Polkadot team dismisses fears of empty treasury, touts self-sustaining model Polkadot team dismisses fears of empty treasury, touts self-sustaining model
Polkadot's Treasury is continually replenished by the network's token inflation.
2 min read
Updated: Jul. 2, 2024 at 6:08 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Stakeholders within Polkadot’s ecosystem have refuted claims that the network’s Treasury will run dry within two years.
Recently, a treasury report raised community concerns by suggesting that the project’s current spending would only sustain operations for two years. However, several stakeholders have dismissed these claims, explaining that Polkadot’s Treasury is continually replenished by the network’s token inflation.
Polkadot Treasury
Ben McMahon, the Ecosystem Lead at Hydration, emphasized that the Treasury does not have a fixed “runway” because it is constantly refilled from a portion of the network’s inflation. He clarified that treasury funds are allocated to not only marketing activities but the treasury also funds liquidity campaigns, DeFi infrastructure developments, ecosystem audits, and security initiatives.
He added:
“The most important thing is that this spending is decided by DOT holders through on-chain voting and executed automatically.”
Giotto de Filippi, the Chief Memer of Polkadot’s largest memecoin, DED, echoed this sentiment to CryptoSlate. He described the Treasury as “self-sustaining” and believes it can last indefinitely.
According to him:
“When Polkadot was launched, the treasury was zero. And it starts slowly to accumulate from the inflation. And yes, it gets spent, but it also keeps increasing. So the brilliance of Polkadot is that instead of giving the inflation only to the people doing staking, and securing the network, the inflation is split in two. Some goes to the people securing the network and some goes to the Treasury.”
Giotto further noted that the Treasury operates like a DAO, where token holders vote on various proposals, ranging from marketing to business development sponsorships and development payments for tools like Block Explorer.
Meanwhile, Filippo Franchini, a technical educator at Polkadot’s Web3 Foundation, added that the Treasury holds less than 2% of the DOT supply. He assured the network would remain operational even if the Treasury were depleted. However, he expressed confidence that the Treasury would not run out of funds.
He stated:
“I really do not believe the treasury will be empty anytime soon as it is a resource to protect, and it will be. The treasury is undergoing diversification into stablecoins, and there is already a discussion to send a fixed part of the DOT inflation to the treasury.”
Disclaimer: CryptoSlate has received a grant from the Polkadot Foundation to produce content about the Polkadot ecosystem. While the Foundation supports our coverage, we maintain full editorial independence and control over the content we publish.
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Oluwapelumi Adejumo
Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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