Update 09:30 am UTC: This piece has been updated to provide clarity on Polkadot’s financial situation.
The treasury of Polkadot contains assets valued at almost $245 million. However, concerns have arisen due to a recent report suggesting that the project’s budget is only sustainable for two years. Despite this, the treasury will not run out of funds after spending the current $245 million, as approximately 7% of the total token inflation is allocated to it.
The head ambassador, Tommi Enenkel, acknowledged that the treasury is becoming more intricate and harder to understand due to direct spending and the allocation of value in bounties and collectives for future expenses. He mentioned that discussions have been sparked about implementing a stricter budgeting approach and adjusting the inflation parameters of the system.
Popular DOT activist Giotto de Filippi clarified that Polkadot’s treasury is constantly replenished with new funds from staking, therefore it does not have a limited runway.
The treasury currently holds $188 million in liquid assets, mainly in the native Polkadot (DOT) token and stablecoins Tether (USDT) and USD Coin (USDC). There was a significant surge in spending in the first half of the year, with over 40% of the total expenditure being allocated to advertising, influencers, conferences, and events.
Enenkel stated that despite the increase in spending, they were able to maximize the value of the DOT token when its price peaked in mid-March. He addressed concerns about the declining treasury balances and suggested that creating departments represented as bounties and collectives could be an effective way to deploy treasury capital.
He also proposed reducing the 10% inflation rate to alleviate selling pressure and maintain the purchasing power of the treasury, which is mostly denominated in DOT. Furthermore, he mentioned that executive bodies within the ecosystem are already forming and taking on departmental roles.
Cointelegraph has reached out to Polkadot for comment on the matter.