- Polkadot spent $87 million on DOT in the first half of 2024, raising sustainability concerns.
- DOT price fell 2.90%, with the RSI below the neutral level, indicating continued bearish sentiment.
In a major update, Polkadot [DOT]the blockchain interoperability protocol founded in 2016 has allocated $87 million worth of DOT tokens for activities in the first half of 2024.
Is Polkadot in a financial crisis?
These expenses leave the company’s coffers with $245 million left in DOT.
Source: Forum.polkadot.network
Community members now estimate that the remaining funds may last approximately two years, based on current market conditions.
According to the treasury report,
“At current spending rates, the Treasury Department still has about two years, although the volatile nature of crypto-denominated government bonds makes it difficult to predict with confidence.”
Expanding on the complexities, the report further added:
“Polkadot’s treasure chest is becoming more complex and harder to understand. It is about direct expenditure and assigning value to premiums and collectives that can be issued in the future.”
Mixed community response
The revelation of these expenses has sparked intense debate among stakeholders concerned about the financial sustainability of the project.
Expressing his dissatisfaction with the project, Victor Jico-founder of Manta Network, took to X (formerly Twitter) and commented:
“It’s a very toxic ecosystem that has no real value for web3, and it doesn’t focus on users or adoption at all.”
Adding to the fray was @DefiIgnas who emphasized that the company’s financial position is “deeply in the negative,” a term often used to describe a situation where expenses or liabilities exceed revenues or assets.
Source: DefiIgnas/X
However, not everyone shared a similar mindset. Amid criticism, CEO of Web3Foundation Fabian Gompf jumped in to defend Polkadot, noting:
“The whole idea of a ‘runway’ for on-chain treasury is misleading. The treasury is experiencing a continuous inflow. The money will never run out.”
Impact on DOT price action
This news had a significant impact on Polkadot’s home currency, DOT, which was trading at $6.17 at the time of writing, reflecting a decline of 2.90% in the past 24 hours, according to CoinMarketCap.
AMBCrypto’s analysis of Santiment data on DOT’s Relative Strength Index (RSI) further confirmed this sentiment, showing an RSI of 48, indicating a bearish trend as it is below the neutral level.
Furthermore, declining price volatility suggested that this bearish sentiment would not last much longer.
Source: TradingView