Not a full stop: Polkadot readies upgrades and broadens its product suite

Polkadot, the so-called zero-layer network devised by Ethereum co-founder Gavin Wood, once ranked among the ten largest crypto projects by market value, peaking at $50bn. Since mid-2022, however, it has languished in a prolonged bear market.

Throughout 2024 the project’s leadership faced a barrage of criticism from industry figures over DAO treasury spending, a toxic atmosphere and even racial discrimination.

In a year-end roadmap, the team set out a sweeping vision for Polkadot 2.0 and a technical upgrade dubbed JAM. Analysts reckon DOT could be among 2025’s stronger performers among the “older” cohort of projects.

This ForkLog analysis examines the project’s revamped economic model, forthcoming upgrades and the odds of a comeback for Ethereum’s once formidable rival.

Gavin Wood’s “simplicity and accessibility”

The idea of a “maximally simple” version of Ethereum—Polkadot—took shape nine years ago. Driven by his vision for scaling, Ethereum’s co-founder and first CTO, Gavin Wood, left the team. The gifted computer scientist who created the smart-contract language Solidity had, by October 2016, prepared the first version of Polkadot’s white paper.

While still at Ethereum, Wood co-founded Parity Technologies, a commercial blockchain-development firm. The team went on to build the Polkadot network and the Substrate framework.

In 2017 Mr Wood and developer Peter Czaban set up the non-profit Web3 Foundation to accelerate protocols for a decentralised internet. That same year the token sale took place, raising $145m through the sale of 5,000,000 DOT.

In 2019 a follow-on token sale helped cover operating needs, and developers launched the experimental Kusama network. It hosted the first parachains. The “Canary” network with the KSM token remains live, providing a testbed for new Polkadot features.

In late 2022 Mr Wood stepped down as CEO of Parity Technologies to make the project “more relevant to the general public”.

In August 2024, in an interview with Cointelegraph, he recalled a 2013 conversation with Ethereum co-founder Vitalik Buterin. Its core idea was to separate Ether from the ecosystem to make Web3 interaction as simple as possible for users.

“Vitalik and I discussed the possibility of getting rid of Ether entirely as a currency. That now seems unthinkable,” Mr Wood said.

His overarching goal is to make Web3 technology accessible to all. The principle is embedded in the network’s architecture, where a zero layer simplifies life for creators of L1 networks (parachains) by abstracting away unnecessary interactions. Polkadot sells infrastructure—albeit in a developer environment that is not easy to master.

The push to simplify user experience and promote privacy is also evident in another of his ideas: tattoo-based proofs. The Proof-of-Ink algorithm envisages authenticating users via distinctive body art.

July 2023 brought a new overarching concept: Polkadot 2.0, which recasts the economics by shifting from auctions to on-demand slot rental. A key component is the technical upgrade JAM, intended to help realise mass adoption of Web3.

“JAM achieves this by virtually reducing blockchain transaction fees to zero, but a more sustainable solution will be individuality in Web3, which will eliminate the need for an anti-spam mechanism and, therefore, for transaction fees,” the Polkadot co-founder added.

“Polka-dot pancakes”: Polkadot 2.0

Polkadot 2.0 is a set of changes that amount to a qualitative transformation of the blockchain.

As Decrypt reported, Mr Wood illustrated the shift with a pancake business:

“Imagine a company that sells nothing but pancakes: it produces its own sugar, water, milk and eggs, but sells only pancakes. The pancakes are parachains, and the company itself is Polkadot 1.0.”

In Polkadot 2.0 the “pancake company” decides to sell not only pancakes but also batter and, perhaps, individual ingredients such as sugar, water and eggs. Those ingredients are Coretime—units of compute that can be rented in portions.

Clients will be able to use resources not only for parachains but for other applications and blockchains.

Previously, to launch a project, a team had to win an auction and secure community support by locking tokens in favour of the start-up. With Polkadot 2.0, developers no longer need to go through a complex, drawn-out parachain-slot auction. Dispensing with that model should make the ecosystem more flexible and ease entry for newcomers.

With the pivot to dapps, users will be able to experiment with the network, tapping the “global supercomputer’s” compute without the infrastructure commitments of old.

The JAM technical upgrade, announced in April 2024, is set to deliver much of Polkadot 2.0’s promise. It will fully replace the Relay Chain, with an emphasis on deploying Agile Coretime.

The Web3 Foundation is actively incentivising JAM development. The total prize pool for work on the new stack is 10,000,000 DOT and 100,000 KSM. The promotional roadshow with Mr Wood—JAM Tour—began on February 17th in Hong Kong, initially focusing on Asia.

Polkadot 2.0 is being rolled out in stages, with key additions:

• Asynchronous Backing. Launched in May 2024, the upgrade improved block processing efficiency. Block time fell from 12 to six seconds, enabling parallel transaction validation and block production. Throughput rose nearly tenfold, while per-block storage expanded fourfold—paving the way to raise the parachain limit from 100 to 1,000;

• Agile Coretime. Deployed in September 2024, it opened new options for developers: lower barriers to entry and on-demand blockspace purchases, especially useful for workloads with variable demand;

• Elastic Scaling. Designed to expand network throughput, serving more blockchains and higher transaction volumes. Parallel processing helps cope more efficiently with load spikes.

Coretime units can be used to balance resource spend. Web3 game teams can buy extra compute during peak demand, avoiding waste in quieter periods. NFT projects, meanwhile, can source capacity during launches when activity jumps.

Users can resell Coretime in bulk on secondary markets, a setup likely to improve price discovery for compute. All transactions use DOT, which could, over time, support its value.

The first sale took place on October 6th 2024, less than a month after launch. One of the five available Cores sold for 69 DOT.

Plenty of marketing—and criticism

In July 2024, after the team reported on Polkadot’s treasury, the community voiced criticism of the leadership.

“Polkadot’s treasury is becoming increasingly complex and difficult to understand,” wrote the project’s chief ambassador, Tommy Enenkel, in a report for the first half of 2024.

“At the current spending rate, the treasury has roughly two years of runway, although the volatility of crypto-denominated assets makes precise forecasting difficult,” the influencer noted.

He added that more effective treasury capital allocation would likely entail dedicated units in the form of bounties and collectives.

Mr Enenkel also urged a lower DOT inflation rate to reduce sell pressure. According to Polkadot’s annual report, that change has been made. In 2024 the community approved mechanisms that could bring inflation down to 8%.

DeFi researcher Ignas, meanwhile, said that despite heavy spending Polkadot remains “invisible” on X and other platforms.

Polkadot’s treasury spent $37m on promotion in the first half of 2024, including paid integrations, partnerships, influencer shilling and other marketing campaigns.

This is real:

Polkadot’s Treasury has about 2 years of runway left at the current burn rate of $87m USD per 6 months. https://t.co/rpXjFzVMw1 pic.twitter.com/Pejcajoz1C

— Ignas | DeFi (@DefiIgnas) July 1, 2024

Polkadot activist Giotto di Filippi, in comments to Cointelegraph, countered by noting that roughly 7% of overall token inflation flows back to the treasury via staking rewards:

“Inflation in Polkadot is distributed between stakers and the treasury to ensure the treasury always has funds… So saying that ‘the money will run out’ is simply meaningless.”

Viktorji.eth, the founder of the L2 protocol Manta Network, added fuel to the fire by claiming Polkadot lacks real value in Web3 and that the project is “toxic”.

He said the ecosystem discriminates in favour of teams from Europe and the United States, to the detriment of their Asian peers. He also hinted at centralisation.

Viktorji.eth recounted a meeting with Mr Wood who, allegedly, did not know that Manta Network was one of the largest projects in the ecosystem he founded.

According to Polkadot’s report, the number of validators approached 500 in October 2024, up from 297 in August. The Nakamoto coefficient, a gauge of decentralisation, stood at 132 at end-2024—among the highest in crypto. By March 21st 2025 it had surpassed 165.

Today, Polkadot’s Nakamoto coefficient is 165. @Polkadot

The Nakamoto Coefficient is a key metric for assessing decentralization.

It highlights the minimum number of entities required to control a blockchain network. pic.twitter.com/ACx78Z7t7z

— #Lily Mendz ? ⭕️ (@lily_mendz) March 21, 2025

On December 4th the Kusama network set a transaction-speed record: in the synthetic Spammening stress test it hit 143,000 TPS.

Ecosystem sentiment

The ecosystem saw unique accounts grow by 150%—from 5.2m in January 2024 to 13.2m by November. Almost 6m new addresses belong to the Mythos network, which has significantly strengthened Polkadot since last year.

Mythical Games, the company behind the parachain, builds Web3 games. Its new app, FIFA Rivals, will be a continuation of the firm’s earlier NFL Rivals—a popular mobile arcade about American football. The project features marketplaces for trading NFT player cards.

The team left Ethereum as part of its expansion strategy, choosing Polkadot for its high throughput, low fees and strong interoperability—well suited to its aims.

Total transactions in the ecosystem rose by over 200%—from 13.1m in January 2024 to 39.6m in November. The increase was driven in part by Mythos and the DeSoc project Frequency, followed by Neuroweb, Phala, Moonbeam and Litentry.

At the time of writing, 216 projects operate in the ecosystem, according to the parachain explorer.

As of April 2025 Polkadot ranks fourth among L1 networks by core developers, with 95 contributors.

Given the market’s current instability, many blockchains, Polkadot included, have slipped from early-January 2025 levels. Earlier figures are no longer current, and April extended the downtrend across several metrics: active addresses, new users and unique accounts.

Against bearish sentiment, developer activity and project migration to Polkadot are positives. Looming upgrades that could reshape the network’s economics give DOT and KSM holders reason for hope.

Institutional interest is also stirring: spot ETFs on Polkadot are in the works. Crypto fund managers Grayscale Investments and 21Shares have already filed applications. While some in the community are sceptical, such products could act as a catalyst if other factors align.

idk who needs to hear this but the market will decide where value lies and if there’s value in launching such a product. If no one puts money into a Polkadot ETF — it will close. People are free to launch whatever ETFs are deemed to be allowed by the SEC

— James Seyffart (@JSeyff) January 31, 2025

Some analysts expect Polkadot to be among the first 2025 comebacks after the successes of 2020–2021.

Conclusions

With Polkadot 2.0, the network’s resources are being used more efficiently. Block time has fallen to six seconds, and teams can choose the exact resources they need instead of overbuying capacity.

Management has addressed the high barriers that smaller projects faced under the slot-auction model, including the need to lock large amounts of DOT. Bigger projects no longer automatically crowd out start-ups.

Technical improvements and refreshed tokenomics aimed at lower inflation are intended to boost scalability, cut costs, speed up the network and spur dapp growth across the Polkadot ecosystem.