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.”

The Polkadot Treasury holds assets equivalent to 38 million DOT, worth approximately $245 million. Head Ambassador Tommi Enenkel, popularly known as Alice and Bob, shared a new report providing the latest update on the network’s treasury.

This balance equates to about two years of the runway at its current spending rate. The report stated:

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

Polkadot’s first six months of spending

During the first six months of this year, Polkadot invested heavily in its ecosystem, spending 11 million DOT, valued at around $87 million, across various projects.

According to the report, the network invested about $37 million in Outreach activities such as advertisements, sponsorships, and events. The network signed sponsorship deals with race car driver Conor Daly and also pushed several marketing activities designed to bolster the network’s adoption by the broader global community.

Polkadot also spent $23 million developing its network features and upgrades, including SDK, Data Services and Indexing, Governance, and Subwallets.

Moreover, the network invested $15 million in liquidity incentives and $5.5 million in Talent and Education. Additionally, it spent $3.8 million to maintain the network and core ecosystem components, and another $2.1 million went towards Research.

Revenue decline

The report highlighted a decline in Polkadot’s revenue. During the first six months of the year, the network’s total earnings dropped to 171,696 DOT from 414,291 DOT, recorded in the second half of 2023.

Enenkel attributed this decline to the significant drop in network fees, which fell from 313,443 DOT last year to 39,444 DOT in the 2024 first half:

“We see that direct revenue from fees is still marginal. Polkadot made 300k DOT from fees in 2023-H2 from a short-lived inscriptions campaign. Fees under regular conditions are pretty stable with about 20k DOT per quarter. Other sources of revenue are typically transfers from accounts that return funds that they received and pay them back for various reasons.”