Polkadot’s treasury currently holds assets worth nearly $245 million, but recent concerns raised by reports suggesting that its runway is limited to two years are unfounded. The project’s head ambassador, Tommi Enenkel, acknowledged that the treasury is becoming more complex, but clarified that Polkadot is spending directly as well as allocating funds to be spent in the future. While the current rate of spending suggests a two-year runway, the treasury will not run out of funds as approximately 7% of the total token inflation is sent to the treasury through staking rewards.
Contrary to the concerns, Polkadot’s treasury is continuously replenished with new funds from staking, ensuring that it does not have a limited runway. Popular DOT activist Giotto de Filippi explained that the blockchain holds $188 million in liquid assets, primarily in the native Polkadot token (DOT), as well as stablecoins Tether (USDT) and USD Coin (USDC).
In the first half of the year, Polkadot experienced a significant increase in spending, with $87 million allocated for advertising, influencers, conferences, and events. Enenkel highlighted that despite the increase in spending, the project received more value from the DOT token as its price reached a peak of $11.46 in mid-March, the highest since May 2022. Although the price has since fallen to $6.33, it is still up by nearly 11% in the past week.
There have been growing concerns within the ecosystem regarding the usage of the treasury, as its balances have been decreasing since mid-2023. The decline in network fees resulted in a 58.5% drop in the treasury’s revenue from the second half of 2023. Additionally, the inflation-based income decreased from 7.8 million DOT to 5.2 million DOT in the first half of this year.
Enenkel suggested that the effective deployment of treasury capital would involve creating departments represented as bounties and collectives. These “executive bodies” would be given more responsibility and would take on departmental roles within the ecosystem. He also proposed lowering DOT’s 10% inflation rate to alleviate selling pressure, as the treasury’s purchasing power relies on a stable DOT/USD exchange rate.
Cointelegraph has reached out to Polkadot for further comments on the matter.
Polkadot’s treasury is well-positioned to sustain its operations beyond the current $245 million, thanks to the continuous influx of funds through staking rewards. The concerns raised about the treasury’s runway are not warranted, and the project remains financially stable.