**Updated 09:30 am UTC: This article has been revised to clarify Polkadot’s financial outlook.**
Polkadot’s treasury currently holds nearly $245 million in assets, but recent concerns over its financial sustainability suggesting a mere two-year runway are being addressed.
Community apprehensions surfaced following a Polkadot treasury report claiming the project could sustain operations for only two years at its current expenditure rate.
“The complexity of Polkadot’s Treasury is increasing, making it more challenging to navigate,” noted Tommi Enenkel, the head ambassador, in the treasury report for the first half of 2024, published on June 28. “Polkadot is allocating funds directly and through bounties and collectives for future use.”
“At the current spending pace, the Treasury is projected to support operations for about two years, though the volatile nature of crypto-backed treasuries makes precise forecasts difficult,” Enenkel added. “This has sparked discussions ranging from stricter budget controls to adjusting the inflation parameters.”
Contrary to fears, Polkadot’s treasury will not exhaust its funds with the current $245 million expenditure, as approximately 7% of total token inflation (staking rewards) continually replenishes it.
Explaining further, prominent DOT advocate Giotto de Filippi emphasized, “Polkadot’s runway is not constrained, as ongoing staking activities consistently inject new funds into the treasury.”
The blockchain platform holds $188 million in liquid assets, predominantly in its native Polkadot (DOT) token, along with stablecoins like Tether (USDT) and USD Coin (USDC).
In the first half of the year, Polkadot witnessed a significant surge in expenditures, totaling $87 million, with more than 40%—$36.7 million—allocated to advertising, influencers, conferences, and events.
*Polkadot’s advertising-related expenditures. Source: Polkadot*
Enenkel highlighted the advantageous timing of these expenditures, noting, “We achieved significant returns per DOT, particularly as the token peaked at $11.46 in mid-March 2024—the highest since May 2022. Although DOT has since corrected to $6.33, it has risen by nearly 11% in the past week, according to CoinGecko.”
Cointelegraph has reached out to Polkadot for their perspective on these developments.
Concerns regarding treasury spending are mounting within the ecosystem, as noted by Enenkel, who observed a decline in treasury balances since mid-2023, alongside a 58.5% drop in revenue from 414,291 DOT to 171,696 DOT due to reduced network fees.
In the first half of the year, inflation-generated income for the treasury amounted to over 5.2 million DOT, down from 7.8 million DOT in the preceding six months.
*Treasury balances (dark orange) have declined since mid-2023. Source: Polkadot*
Enenkel suggested that optimizing the treasury’s capital deployment might involve establishing specialized departments operating as bounties and collectives.
In related discussions, Polkadot has proposed reducing unstaking times to two days, underscoring efforts to enhance operational efficiency.
Enenkel also proposed lowering DOT’s current 10% inflation rate to alleviate selling pressure, asserting that “a predominantly DOT-denominated treasury hinges on a stable DOT/USD exchange rate for its purchasing power.”
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