Polkadot Phase 2 Could Add EVM Compatibility, Cancel Parachain Auctions and Push DOT Inflation Toward 3.1% by 2026

• Parachain auctions abolished, replaced by elastic scaling for simpler onboarding.

• Phase 2 adds EVM compatibility to accelerate developer integration and tooling reuse.

• DOT inflation is forecast to decline toward ~3.1% by 2026, which may improve long‑term liquidity.

Polkadot Phase 2: Referendum 1721 ends parachain auctions and adds EVM compatibility — read how developers and DOT holders may benefit. Learn next steps.

What is Polkadot Phase 2 (Referendum 1721)?

Polkadot Phase 2 is a protocol milestone enacted by Referendum 1721 that abolishes parachain slot auctions and introduces elastic scaling plus EVM compatibility. The change is designed to simplify developer onboarding, increase composability with EVM tooling, and moderate DOT inflation through economic adjustments.

How does Referendum 1721 remove parachain auctions and what replaces them?

Referendum 1721 cancels the parachain slot auction mechanism and replaces it with elastic scaling and shared routing. Elastic scaling allows projects to spin up parachain-like environments without winning auction slots. This reduces barriers to entry and is intended to keep network resources more fluid and liquid.

Polkadot founder Gavin Wood has long emphasized transparent governance. He has said that Polkadot prioritizes clear, community-driven protocol decisions, a principle reflected in the referendum process.

Why does Phase 2 enable EVM compatibility and who benefits?

Phase 2 integrates EVM compatibility to allow Ethereum tooling, smart contracts, and developer skills to run on Polkadot-based execution environments. This benefits smart-contract developers, DeFi builders, and projects seeking multichain liquidity. EVM compatibility lowers migration friction and can accelerate dApp launches on Polkadot environments.

When will DOT inflation change and what are the projected levels?

Economic parameters tied to Phase 2 are expected to gradually lower DOT inflation. Forecasts cited in community proposals target a reduction toward roughly 3.1% by 2026. That projection depends on staking rates, treasury spend, and on‑chain activity; outcomes will be monitored via governance dashboards and network telemetry (CoinMarketCap price snapshots referenced as plain text).

How will Phase 2 affect developers and projects?

Phase 2 lowers the technical and financial barriers to deploy by replacing slot auctions with elastic scaling. Developers gain near‑instant access to environments compatible with EVM tooling, reducing integration time. Projects focused on cross‑chain UX and wallets will see faster interoperability opportunities.

What are the market reactions and short‑term indicators?

Market indicators show resilient DOT performance around the upgrade window. DOT price snapshots (CoinMarketCap as plain text) noted a price near $4.27 with a market cap ~ $6.90 billion, a 24‑hour change of +3.19% and a 90‑day move of +17.80%. Analysts cite the JAM upgrade’s near‑unanimous support in 2024 as precedent for strong community consensus.

Frequently Asked Questions

Will parachain projects lose functionality without auctions?

No. Parachain functionality continues via elastic scaling and shared-routing constructs. Projects will be able to access equivalent execution environments without participating in expensive auction cycles.

How does EVM compatibility change token and dApp onboarding?

EVM compatibility means many Ethereum smart contracts and developer tools can be reused, shortening deployment time and lowering onboarding friction for token projects and dApps.

Does Phase 2 change DOT staking rewards?

Phase 2 does not directly alter staking mechanics. However, economic parameter adjustments tied to supply and treasury policies aim to reduce nominal inflation over time, which indirectly affects staking yield dynamics.

Key Takeaways

• Protocol change: Referendum 1721 ends parachain slot auctions and introduces elastic scaling.
• Developer access: EVM compatibility reduces friction for Ethereum-native teams and tooling.
• Economics: DOT inflation is projected to decline toward ~3.1% by 2026, which may support liquidity and participation.

Conclusion

Polkadot Phase 2, enacted through Referendum 1721, represents a strategic shift to elastic scaling and EVM compatibility to broaden developer access and improve liquidity. The upgrade targets lower DOT inflation and smoother onboarding for projects. Watch governance channels and network telemetry for real‑time metrics as adoption unfolds.

By: Liam Zhang — Researcher, Blockchain Journalism, COINOTAG

Published: 16 September 2025, 18:41:45 GMT

Updated: 16 September 2025, 18:41:45 GMT

Meta description: Polkadot Phase 2: Referendum 1721 ends parachain auctions and adds EVM compatibility to boost developer access and reduce DOT inflation. Read next steps.