Blockchain Network Upgrades and Their Impact on Exchange Liquidity and Investor Strategy

Blockchain networks are evolving rapidly, with protocol upgrades serving as catalysts for both innovation and volatility. For investors, understanding how these upgrades influence exchange liquidity and investor behavior is critical. This analysis examines the 2025 protocol transitions of Polkadot (DOT) and IoTeX (IOTX), assessing risks and opportunities for token holders.

Polkadot's 2025 Upgrades: Scarcity, Throughput, and Institutional Staking

Polkadot's ecosystem has undergone transformative upgrades in 2025, anchored by the Hard Pressure economic reform, which permanently capped the supply of DOT at 2.1 billion tokens with 81% community support, according to the Polkadot DAO recap. This reform, set to reduce new token issuance by 53% starting March 2026, aligns DOT's tokenomics with Bitcoin's scarcity model, potentially boosting investor confidence.

Technically, Polkadot introduced Asynchronous Backing, increasing network throughput by 10x, and Agile Coretime, a pay-as-you-go blockspace model, as described in a Yahoo Finance article. These upgrades, coupled with Elastic Scaling tests achieving 143,000 TPS on Kusama, signal readiness for mass adoption. The upcoming Polkadot 2.0 rollout in October 2025 promises 500ms block times and Ethereum compatibility via PolkaVM, further broadening utility.

However, liquidity risks emerged during the Astar Network migration in November 2025, where DOT balances, staking, and governance functions shifted to the Asset Center, according to the DOT migration notice. While the transition aimed to streamline asset management, temporary token immobilization could disrupt exchange liquidity during the Nov 3–7 maintenance window. Institutional staking activity, meanwhile, gained momentum through Galaxy Digital's integration with Coinbase Prime, enabling institutional clients to delegate assets to Galaxy's validators, highlighted in the Galaxy-Coinbase integration. This collaboration underscores growing demand for secure, diversified staking solutions.

IoTeX's AI-Driven Evolution: Staking Growth and Wallet Normalization

IoTeX's 2025 upgrades centered on its Quicksilver AI agent framework, which saw daily requests surge to 621 in Q3 2025-more than double June activity, peaking at 3,000 queries in mid-August, according to the IoTeX Q3 2025 brief. This growth, driven by integrations with OpenAI and Anthropic models, reflects heightened developer experimentation and user engagement. Strategic partnerships, including a collaboration with HashKey Exchange to build a compliant AI Ecosystem Center, further solidified IoTeX's position in decentralized AI infrastructure.

Staking activity on IoTeX also rose, with 3.6 billion IOTX tokens (valued at $77.5 million) staked by Q3's end-a 1% quarter-over-quarter increase. Despite this, average daily active wallets declined by 10.8% to 5,914, signaling normalization after a Q3 2024 surge. This trend suggests a shift from speculative trading to long-term staking, aligning with IoTeX's focus on real-world AI applications.

Risks and Opportunities for Investors

Polkadot (DOT):
- Opportunities: The hard supply cap and throughput improvements position DOT as a deflationary, scalable asset. Institutional staking partnerships (e.g., the Galaxy-Coinbase integration) enhance liquidity depth.
- Risks: Short-term liquidity dips during migrations (e.g., the Astar Network migration) could trigger volatility. The token cap's long-term effects on issuance and inflation remain untested, per the Polkadot DAO recap.

IoTeX (IOTX):
- Opportunities: Quicksilver's AI integration and real-world AI Foundry projects open avenues for decentralized infrastructure adoption. Staking growth indicates strong network security and user retention, as noted in the IoTeX Q3 2025 brief.
- Risks: Declining active wallets highlight potential user attrition. The AI ecosystem's success hinges on developer adoption and regulatory clarity, which the IoTeX Q3 2025 brief also discusses.

Conclusion

Blockchain upgrades are double-edged swords, offering innovation while introducing operational risks. For DOT holders, Polkadot's scarcity-driven model and institutional staking infrastructure present long-term value, albeit with short-term liquidity challenges. IOTX investors, meanwhile, must balance optimism around AI-driven use cases with caution regarding wallet activity trends. As both ecosystems mature, monitoring post-upgrade liquidity metrics and staking dynamics will be key to navigating these evolving markets.