Polkadot spent $87 million worth of DOT tokens in the first half of 2024, sparking concerns about sustainability. The price of DOT fell by 2.90%, with RSI below neutral levels indicating sustained bearish sentiment.
In a significant update, Polkadot, a blockchain interoperability protocol established in 2016, allocated $87 million worth of DOT tokens for activities in the first half of 2024.
Has Polkadot entered a financial crisis?
The expenditure leaves the company’s treasury with $245 million worth of DOT remaining.
Community members now estimate that, given current market conditions, the remaining funds could last approximately two more years.
According to the treasury’s report,
“At the current spending rate, the treasury has about 2 years left, although the volatility of crypto-denominated bonds makes it difficult to confidently predict.”
The report further adds,
“Polkadot’s treasury is becoming increasingly complex and difficult to manage. It is disbursing directly and allocating value in future bonuses and collectives.”
Mixed community reactions
Disclosure of this expenditure has sparked intense debate among stakeholders concerned about the project’s financial sustainability.
Victor Ji, co-founder of Manta Network, expressed dissatisfaction on X (formerly Twitter), noting,
“It’s a toxic ecosystem lacking any real value for web3 and paying no attention to users or adoption.”
@DefiIgnas emphasized that the company’s financial situation is “very bad,” a term often used to describe spending or debt exceeding income or assets.
However, not everyone shares the same view. Amid criticism, Fabian Gompf, CEO of Web3 Foundation, defended Polkadot, stating,
“The entire concept of a ‘treasury runway’ is misleading. The treasury continually receives inflows. It will never run out of funds.”
Impact on DOT price action
According to CoinMarketCap data, this news significantly affected Polkadot’s native DOT, which traded at $6.17 at the time of writing, reflecting a 2.90% decline over the past 24 hours.
Analysis of DOT’s Relative Strength Index (RSI) data by Santiment on AMBCrypto further confirmed this view, showing an RSI of 48, indicating bearish sentiment below neutral levels.
Moreover, decreasing price volatility suggests that this bearish sentiment is likely to persist.
