CESS in the Polkadot ecosystem may achieve breakthroughs in real-world applications in 2024.

8. The chain and applications are further exploding: In 2024, a "Chain Summer" similar to the DeFi Summer of 2020 may emerge.

9. More "Web2.5" cases: Polkadot may welcome more collaborations with traditional enterprises, pushing it towards the mainstream.

10. GameFi is worth looking forward to: The Polkadot ecosystem needs to have its own star GameFi projects to prove its competitiveness in this field.

With the improvement of the global economic environment, the maturity of the Crypto market, and the continuous industry innovation, Polkadot and its ecosystem are expected to show new vitality in 2024. The accumulation over the past 7 years has laid a solid foundation for new developments, and the next two years will be a key development period for the Polkadot ecosystem.