Polkadot Spent $87M on Ecosystem Development in 2024, Concerns Over Treasury Runway
Polkadot has spent $87 million worth of DOT tokens on various initiatives during the first half of this year. Currently, Polkadot's treasury holds around $245 million worth of DOT, which community members estimate will be sufficient for about two years at current prices. The recent spending surge represents a more than 125% increase from the nearly $25 million spent in the latter half of 2023.
This expenditure marks a significant increase, doubling the pace compared to the previous six months, according to a treasury report released by community representatives over the weekend.
It is important to note that Polkadot's treasury is continually replenished through the inflationary mechanism of the DOT token. Consequently, the treasury is expected to grow even before accounting for net spending over the next two years. Web3 Foundation CEO Fabian Gompf addressed concerns about the treasury's longevity on social media platform X, stating, "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."
Marketing and outreach activities constituted the largest portion of the expenditure, with over $36 million allocated to advertisements, events, meetups, conference hosting, and other initiatives aimed at attracting new users, developers, and businesses to the Polkadot ecosystem. Software development costs followed, with more than $23 million spent on building services such as wallets and toolkits to support developers. Additionally, around $15 million was directed towards liquidity provision and incentives on Polkadot-based trading platforms.
Despite the detailed breakdown of each transaction being available on a publicly-viewable spreadsheet, some community members have expressed concerns regarding the substantial spending and the risk of depleting liquidity. The report highlighted these worries, noting, “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.”
The report further acknowledged the challenges posed by the volatile nature of a mostly DOT-denominated treasury, making future predictions difficult. “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.
Polkadot (DOT) gained 1.74% over the past 24 hours, and over 10% in the past week. It currently has a market capitalization of $9.28 billion, making it the 14th largest cryptocurrency.
