Here Are the Major Reasons Polkadot Will Cease to Exist Within 2 Years
Polkadot’s treasury, currently holding nearly $245 million, faces scrutiny over its financial limits. A recent analysis suggested that at its current expenditure rate, the project might exhaust its budget within two years. Tommi Enenkel, the lead ambassador, acknowledged the growing complexity of Polkadot’s Treasury, noting its direct spending and allocation practices for bounties and future initiatives.
Concerns over Polkadot’s financial trajectory have been voiced by cryptocurrency analyst Zia ul Haque, who foresees potential insolvency within two years. Highlighting Polkadot’s asset portfolio of $245 million, including $188 million in tokens, Haque pointed out that the team’s expenditure during the first half of 2024 amounted to $87 million (11 million DOT), marking a 2.4-fold increase compared to late 2023. Liquid assets total $188 million (29 million DOT), supplemented by $8 million in stablecoins, with an additional $16 million earmarked for further stablecoin acquisitions.
Notably, a substantial portion, approximately $36.7 million, was allocated for outreach efforts such as advertising, conferences, and partnerships aimed at expanding Polkadot’s user base. Despite these investments, the initiative failed to boost active accounts, despite collaborations with prominent figures like Lionel Messi, sponsorships in racing, and various influencer engagements.
Haque underscores the unsustainability of Polkadot’s current spending rate, estimating that with $200 million in liquid assets, the platform can only sustain its operations for another two years without substantial strategic adjustments. He emphasizes the urgent need for Polkadot to revise its financial approach and address inflation concerns to avert a financial crisis.
In contrast, DOT advocate Giotto de Filippi remains optimistic, assuring that despite reduced spending and mid-2023 balance adjustments, Polkadot’s treasury won’t face immediate depletion. He attributes this resilience to continuous funding from staking rewards, which contribute 7% of token inflation, alongside assets in Tether, USD Coin, and Polkadot’s native DOT token.
The ongoing debate surrounding Polkadot’s financial strategies has sparked discussions on the necessity for stricter budget controls and potential revisions to inflation policies, reflecting broader concerns within the cryptocurrency community.
Tags: Altcoins