Polkadot Treasury Shrinks, Faces Funding Challenge

Polkadot only has two years of runway after its enormous investment in ecosystem growth exhausted its coffers.

The Polkadot Treasury owns assets equivalent to 38 million DOT, worth around $245 million. The network’s treasurer, Tommi Enenkel, also referred to as Alice and Bob, Head Ambassador, released a new report with the most recent information.

Given the current pace of expenditure, this amount corresponds to approximately two years of the runway. According to the report:

“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.”

The initial six months of Polkadot’s expenditure

During the first half of this year, Polkadot made significant investments in its ecosystem, allocating 11 million DOT, or around $87 million, to a range of initiatives.

The study states that the network spent over $37 million on outreach initiatives like sponsorships, events, and ads. Conor Daly, a race car driver, inked sponsorship deals with the network, which also promoted several marketing initiatives aimed at increasing the network’s acceptance by the general public worldwide.

In addition, Polkadot invested $23 million in developing its network features and improvements, including sub-wallets, governance, data services and indexing, and SDK.

Additionally, the network spent $5.5 million on talent and education and $15 million on liquidity incentives. It also spent an additional $2.1 million on research and $3.8 million on maintaining the network and essential ecosystem components.

Decline in revenue

Polkadot’s revenue was seen to be declining in the report. The network’s overall earnings for the first half of 2023 decreased to 171,696 DOT from 414,291 DOT in the second half of 2023.

Enenkel ascribed this reduction to the notable decrease in network fees, which dropped from 313,443 DOT in the previous year to 39,444 DOT in the first half of 2024:

“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.”