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Messari Polkadot 2024 Q1 Report: Daily Active Addresses Exceed 510,000, Setting a New Historical High

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PANewsPANews2024/05/11 07:49
By:PolkaWorld

Messari recently released a first-quarter 2024 overview report on Polkadot, analyzing key data indicators, network analysis, ecosystem analysis, and the latest roadmap related to Polkadot.

Messari recently released an overview report of Polkadot in the first quarter of 2024, analyzing key data indicators, network analysis, ecosystem analysis, and the latest roadmap of Polkadot. The full text is as follows.

Report Highlights:

  • The number of daily active addresses in the Polkadot ecosystem reached 514,000, hitting a historical high, with a 48% increase compared to the previous period and a 192% increase over six months. Moonbeam continues to maintain a leading position, with Manta Network showing the most significant growth.
  • XCM message volume increased by 94% compared to the previous period and by 314% over the past six months. In the past year, the number of XCM messages and channels has been increasing each quarter.
  • Gavin Wood proposed the future development of Polkadot, introducing the Join-Accumulate Machine (JAM). JAM combines the characteristics of Ethereum and Polkadot, aiming to enhance scalability and performance while maintaining flexibility.
  • Referendum 457 aims to diversify the Polkadot treasury, introducing USDT and USDC, and allowing treasury proposals in stablecoin units. This referendum plans to use HydraDX's DCA function to exchange 3.4 million DOT.

Introduction

Polkadot (DOT) is a distributed blockchain computing platform that serves as the foundational layer for other sovereign blockchains (referred to as parachains) for validation and secure sharing. Polkadot is built using the Substrate blockchain development framework. Additionally, Polkadot's base layer, known as the relay chain, adopts the Nominated Proof-of-Stake (NPoS) consensus mechanism, with its state machine compiled into WebAssembly (Wasm).

The core function of Polkadot's relay chain is to validate and provide security for its parachains. Parachains are added to the relay chain through parachain slot auctions. Currently, the auction process is a one-week candle auction, where potential parachains "bid" DOT tokens to acquire a parachain slot. However, this model will be updated in 2024.

Finally, parachains on Polkadot can communicate with each other through Cross-Consensus Message Format (XCM). XCM is a message format that standardizes messages between Polkadot parachains, enabling greater interoperability.

Key Metrics

Financial Analysis

Market Value

In the fourth quarter of 2023, DOT's market value increased by 111% compared to the previous period, reaching $8.4 billion. Following this strong quarter, in the first quarter of 2024, DOT's circulating market value further increased by 16% compared to the previous period, reaching $12.7 billion. From the bear market low, DOT has risen by 270%. At the end of this quarter, it ranks 16th among all crypto protocols. DOT is still 80% lower than its all-time high of $55.5 billion set on November 8, 2021.

Revenue

In the fourth quarter of 2023, Polkadot's revenue reached $2.8 million, a 2880% increase compared to the previous period. This surge was mainly attributed to a significant increase in extrinsics in late December, driven by Polkadot's inscriptions. In the first quarter of 2024, the revenue indicators saw a significant decline compared to the previous period. Dollar-denominated revenue was $241,000 (a 91% decrease), and DOT-denominated revenue was 28,800 DOT (a 92% decrease). Compared to the third quarter of 2023, dollar-denominated revenue increased by 249%, and DOT-denominated revenue increased by 97%. It is worth noting that due to the network's structural design, Polkadot's revenue is relatively lower compared to its competitors.

Supply

Polkadot's native token DOT has three main uses: governance, staking, and parachain bonding. By the end of the first quarter of 2024, Polkadot's staking rate was 52%. DOT follows an inflationary monetary policy with no maximum supply. The currency policy of DOT is determined by its alignment with the ideal staking rate, providing enough support to prevent potential security risks while maintaining the liquidity of the native token. If the staking rate is below the ideal rate, nominators' staking rewards increase, encouraging more staking. Conversely, if it exceeds the ideal staking rate, staking rewards decrease.

Treasury

The funds of the Polkadot treasury come from block rewards, validator penalties, transaction fees, and inefficiencies in staking. Treasury funds are held in a system account for spending during a 24-day expenditure period, with unused funds requiring a 1% burn. It is important to note that all treasury expenditures are automatically executed on-chain, ensuring transparency and accountability.

Referendum 457 of Polkadot aims to diversify the Polkadot treasury by introducing USDT and USDC and allowing financial proposals in stablecoin units. This referendum plans to use HydraDX's DCA dollar-cost averaging function to exchange 3.4 million DOT in small amounts daily (100 USDT and USDC per transaction, totaling 36,000 USDT and USDC per day). Additionally, this referendum will prepay 5,000 DOT to HydraDX for transaction fees and use a pure proxy account on HydraDX for the exchange. The acquired USDT and USDC will be regularly sent to the general treasury, each time 5,000 USDT and 5,000 USDC. A treasury denominated in stablecoins will add more predictability to the treasury.

Referendum 457:

https://messari.io/intel/event/533b5976-57e0-426b-aa19-5f7db18e33f2

By the end of the first quarter of 2024, the Polkadot treasury held approximately 37 million DOT (valued at $347 million). This represents a 5.3% decrease in USD terms and a 16% decrease in DOT terms compared to the previous quarter.

Network Analysis

Usage

Several key functions of Polkadot's relay chain include protecting and connecting parachains. Therefore, end users primarily transact and use the network through parachains. The relay chain does support some end-user functions, including token transfers, staking, validator elections, governance voting, and participation in parachain slot auctions. According to RFC-0032: Minimal Relay proposal, these subsystems are planned to be migrated to system parachains.

RFC-0032: Minimal Relay

https://github.com/polkadot-fellows/RFCs/blob/main/text/0032-minimal-relay.md#rfc-0032-minimal-relay

In late October last year, the unlocking of DOT from the first batch of parachain auctions led to a new high in active addresses on October 24. Address activity continued to show a positive trend in the first quarter of 2024. Returning addresses reached 8,200 (a 9% increase), new addresses totaled 3,100 (a 23% increase), resulting in 11,300 active addresses (a 12% increase).

In Polkadot's blockchain framework, extrinsics (external information) are key elements that drive state transitions on the relay chain. Serving as a generic transaction, extrinsics encapsulate external data that the network needs to validate and track. Typically, extrinsics carry signatures and references to specific functions, enabling interactions such as token transfers between accounts. Through extrinsics, Polkadot can efficiently process external inputs, ensuring the seamless operation of its blockchain network.

From December 20 to 23, the number of Polkadot extrinsics surged, with the relay chain processing an average of extrinsics daily during this period.c reached 4.3 million. The network successfully handled this surge without any performance degradation. In addition to these figures, the average daily extrinsic volume continued to show a month-on-month growth of over 100%, reaching 17,000 extrinsic. In the first quarter of 2024, compared to the filtered data from the fourth quarter of 2023, the daily extrinsic volume remained unchanged.

Development

Polkadot boasts one of the largest developer bases in the cryptocurrency industry. According to Electric Capital's data, in December 2023, Polkadot had an average of nearly 2,100 developers, with 792 of them being full-time, ranking the ecosystem second only to Ethereum.

Polkadot provides comprehensive support for developers through its open-source tech stack, including categories such as user interfaces, tools, APIs and languages, smart contracts, chains and modules (pallets), network maintenance tools, consensus, and more.

Highlights of the first quarter of 2024 include:

  • Further expansion of the Polkadot Blockchain Academy, including new founder tracks, plans for further growth in the Asia-Pacific region, and remote options.
  • Launch of the Polkadot Alpha Program, supporting developers' needs across the development cycle, including agile core times.
  • Dune Analytics integration of Polkadot and Kusama data.
  • The Web3 Foundation will shut down the W3F 0 registrar for Polkadot and Kusama.
  • The Web3 Foundation has provided funding to Decentered Studio for organizing events and enhancing community collaboration.
  • Polkadot has launched a new SDK for games - Polkadot Play.

In addition, Polkadot founder Gavin Wood introduced the Join-Accumulate Machine (JAM) in a "gray paper," which is a scalable, trustless virtual machine that combines the features of Ethereum and Polkadot. JAM combines a global singleton environment and cross-node secure computation, aiming to improve the efficiency and security of cross-chain interactions.

Decentralization and Security

Polkadot employs a unique consensus mechanism called Nominated Proof of Stake (NPoS). Validators receive immediate rewards every 24 hours based on their completed actions, known as era points. Every four hours, a random subset of validators is selected to validate all parachains, applying a multiplier to their era points. This combination of era points and random parachain validation creates a probabilistic guarantee that validators receive almost equal rewards. Due to the nearly equal rewards received by validators and the proportional distribution of these rewards to their nominators, nominators are incentivized to collaborate with validators with lower stakes to earn higher rewards. The "validator-nominator" reward model aims to decentralize Polkadot's validator set.

The active set of validators on Polkadot has remained stable at 297 for many years, with no immediate plans for changes. In the first quarter of 2024, the validator reward model continued to prove its effectiveness in promoting decentralized validator staking. Out of the 297 validators, 289 have stakes ranging from 2.19 million to 2.8 million DOT.

The equal reward distribution of the validator model incentivizes node operators to operate multiple validators. This strategy has been adopted by multiple entities.

The Nakamoto Coefficient refers to the minimum number of entities controlling the majority of the network and potentially leading to a consensus failure. For PoS blockchains, this threshold is associated with entities controlling over 33% of the total stake. In the first quarter of 2024, the average Nakamoto Coefficient of Polkadot's validator model was 93, higher than other major networks.

Governance

OpenGov is a new governance model introduced by Polkadot in the second quarter of 2023, which changes the referendum lifecycle and decentralized decision-making process. The system includes a guidance period for proposal submission, a decision period for voting and approval, and an implementation period for execution, allowing multiple referendums to run concurrently to expedite decision-making. The Historical Council and Technical Committee have been replaced by Fellowship, a developer DAO that ensures decentralization through community voting and checks and balances, as well as flexible delegation based on conviction and token commitments.

Since the introduction of OpenGov, governance activities have significantly increased. The number of referendums, delegators, and direct voters has increased for three consecutive quarters, demonstrating the system's impact on participation. Specifically, referendums have increased to 217, a 5% increase compared to the previous quarter and a 57% increase over the past six months.

Ecosystem Analysis

XCM

Cross-Consensus Message Format (XCM) is a standardized message format and language that enables seamless communication between parachains and other consensus-driven systems. XCM plays a crucial role in facilitating interoperability and complex cross-consensus interactions. It allows for message exchange, execution of operations, and asset transfers between blockchains, among other functions.

In the first quarter of 2024, Polkadot's XCM activity continued to increase. Daily XCM transfers reached 2,700, an 89% increase compared to the previous period. Non-asset transfer use cases ("XCM Other") grew to 185 daily transfers, a 214% increase. The total daily XCM messages amounted to 2,800, a 94% increase compared to the third quarter of 2023. The number of active XCM channels increased to 230, a 13% increase.

Parachains

In the first quarter of 2024, Polkadot conducted eight parachain auctions, bringing the total to 66. These auctions bonded 1 million DOT, marking the highest amount since the second quarter of 2022. Out of these eight auctions, five were lease extensions for Darwinia, Bifrost, Unique Network, Litentry, and NeuroWeb (formerly Origin Trail). The remaining three slots were granted to new parachains: SORA, a non-debt-based monetary framework using cryptocurrencies to promote global financial stability and inclusivity; Mandala, a hybrid Layer 1 connecting emerging markets and the global blockchain market, starting with Indonesia; and Hyperbridge, an interoperability coprocessor.

As part of the so-called "Polkadot 2.0," parachain auctions and the general model will undergo a thorough reform. Polkadot 2.0 introduces a market that allocates "core time" based on long-term leases rather than "slots," allowing more flexible and on-demand access to resources. The new approach aims to address shortcomings and encourage seamless application deployment and collaboration between chains. This marks a shift in the Polkadot ecosystem from being chain-centric to application-centric, representing a significant transformation.

In the first quarter of 2024, the number of active addresses on parachains reached a record high of 514,000, a 48% increase compared to the previous period. Moonbeam's monthly active addresses further increased to 217,000 (a 110% increase). Nodle's monthly active addresses doubled to 54,000. Astar's active addresses slightly increased to 26,000 (an 8% increase), while Bifrost Finance's active addresses also slightly increased to 10,000 (a 2% increase). Acala's monthly active addresses decreased to 13,000 (a 16% decrease).

Manta Network showed the most significant performance in parachains in the first quarter of 2024, with the number of daily active addresses significantly increasing to 15,000. This growth was driven by the launch of the MANTA token on January 18, 2024, and subsequent listing on Binance. This listing helped Manta reach a peak total value locked (TVL) of over $440 million.

In the first quarter of 2024, the average monthly transactions on parallel chains were 11.8 million, a decrease of 34% compared to the previous quarter, due to an abnormal surge caused by the unlocking of the first batch of parallel chains in the fourth quarter of 2023. Compared to the third quarter of 2023, transactions increased by 30%. Phala Network, as a leading parallel chain, reported 4.3 million transactions per month, a slight increase of 3% compared to the previous period. Moonbeam's transactions surged to 2.7 million (a 71% increase), while NeuroWeb's monthly transaction volume dropped to 2.1 million (a 38% decrease) and Astar's monthly transaction volume dropped to 0.94 million (a 27% decrease).

Other updates include:

  • Composable's Liquid Staked DOT (lsDOT) is now live. Additionally, lsdDOT will soon be integrated into its upcoming re-staking layer.
  • Picasso Network has integrated IBC with Ethereum to enable asset and data transfers across the Cosmos, Kusama, and Polkadot ecosystems.
  • DED Game has launched a brick-breaking game for promotion and kicked off a $1 million marketing campaign.
  • Polkadot released a blog post focusing on leading AI protocols in the ecosystem, including NeuroWeb (a distributed knowledge graph), Phala Network (a distributed computing network), and Bittensor (a comprehensive AI development network).

Roadmap

Polkadot has completed and shared the formal release of Polkadot 1.0, marking the completion of the Polkadot whitepaper. Additionally, the network's codebase has fully transitioned to repositories managed by the community through Polkadot OpenGov and Polkadot Fellowship.

The community believes that the next iteration of Polkadot, Polkadot 2.0, will be determined through community discussions and consensus. Polkadot founder Gavin Wood has proposed some ideas, such as providing additional, more flexible, and capital-efficient mechanisms for allocating Polkadot block space beyond the parachain model, as well as the concept of creating selective 'Accords' protocols for joining multiple blockchains, termed 'Accords'.

Furthermore, Gavin Wood outlined the core technical priorities of Parity in the annual year-end review. These priorities include Agile Coretime, on-demand parachains, the Snowbridge bridge to Ethereum, and the Kusama bridge. He also introduced new technologies expected to be launched in 2024, such as Elastic Scaling and JAM. Additionally, the expansion of DAO primitives, including new Fellowships, multi-asset sub-libraries, expanded XCM, and the development of novel primitives, is underway. Sassafras, a forkless block production consensus algorithm, has been developed and will undergo testing in 2024. Parity Labs is actively researching various new technologies, including CoreJam, to continue shaping the network's future.

Summary

As of the beginning of 2024, Polkadot continues to maintain its strong performance from the previous year. In the first quarter of 2024, the active addresses in the ecosystem reached a historical high of 514,000, a 48% increase compared to the previous period, and a 192% increase over six months. Moonbeam remains in the lead, with Manta Network showing the largest increase. Additionally, XCM messages hit a historical high, with a 94% increase compared to the previous period and a 314% increase over the past six months.

Notable developments include the introduction of the Join-Accumulate Machine (JAM), a trustless virtual machine that combines the characteristics of Ethereum and Polkadot; Proposal 457 aims to diversify the Polkadot treasury, introducing USDT and USDC, and allowing treasury proposals in stablecoin units; and Picasso has integrated the Polkadot ecosystem with the IBC ecosystem.

Looking ahead, the Polkadot community expects to further shape Polkadot 2.0. The ongoing development of technologies such as Agile Coretime, on-demand parachains, and Elastic Scaling will ensure further growth and innovation. These efforts, combined with strategic expansions and community support, signal a hopeful year ahead for Polkadot.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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