Polkadot’s treasury has $245M with two years of runway

Polkadot’s treasury holds just under $245 million worth of assets, giving it around two years of spending left at its current rate, according to a report from the blockchain.

“Polkadot’s Treasury is becoming more complex and harder to grasp,” its head ambassador Tommi Enenkel wrote in a June 28 treasury report for 2024’s first half. “Polkadot is spending directly as well as allocating value in bounties and collectives to be spent in the future.”

“At the current rate of spending, the Treasury has about two years of runway left, although the volatile nature of crypto-denominated treasuries makes it hard to predict with confidence,” Enenkel added. “This has sparked discussions ranging from a stricter budgeting approach to a change in the inflation parameters of the system.”

The blockchain holds $188 million in liquid assets, mostly in its native token, Polkadot (DOT $6.37) but also stablecoins Tether (USDT $1.00) and USD Coin (USDC $1.00).

Polkadot had “a huge jump in spending” in the year’s first half. It spent $87 million in total, with over 40% — $36.7 million — spent on advertising, influencers, conferences and events.

Polkadot’s advertising-related spending. Source: Polkadot

But Enenkel said it got “more bang for the DOT” on average as the token’s price hit a 2024 peak of $11.46 in mid-March — its highest since May 2022. DOT has since fallen to $6.33 but is up nearly 11% on the week, according to CoinGecko.

Treasury spending concerns rise

Enenkel noted that “concerns in the ecosystem about the usage of the Treasury are increasing,” with its balances falling since mid-last year.

The treasury’s revenue declined 58.5% from the second half of 2023, dropping from 414,291 DOT to 171,696 DOT, which was attributed to a decline in network fees.

The treasury had over 5.2 million DOT worth of inflation-based income in the year’s first half, down from the 7.8 million DOT in the prior half-year.

Treasury balances (dark orange) have fallen since around mid-2023. Source: Polkadot

He added that the “effective deployment of Treasury capital” will likely involve creating departments “represented as bounties and collectives.”

Enenkel floated the idea of giving these “executive bodies” more responsibility as he claimed they’re already “increasingly forming and taking on departmental roles within the ecosystem.”

He also called to lower DOT’s “not ideal” 10% inflation rate to lower selling pressure as “a mostly DOT-denominated treasury derives its purchasing power from a solid DOT/USD exchange rate.”