Polkadot’s $245M Treasury Would Last 2 Years at Current Spending Rate

Polkadot, one of the crypto industry’s earliest Ethereum rivals, spent $87 million worth of DOT tokens on various activities for the first half of this year, doubling from the pace of the prior six months, community representatives for the blockchain published in a treasury report over the weekend.

The treasury has just over $245 million worth of DOT left for spending, an amount community members estimate will last for two years at current prices. The first-half spending represents a more than 125% jump from the nearly $25 million spent in the second half of 2023.

It’s worth noting that Polkadot’s treasury is topped up by the inflationary mechanism of the DOT token and that the treasury will grow before net spend is taken into account over the next two years.

“The whole notion of a ‘runway for the on-chain treasury is misleading. The treasury has continuous inflows. It’s never going to run out of funds,” Web3Foundation CEO Fabian Gompf said on X.

Marketing and outreach activities accounted for the biggest chunk of spending, with over $36 million spent on advertisements, events, meetups, conference hosting, and other initiatives. These efforts were intended to attract new users, developers, and businesses to the ecosystem.

Software development costs were the second-largest money sink, with over $23 million used to build services, such as wallets and toolkits to support developers. Some $15 million was spent on liquidity provision and incentives on Polkadot-based trading platforms.

A detailed breakdown of each transaction has been published on a publicly-viewable spreadsheet.

As such, community members expressed concerns about the large amount of spending on various activities and the possibility of running out of liquidity.

“The Treasury has about 32m DOT (200m USD) in liquid assets available within the next year. At a current net loss of 17m DOT (108m) USD per year, this leaves about 2 years of runway left if the DOTUSD rate stays the same,” the report said.

“The volatile nature of a mostly DOT-denominated treasury makes it hard to predict the future, but concerns in the ecosystem about how the Treasury is used are increasing,” it added.

UPDATE JULY 2, 15:56 UTC: Adds third and fourth paragraph on how Polkadot’s treasury will inflate over time.