Analysis of Polkadot's Treasury Management
A recent report has revealed that Polkadot's treasury contains assets worth nearly $245 million, equivalent to approximately two years of current spending. As per the June 28 treasury report for the first half of 2024, chief ambassador Tommi Enenkel highlighted the growing complexity of Polkadot's treasury.
Insights into Polkadot's Financial Strategy
In a statement by Polkadot ambassador Tommi Enenkel, it was disclosed that Polkadot is actively managing funds for future rewards and collective initiatives. Enenkel emphasized the following points:
- The current spending rate suggests that the treasury can sustain operations for about two years. However, the uncertain nature of treasury bonds in the cryptocurrency realm adds complexity to predicting future outcomes.
- This scenario has triggered debates ranging from stricter budgeting to adjusting the system's inflation parameters.
Polkadot's blockchain houses liquid assets totaling $188 million, primarily in Polkadot's native token and stablecoins like Tether and USD Coin. The first half of the year witnessed a substantial increase in expenditures, totaling $87 million, with a major portion allocated towards promotional activities, influencers, conferences, and events.
Financial Performance and Challenges
Enenkel acknowledged that the token's price peaked at $11.46 in mid-March 2024, subsequently declining to $6.33. Despite this dip, the token has seen an approximate 11% weekly increase.
Regarding treasury management, an evident decline in balances has been observed since mid-2023, raising concerns about optimal treasury utilization within the ecosystem. Treasury revenues plummeted by 58.5% from the latter half of 2023, decreasing from 414,291 DOT to 171,696 DOT mainly due to a decline in network fees.
The first half of 2024 witnessed inflation-based revenues of 5.2 million DOT, down from 7.8 million DOT in the preceding period.
Future Strategies and Recommendations
Enenkel proposed delegating increased responsibilities to executive bodies to enhance their organizational roles within the ecosystem. He advocated for a reduction in DOT's 10% inflation rate to alleviate selling pressure, highlighting that a treasury predominantly in DOT relies on a stable DOT/USD exchange rate for purchasing power.
This article was originally published on COINTURK NEWS: Polkadot Manages Treasury with Strategic Spending
