- Polkadot’s on-chain treasury, which holds $245 million in assets, is expected to run dry in 2 years due to high spending.
- The treasury has already spent $87 million in the first half of 2024, with a significant portion going towards outreach initiatives to attract new users, businesses, and developers.
- While concerns about the treasury’s spending are increasing within the Polkadot ecosystem, the Web3 Foundation refutes claims that the treasury will run out of funds, stating that it has a continuous inflow of new funds.
Polkadot‘s on-chain treasury is quickly depleting, according to a new report by the blockchain‘s head ecosystem ambassador. The treasury currently holds $245 million in assets, but its spending has turned negative as governance members vote to fund various initiatives.
Polkadot’s Current Treasury Holdings
The report reveals that Polkadot’s on-chain treasury currently holds $245 million in assets, with $188 million of that being liquid. The assets are spread across three different chains. This is said to be the most comprehensive treasury report in Polkadot’s history.
Rapid Spending Reduces Runway
In the first half of 2024, the treasury has already spent $87 million. Of that, $36 million went towards outreach initiatives to attract new users and developers. Another $23 million funded development, while $15 million went to liquidity incentives. At this rate of spending, the head ambassador estimates there are only 2 years of runway left in the treasury.
Debating Treasury Inflation
The treasury is mostly denominated in DOT, Polkadot’s native token. DOT has a 10% annual inflation rate, with most new tokens going to stakers. A proposal to reduce inflation was recently rejected, sparking debate in the community. On one hand, some want to reduce sell pressure from the treasury. On the other, stake-to-sell users create significant sell pressure already.
Ongoing Inflows Provide Hope
The Web3 Foundation disputes the notion that the treasury will run dry. As they note, the treasury has continuous inflows from things like staking rewards. Even if spending continues, the inflows mean the treasury won’t fully deplete. The notion of a fixed “runway” does not apply.
