Polkadot slashes spending by half in Q3, still has $150M in treasury

Polkadot spent $27.3 million on various projects during the third quarter, which is almost half of what the Ethereum rival spent in the previous three months, according to a treasury report shared by the community on Monday.

The treasury still has just over $150M worth of DOT available for spending, which community members estimate should last about a year and a half at current prices.

Software development made up the largest chunk of the budget, with nearly $12M allocated to projects like building a Polkadot-Ethereum bridge and improving wallet functionality. Marketing and outreach were the second-biggest expense, with over $9.9M going towards ads, events, meetups, conferences, and more.

The findings follow earlier reports, which sparked discussions on the use of treasury funds and how these funds should be managed.

Polkadot manages its treasury across multiple assets and chains within the Polkadot ecosystem. This complex financial structure supports various governance initiatives, decentralized finance (DeFi) operations, and liquidity provisions. 

A major development in Q3 was Polkadot’s first asset swap, in which 1M DOT tokens were exchanged for an equivalent amount of MYTH tokens. The swap was part of a broader strategy to integrate the Mythical gaming chain into the Polkadot network. 

As of September 30, 2024, the Polkadot Treasury holds a total of $153M (33.3M DOT) in assets, with $109M readily available for spending. In addition, $6.6M of the treasury’s reserves are held in stablecoins, and another $28M has been set aside for stablecoin acquisitions. 

Meanwhile, Polkadot deployed $10M of its assets across four DeFi chains, including Hydration, Centrifuge, Bifrost, and Pendulum. Executive bodies, including bounties and collectives, accounted for 15% of the spending, with funds directed towards initiatives like DeFi tooling, gaming, and business development.

The treasury surplus for Q3 was reported at 32.4M DOT ($149M) after accounting for its liabilities, such as wages for the Polkadot Technical Fellowship and future distributions of MYTH tokens. 

Operational costs came in at $1.4M, covering network infrastructure, data services, and legal expenses. The treasury ramped up investment in talent and education, spending $3.8M on hackathons, educational programs, and recruitment efforts. On the other hand, research spending took a hit, dropping to just $313,000 from $1.5M in the previous quarter.

The report also touches on the ongoing debate around inflation and its impact on the treasury's long-term financial stability. While inflation does help refill treasury funds, the report points out that it can't be a permanent solution since it essentially acts as a tax on token holders who aren’t staking.

Polkadot stakeholders recently voted to reduce inflation rates to stabilize the treasury’s income. The report estimates that the treasury will receive around 18M DOT (about $83M) from inflation in 2025, giving it a budget of 4.5M DOT per quarter. 

Source: Investing.com