Polkadot’s treasury currently holds nearly $245 million in assets, providing a funding runway of approximately two years at its present spending pace, according to a Friday report from the blockchain.
“The complexity of Polkadot’s Treasury is increasing, making it harder to understand,” wrote Tommi Enenkel, Polkadot’s head ambassador, in a treasury report for the first half of 2024 dated June 28. “Polkadot is not only spending directly but also earmarking funds for future bounties and collectives.”
Enenkel further noted, “Given the current expenditure rate, the Treasury has around two years of funding left, although the unpredictable nature of crypto-denominated treasuries makes precise forecasting challenging. This has led to discussions about adopting a stricter budgeting strategy or adjusting the system’s inflation parameters.”
The blockchain’s treasury comprises $188 million in liquid assets, mainly in Polkadot’s native token, DOT, along with stablecoins Tether (USDT) and USD Coin (USDC).
Polkadot experienced a significant surge in spending during the first half of the year, disbursing a total of $87 million. Over 40% of this amount—$36.7 million—was allocated to advertising, influencers, conferences, and events.
However, Enenkel remarked that the treasury received “more value for the DOT” on average, as the token’s price peaked at $11.46 in mid-March 2024, its highest since May 2022. Although DOT has since decreased to $6.33, it has risen nearly 11% over the past week, according to CoinGecko.
Rising Concerns Over Treasury Spending
Enenkel pointed out growing concerns within the ecosystem regarding the Treasury’s expenditures, as its balances have been declining since mid-last year.
Treasury revenue dropped by 58.5% in the second half of 2023, falling from 414,291 DOT to 171,696 DOT, primarily due to a decrease in network fees.
In the first half of the year, the treasury earned over 5.2 million DOT from inflation-based income, down from 7.8 million DOT in the previous half-year.
Effective Use of Treasury Capital
Enenkel suggested that the “effective deployment of Treasury capital” might involve establishing departments represented as bounties and collectives.
He proposed giving these “executive bodies” more responsibility, noting that they are already “increasingly forming and assuming departmental roles within the ecosystem.”
Additionally, Enenkel recommended lowering DOT’s “not ideal” 10% inflation rate to reduce selling pressure, as “a mostly DOT-denominated treasury derives its purchasing power from a strong DOT/USD exchange rate.”
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