**Updated at 09:30 am UTC: This revision provides additional clarity on Polkadot’s financial outlook.**
Polkadot currently manages assets nearing $245 million within its treasury, yet concerns over its financial sustainability beyond two years have emerged, despite recent assertions.
Community apprehensions were sparked by a Polkadot treasury report suggesting that the project’s budget could sustain operations for just two more years at the present expenditure rate.
“Understanding Polkadot’s Treasury has become increasingly intricate,” noted Tommi Enenkel, the project’s lead ambassador, in a mid-2024 first-half report on June 28. “Polkadot is actively spending while also earmarking resources for future bounties and collective initiatives.”
Enenkel added, “Given current spending patterns, the Treasury anticipates a runway of approximately two years. However, the unpredictable nature of cryptocurrency-denominated reserves makes precise predictions challenging.” This has led to discussions ranging from stricter budgeting protocols to adjustments in the system’s inflation parameters.
Contrary to concerns, Polkadot’s treasury isn’t confined to its existing $245 million, as about 7% of total token inflation (derived from staking rewards) continuously replenishes it.
According to prominent DOT advocate Giotto de Filippi, “Polkadot’s runway isn’t limited because staking continuously injects new funds into the treasury,” as explained to Cointelegraph.
The blockchain currently holds $188 million in liquid assets, primarily in Polkadot’s native DOT token, alongside stablecoins like Tether (USDT) and USD Coin (USDC).
During the first half of the year, Polkadot experienced a significant surge in expenditures, totaling $87 million. Of this, more than 40%—approximately $36.7 million—was allocated to advertising, influencer engagements, conferences, and events.
Enenkel highlighted that Polkadot achieved a heightened return on investment during this period, with the token’s value peaking at $11.46 in mid-March 2024, marking its highest since May 2022. Subsequently, DOT’s price adjusted to $6.33 but saw an almost 11% rise within the week, according to CoinGecko.
Cointelegraph has reached out to Polkadot for further comment.
Rising concerns about treasury spending were acknowledged by Enenkel, who noted growing unease within the ecosystem regarding treasury utilization, compounded by declining balances since mid-2023. Treasury revenues fell by 58.5% from the second half of 2023, dropping from 414,291 DOT to 171,696 DOT, attributed to reduced network fees.
In the first half of the year, the treasury accrued over 5.2 million DOT from inflation-based earnings, down from 7.8 million DOT in the preceding half-year.
Enenkel emphasized the importance of effectively deploying treasury resources, suggesting the formation of specialized departments structured around bounties and collective initiatives.
In related developments, Polkadot proposed reducing unstaking periods to two days.
Enenkel proposed granting greater responsibility to these “executive bodies,” asserting their evolving role within the ecosystem.
He also advocated for revising DOT’s current 10% inflation rate to alleviate selling pressures, arguing that a primarily DOT-denominated treasury benefits from a stable DOT/USD exchange rate.
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