Polkadot treasury is facing challenges as it holds $245 million in assets but is experiencing a revenue decline and has a two-year runway left. The Head Ambassador, Tommi Enenkel, also known as Alice and Bob, shared a report with the latest update on the network’s treasury.
The current balance in the Polkadot Treasury is equivalent to 38 million DOT, which is approximately $245 million. This amount is estimated to provide about two years of runway at the current spending rate. However, due to the volatile nature of crypto-denominated treasuries, it is challenging to predict with confidence.
In the first six months of this year, Polkadot made significant investments in its ecosystem, spending 11 million DOT, valued at around $87 million, across various projects. The network allocated approximately $37 million to Outreach activities, including advertisements, sponsorships, and events. Sponsorship deals with race car driver Conor Daly were signed, along with other marketing initiatives to increase adoption globally.
Additionally, $23 million was spent on developing network features and upgrades such as SDK, Data Services and Indexing, Governance, and Subwallets. Liquidity incentives received $15 million in funding, while $5.5 million was invested in Talent and Education. Maintenance of the network and core ecosystem components required $3.8 million, with another $2.1 million allocated towards Research.
However, despite these investments, Polkadot experienced a decline in revenue during the first half of the year. Total earnings dropped to 171,696 DOT from 414,291 DOT recorded in the second half of 2023. This decrease was mainly attributed to a significant drop in network fees, which fell from 313,443 DOT last year to 39,444 DOT in the first half of 2024.
Enenkel explained that direct revenue from fees remains minimal, with the network making 300k DOT from fees in the second half of 2023 due to a short-lived inscriptions campaign. Under regular conditions, fees are relatively stable at about 20k DOT per quarter. Other sources of revenue include transfers from accounts that return funds for various reasons.
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These challenges facing the Polkadot Treasury highlight the importance of strategic financial planning and revenue diversification to ensure the sustainability and growth of the network in the long term. By addressing these issues and adapting to the changing market conditions, Polkadot can continue to thrive and expand its ecosystem effectively.