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Polkadot spends $87M in H1 2024: ‘Treasury deep in the negative’

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The debate over Polkadot’s treasury longevity influences DOT’s price, fueling bearish sentiment.

Polkadot spends $87M in H1 2024: 'Treasury deep in the negative'

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  • Polkadot spent $87 million worth of DOT in H1 2024, raising sustainability concerns.
  • DOT’s price fell by 2.90%, with the RSI below the neutral level, indicating ongoing bearish sentiment.

In a significant update, Polkadot [DOT], the blockchain interoperability protocol established in 2016, has allocated $87 million worth of DOT tokens toward activities in the first half of 2024.

Is Polkadot under a financial crunch?

This spending leaves the company’s treasury, with $245 million worth of DOT remaining. 

Polkadot Treasury Assets

Source: Forum.polkadot.network

Community members are now estimating that the remaining funds could potentially last for approximately two years, based on current market conditions. 

According to the treasury report,

“At the current rate of spending, the Treasury has about 2 years of runway left, although the volatile nature of crypto-denominated treasuries makes it hard to predict with confidence.” 

Expanding on the complexities, the report further added, 

“Polkadot’s Treasury is becoming more complex and harder to grasp. It is spending directly as well as allocating value in bounties and collectives to be spent in the future.” 

Mixed community reaction

The revelation of this expenditure has sparked intense debate among stakeholders concerned about the project’s financial sustainability.  

Expressing his discontent with the project, Victor Ji, co-founder of Manta Network, took to X (formerly Twitter) and noted, 

“ It is a highly toxic ecosystem that lacks any real value for web3, and it does not focus on users or adoption at all.” 

Adding to the fray was @DefiIgnas who highlighted that the firm’s financial position is “Deep in the negative”, a term often used to describe a situation wherein expenses or liabilities exceed income or assets. 

DefiIgnas on DOT

Source: DefiIgnas/X

However, not everyone shared a similar line of thought. Amidst criticism, Web3Foundation CEO Fabian Gompf jumped in, to defend Polkadot and noted, 

“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.” 

Impact on DOT’s price action

This news significantly impacted Polkadot’s native currency, DOT, which was trading at $6.17 at the time of writing, reflecting a 2.90% decrease over the past 24 hours, according to CoinMarketCap

AMBCrypto’s analysis of Santiment data on DOT’s Relative Strength Index (RSI) further confirmed this sentiment, showing an RSI of 48, indicating a bearish trend as it sits below the neutral level.

Additionally, declining price volatility suggested that this bearish sentiment was here to stay. 

Polkadot- TradingView

Source: TradingView

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Ishika is a graduate of Political Science from the University of Delhi. From writing content as a hobby to now pursuing it as a professional career, she has been living and breathing content all her life. Her interests lie in making sure articles are very digestible to a common reader, despite all its technicalities and jargons.
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