Messari Polkadot’s first quarter report: the popularity of parachains has dropped after the auction, and developers are highly active

BTC0.0₂₀

ETH0.0₂₀

HTX0.0₂₀

SOL0.0₂₀

BNB0.0₂₀

BTC0.0₂₀

ETH0.0₂₀

HTX0.0₂₀

SOL0.0₂₀

BNB0.0₂₀

Messari Polkadot’s first quarter report: the popularity of parachains has dropped after the auction, and developers are highly active

PolkaWorld

2022-05-07 11:00

本文约5242字，阅读全文需要约21分钟

Polkadot maintains a healthy distribution of validators in terms of total collateral, and developer activity remains the most active in the crypto ecosystem.

Original title: "State of Polkadot Q1 2022"

Original source: Messari

core point of view

core point of view

After five years of research and development, the Polkadot parachain is now live.

At the end of Q1 2022, 13 parachains won parachain slots, with 127.8 million DOTs bonded (11% of total supply; worth $2.9 billion).

Between now and February 2023, 28 more parachain slot auctions are planned (bringing the total to 41).

Polkadot price and user account count hit all-time highs at the time of the first parachain slot auction; however, both metrics have declined steadily since then.

Polkadot has a uniformly distributed validator set, with 99% of validators holding 18,000-2.6 million DOTs.

Polkadot’s developer activity remains the most active in the crypto space.

The next major milestones are the implementation of the cross-consensus message format XCM, parathreads, and performance upgrades.

Introduction to Polkadot

Polkadot is a Nominated Proof-of-Stake (NPoS) blockchain network designed to support a variety of interconnected, application-specific Layer 1 chains, or parachains. Every chain built in Polkadot uses Substrate, Parity Technologies' blockchain development framework, which allows developers to choose the specific components that are best for their specialized application chain. Polkadot refers to an entire ecosystem, that is, all parachains connected to a single underlying platform "relay chain". This underlying platform does not support application functionality, but contains all validators and is responsible for securing, managing and connecting parachains.

After about five years of research and development, the first batch of parachains went live on December 17, 2021. By the end of Q1 2022, 13 parachains have won parachain slots, with 127.8 million DOTs bonded (11% of total supply, worth $2.9 billion). As the first edition of Polkadot's quarterly coverage, this report will highlight important developments since the launch of parachains and assess the network's first-quarter performance. A full appendix of quarterly highlights and figures is provided at the end of the report.

price history

The concept of parachains was first introduced in the Polkadot white paper in 2016. In October 2021, at the Substrate Sub0 conference, co-founder Robert Habermeier announced that the relay chain was ready to support parachains. Over the next three weeks, the price of Polkadot's native token, DOT, rose 57% to an all-time high of $55.08 ($56.5 billion market capitalization) on November 5, 2021, when the community approved the first parachain slot auction The day after - November 11, 2021. However, from November 2021 to the first quarter of 2022, the valuation of Polkadot and the broader crypto market has decreased. As of the first quarter of 2022, DOT is $22.5 ($23.3 billion market cap), down 60% from its all-time high.

network usage

Polkadot user accounts, whether new or active, follow a similar path to price. In November, the average user account increased by 131% compared to the beginning of the year and hit multiple all-time highs. However, active user and new user accounts have declined each month since November. While user account declines are a common macro theme, there are also some internal causes.

The decrease in active accounts may be due to users locking up their DOTs for a two-year lease to support their favored parachains in parachain auctions. DOTs locked in Crowdloan are unusable and therefore unusable in Polkadot. In response to this liquidity constraint, the parachains Acala and Parallel Finance introduced liquidity staking.

The decrease in new accounts may be related to the fact that the first batch of parachains is more popular than the second batch. The first batch of parachains (1-5) has 342% more DOT bonded than the second batch of parachains (6-11).

On the contrary, the number of addresses holding DOT will increase every month in 2021 and the first quarter of 2022. Despite the decline in valuations, this increase in figures shows a strong interest in the Polkadot ecosystem.

Staking and Decentralization

Polkadot uses a Nominated Proof of Stake (NPoS) consensus mechanism. Nominated Proof-of-Stake consensus is different from Delegated Proof-of-Stake (DPos) consensus because nominators, i.e. DOT owners who stake their Tokens with validators, may be subject to Slash fines.

Validators are paid every 24 hours based on the paid operations they complete, called era points. A subset of validators are randomly assigned every 4 hours to validate all parachains, and the earned era points are multiplied by a factor. The combination of Era points and randomized parachain validation guarantees that validators will receive nearly the same rewards. Because validators receive nearly equal rewards and distribute those rewards proportionally to their nominators, nominators are incentivized to stake with lower-staking validators for higher rewards. The validator-nominator reward model aims to decentralize Polkadot's validator set. At the end of Q1 2022, 294 of 297 validators (99%) hold 1.8-2.6 million DOTs, confirming that the game theory of nominator staking is valid.

Polkadot uses an inflationary Token model, so there is no upper limit to the number of DOTs. Inflation rewards are distributed to validators for securing the Polkadot network, while the rest goes to the treasury. The inflation rate is related to Polkadot's ideal collateralization rate, but averages around 10% per year. In the first quarter of 2022, the pledge rate of DOT is relatively stable, accounting for 53.8% to 58.6% of the total DOT Token pledge.

A single entity can run multiple validators. According to Subscan, in the first quarter of 2022, there are 7 entities running multiple validators, accounting for 20% of the total DOT pledge. Other entities may also be running multiple validators, but Subscan has not yet identified them.

Running multiple validators yields greater expected value due to the even distribution of rewards. Therefore, Polkadot validators self-stake at least one DOT and nominate their DOTs to a maximum of 16 validators to maximize the expected value of their staking rewards. About 99.7% of the total stake in DOT comes from nominators and 0.3% comes from validators self-staking.

Parachain Auction

The first parachain slot auction starts on November 11, 2021. At the end of Q1 2022, the 13 slot-winning parachains bonded 127.8 million DOT (11% of total supply, worth $2.9 billion). Polkadot plans to conduct 28 new parachain auctions by February 2023 (bringing the total to 41).

Among the first 13 parachains, 7 are DeFi chains, 3 are smart contract platforms, and 3 are Web3 infrastructure chains. For an in-depth look at the top 13 parachains, check out the Polkadot Ecosystem Overview.

Polkadot vs. Kusama

Another unique component of the Polkadot ecosystem is the canary network Kusama. Kusama is a sovereign blockchain with almost the same codebase and architecture as Polkadot; however, Kusama has a faster governance mechanism with voting taking only 7 days compared to Polkadot's 28-day voting. All new code releases are proposed, approved, tested and implemented on Kusama before migrating to Polkadot. Therefore, Polkadot and Kusama are closely related. Over the past five quarters, the market caps of the two networks have closely tracked each other with a correlation coefficient of 0.797.

In contrast, there was little correlation between user activity on the two networks. Over the past five quarters, user accounts for both networks have a weak correlation of 0.42. Both networks saw a decline in user accounts following the first Polkadot parachain (Auction).

Similar to the Kusama-Polkadot relationship, parachain project teams can launch a Kusama parachain to test new features under real economic conditions. Of the first 13 Polkadot parachains, 11 have Kusama parachains. On average, Polkadot parachains have 10x the dollar value locked up than Kusama parachains. The only exception is the Polkadot parachain Phala Network, whose Kusama parachain Khala Network has a higher dollar value locked.

Developer overview

According to the annual Electric Capital Developer Report, Polkadot has the second largest developer community in 2021. Polkadot started the year with 840 developers and ended the year with 1,400 developers, a net increase of 560 developers (+67%). In contrast, Ethereum has the most developers with 3,920 and Cosmos is third with around 950.

ecosystem challenge

In the fourth quarter of 2021, new users flooded into Polkadot to participate in the first novel parachain slot auction. However, by the first quarter of 2022, the heat surrounding the ecosystem has steadily declined.

To generate heat, Polkadot needs a spark, perhaps powered by a parachain or a protocol built on top of a parachain. The protocol needs to exploit the cross-chain architecture and XCM communication to develop new primitives. Developing new features and use cases will demonstrate the power of the network and engage users organically.

Additionally, users in the network often complain about the complexity of the Polkadot JS wallet. As of the end of the first quarter of 2022, multiple projects are developing Polkadot ecological wallets, including Talisman, SubWallet, Nova, and Polka Wallet.

the road ahead

The Polkadot launch process began with the genesis block of the relay chain in May 2020 and ended with the launch of the parachain in December 2021. In the first quarter of 2022, Polkadot implemented a number of post-launch developments and optimizations, which are expected to continue until 2022.

Arguably the area of greatest focus is the construction of Polkadot's cross-consensus message format (XCM). XCM is a communication language that allows parachains to exchange messages with other parachains, similar to Interchain Communication (IBC) on Cosmos. Polkadot's canary network, Kusama, has been testing a light-client version of XCM called HRMP. It is expected that XCM will be implemented on Polkadot in the second quarter of 2022. *Update, Polkadot co-founder Robert Habermeier tweeted on April 17, 2022 that XCM will be launched on Polkadot during the next runtime upgrade. (Note: XCM was launched on Polkadot on May 4th. For details, see "XCM Launched on Polkadot, Entering the Era of Parachain Cross-Chain Communication!")

Another key area of focus is the introduction of parathreads. Parathreads are pay-as-you-go parachains. Parathreads are not always connected to the relay chain like parachains, but pay for the security and interoperability of the relay chain according to their own needs. Parathreads are useful for projects that do not wish to acquire full parachain slots or existing parachains that no longer require dedicated parachain slots.

Summarize

The big event in 2021 is the release of parachains. The parachain launch brought all-time highs in price, user accounts, and parachain slot auction contributions. Unfortunately, the frenzy was short-lived, with each of these metrics experiencing month-to-month declines through the first quarter of 2022.

During the same period, basic KPIs remained stable. Polkadot maintains a healthy validator distribution in terms of total collateral, developer activity remains the most active in the crypto ecosystem, and users continue to hoard tokens, showing some interest in the ecosystem.

The second quarter of 2022 will be characterized by more parachains coming online and the launch of XCM. In order to gain more market share, Polkadot needs parachains or protocols built on parachains, exploiting XCM and cross-chain architecture to develop unique use cases. As parachains only went live 4 months ago, they are still in their early stages.