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at recent days a report Polkadot’s Treasury’s financial report for the first half of 2024 has raised concerns about an impending funding crisis. The report notes that treasury assets, spread across multiple chains, are becoming increasingly complex and difficult to manage effectively.
DeFi researcher Ignas has Analyzed The report highlights the limited scope the Treasury can take in about two years at its current burn rate of $87 million every six months.
Concerns grow over Polkadot funding
Polkadot spending during the first half of 2024 paints a worrying picture. Awareness Program The project was valued at $37 million, with the aim of attracting new users, developers and companies.
Additional spending included $10 million on advertising/sponsorship, $4.4 million on influencers, and $4 million on digital advertising. Surprisingly, despite these expenses, Polkadot’s visibility on social media platforms, including X, remained significantly low.
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The Treasury has spent a total of $86 million in the past six months, managing $245 million ($38 million from the DOT) in assets, with $188 million ($29 million from the DOT) in liquid form. The burn rate suggests the Treasury may be facing bankruptcy In less than two years.
Polkadot’s supply is growing at a rate of 10% per year, primarily due to participation rewards. With a market cap of $10 billion, participants receive $1 billion per year, which has a significant impact on the network’s security costs.
However, 57% of respondents rejected a proposal to reduce inflation, exacerbating the financial challenges facing the Treasury.
New governance model
The report reveals that direct fee revenue remains marginal for Polkadot. In the second half of 2023, Polkadot generated 300,000 points through fees during a short-term registration campaign. Under normal circumstances, fee revenue would stabilize at around 20,000 points per quarter.
On the expenditure front, the report highlights a 2.4-fold increase in DOT spending compared to the second half of 2023. Ambitious proposals and larger demand volumes contributed to this significant increase in spending.
Although the average DOT price While the value of the cryptocurrency has risen, increasing the value per transfer point, concerns are growing about the use of treasury within the ecosystem.
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To address these challenges, Polkadot is moving towards a more structured approach. Enforcement bodies, such as rewards and associations, are emerging to take on governance roles within the ecosystem.
These entities are responsible for security, data research, core functionality development, network operation, and marketing. Business Development The main question now is how to quickly create effective structures to guide Polkadot towards success.
The solution, according to Blockchain Treasury, is to delegate more responsibility to these executive bodies. These bodies are made up of competent individuals who evaluate new proposals and deliver value. The groups, similar to sub-DAOs, have OpenGov capabilities and sub-treasuries to facilitate their work.
By leveraging these executive bodies, Polkadot can outsource operational issues and routine tasks, allowing OpenGov stakeholders to focus on making critical decisions.
The effectiveness and performance of executive bodies is evaluated, and budget allocations are negotiated with OpenGov based on the results.
At the time of writing, a point It is trading at $6.35, which represents a price recovery of about 4% in a 24-hour timeframe. However, the 17th largest cryptocurrency by market cap is still down 10% over the past month.
Featured image by DALL-E, chart by TradingView.com
