Polkadot's Treasury Holds $245M Assets: Current Spending Predicts Two-Year Lifespan
Summary:
Polkadot's treasury currently holds nearly $245 million in assets and at the current spending rate, it has around two years of spending left, says Polkadot's Head Ambassador, Tommi Enenkel. The blockchain's treasury includes $188 million in liquid assets, primarily in its native token, Polkadot (DOT). The first half of the year saw a significant increase in spending, with advertising and event participation accounting for over 40% of the total outlay. Treasury income has declined, raising concerns within the ecosystem about the usage of the treasury. To address this, Enenkel proposes more effective deployment of treasury capital, reducing the DOT's inflation rate, and giving more responsibility to executive bodies within the ecosystem.
Assets worth nearly $245 million are currently housed in Polkadot’s treasury, indicating a spending lifespan of approximately two years based on current outlay patterns, as per details highlighted in a recent blockchain report. Polkadot's Head Ambassador, Tommi Enenkel, cautioned in a treasury report from the first half of 2024 that managing Polkadot's Treasury is becoming complex due to its direct spendings, bounties, and collective allocations for future use. He also mentioned the difficulty in accurately predicting the treasury's lifespan due to the unpredictable nature of crypto assets' value.
Various possibilities were discussed, including the implementation of strict budgeting or adjustments to the system's inflation parameters. Polkadot's repository contains $188 million in readily available assets, dominated by its native currency, Polkadot (DOT), and also includes stablecoins such as Tether (USDT) and USD Coin (USDC).
The first part of the year witnessed a significant rise in Polkadot's expenditure, totaling $87 million, of which advertising, influencer outreach, and event participation accounted for over 40%, or $36.7 million. However, Enenkel points out Polkadot managed to get more value per DOT due to the token’s price reaching a 2024 peak of $11.46 in mid-March, the highest point since May 2022. Despite falling to $6.33 since then, DOT has experienced a nearly 11% increase this week, as reported by CoinGecko.
Enenkel also noted growing concerns about the treasury's use and the declining balances from the middle of last year. Treasury income slid by 58.5%, from 414,291 DOT to 171,696 DOT, which was linked to a drop in network fees. Inflation-based income in the first half of the year was a little over 5.2 million DOT, in contrast with 7.8 million DOT from the latter half of last year.
Enenkel anticipates that moving forward, the treasury capital will be deployed more effectively by being apportioned into departments characterized by collectives and bounties. He proposed greater responsibility for these executive entities, who are increasingly taking on departmental roles within the ecosystem. Furthermore, Enenkel advocated for DOT's 10% inflation rate, branded as "non-ideal," to be reduced to lower selling pressure and maintain its purchasing power anchored in a stable DOT/USD exchange rate.
Published At
7/2/2024 5:25:27 AM
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