Crypto analytics resource Messari published a report on Polkadot’s Q1 performance, outlining the layer-zero protocol’s price action, network usage, latest developments in staking and decentralization, and possibilities ahead.
The document states that Polkadot successfully completed 13 parachain slot auctions, with a total of 127.8 million DOT – worth $2.9 billion (at the end of the first quarter) and around 11 % of total bid – bonded. Additionally, another 28 parachain slot auctions are scheduled through February 2023, bringing the total number to 41.
Although the active and new accounts have decreased in the same period, the growth of parachains confirms the steady progress of the ecosystem.
Decentralized staking
A day after protocol approved the first parachain slot auction for Nov. 11 last year, DOT hit ATH at $55.08. However, since then the price of the asset has been trading lower with the wider market. The report attributes the drop in active accounts to users who lock in their DOT to support their desired parachain(s) in a slot auction because the DOT locked in a “collective loan” cannot be removed for use in other applications.
Meanwhile, over the Q1 of 2021, the number of addresses holding DOT has increased steadily, indicating a consistently growing interest in the ecosystem despite the market remaining bearish.
By adopting the Nominated Proof-of-Stake (NPoS) consensus mechanism designed to decentralize the set of validators in the network, Polkadot had 294 out of 297 validators (99%) getting 1.8 to 2.6 million DOTs staked.
It is considered as a form of healthy validator distribution by total stake – a success of decentralizing the overall power due to the mechanism incentivizing nominators to stake with lower-staked validators to earn higher rewards.
The number of active developers is also a critical metric that gauges the robustness of an ecosystem. The report notes that “Q1 2022 saw a 10% decline in average monthly developer activity as developers prioritized enabling previously deployed features over developing new features.”
It concluded that Polkadot’s developer activity remains at the top tier in crypto, trailing only to Ethereum.
Ecosystem challenges
The Polkadot network has also faced serious challenges heading into 2022. The report says interest in the ecosystem waned after users were inundated for participating in the parachain slots auction in November. .
It suggested that the layer one protocol “needs a spark,” such as developing “a new primitive(s) utilizing the cross-chain architecture and XCM communication” to attract users again. Also, the network’s main wallet, Polkadot JS wallet, has been criticized by users for its general functionalities.
Finally, the report pointed out that the uniqueness of the architecture has led to misunderstandings and misconceptions that discourage wider adoption of the network.
