Polkadot’s Treasury of $245 Million Predicted to Last Two Years at Current Expenditure Rate

In the first six months of this year, Polkadot utilized $87 million from its treasury for various initiatives, with the bulk of this expenditure, over $36 million, directed towards marketing and outreach efforts. The remaining treasury, valued at slightly over $245 million in DOT tokens, is anticipated to sustain for another two years at the present spending and price levels. The community is increasingly concerned about how the treasury funds are being used.

Polkadot, a pioneer in the cryptocurrency sector and a competitor to Ethereum, reported a significant increase in spending, with $87 million in DOT tokens used in the first half of the year, as revealed in a treasury report by blockchain community representatives. This expenditure marks a more than 125% increase from the nearly $25 million spent in the latter half of 2023. The treasury, currently valued at over $245 million in DOT tokens, is expected to deplete in two years if spending and prices remain constant, despite the treasury’s growth potential due to DOT’s inflationary mechanism.

“The concept of a ‘runway’ for the on-chain treasury is misleading because the treasury continually receives inflows. It will never deplete,” stated Fabian Gompf, CEO of Web3Foundation, on X.

The largest portion of the treasury’s expenditure was on marketing and outreach, including advertising, event hosting, and other initiatives aimed at drawing new users, developers, and businesses to the Polkadot ecosystem. Software development was the second-largest expense, with over $23 million allocated to creating services like wallets and developer tools. Additionally, about $15 million was spent on providing liquidity and incentives on Polkadot-based trading platforms.

A comprehensive breakdown of each transaction has been made available in a publicly accessible spreadsheet, highlighting the community’s concern over the extensive spending and the potential risk of depleting liquidity.

“The Treasury has roughly 32 million DOT (equivalent to 200 million USD) in liquid assets that can be utilized within the next year. Considering a current net loss of 17 million DOT (108 million USD) per year, this leaves an estimated two years of operational funds if the DOT to USD exchange rate remains stable,” the report indicated.

Given the treasury’s reliance on DOT, which is subject to market volatility, there is growing unease within the ecosystem regarding the treasury’s management and future sustainability.