Polkadot’s treasury holds just under $245 million in assets, providing around two years of operational runway at its current spending rate, according to a report from the blockchain.
“Polkadot’s Treasury is becoming more complex and harder to grasp,” head ambassador Tommi Enenkel wrote in a June 28 treasury report for the first half of 2024. “Polkadot is spending directly as well as allocating value in bounties and collectives to be spent in the future.”
Enenkel further explained that, given the current spending rate, the treasury has about two years of runway left. However, he cautioned that the volatile nature of crypto-denominated treasuries makes accurate predictions challenging. This has sparked discussions on adopting a stricter budgeting approach or changing the system’s inflation parameters.
The blockchain holds $188 million in liquid assets, mostly in its native token, Polkadot (DOT), and stablecoins Tether (USDT) and USD Coin (USDC).
Polkadot experienced a significant increase in spending during the first half of the year, totaling $87 million. Over 40% of this amount—$36.7 million—was spent on advertising, influencers, conferences, and events.
Enenkel noted that Polkadot experienced significant value appreciation, with the token reaching a peak of $11.46 in mid-March 2024, its highest level since May 2022. Since then, DOT has retraced to $6.33 but has seen an increase of nearly 11% over the past week, according to CoinGecko.
Concerns about treasury spending are escalating
Enenkel highlighted increasing concerns within the ecosystem regarding the utilization of the Treasury, noting a decline in balances since mid-last year.
During the first half of the year, the treasury’s revenue decreased by 58.5%, falling from 414,291 DOT to 171,696 DOT, primarily due to a reduction in network fees.
Inflation-based income for the treasury totaled over 5.2 million DOT in the first half of the year, down from 7.8 million DOT in the preceding half-year.
He added that effectively deploying Treasury capital will likely involve establishing departments represented as bounties and collectives.
Enenkel suggested granting these “executive bodies” greater responsibility, noting their increasing formation and assumption of departmental roles within the ecosystem.
He also advocated for reducing DOT’s “less than ideal” 10% inflation rate to alleviate selling pressure, emphasizing that a treasury mostly denominated in DOT relies on a stable DOT/USD exchange rate for its purchasing power.