CryptoSlate Report:
Polkadot spent $87 million worth of DOT in the first half of 2024, sparking concerns about sustainability. The price of DOT dropped by 2.90%, with the RSI falling below neutral levels, indicating sustained bearish sentiment.
In a significant update, the blockchain interoperability protocol Polkadot [DOT], established in 2016, allocated $87 million worth of DOT tokens for activities in the first half of 2024.
Is Polkadot Facing Financial Crisis?
The expenditure left the company’s treasury with $245 million worth of DOT remaining.
Community members now estimate that, given current market conditions, the remaining funds may last approximately two more years.
According to the treasury report,
“The treasury has approximately 2 years left at the current spending rate, though volatility in crypto-denominated bonds makes predicting with confidence difficult.”
The report further noted,
“Polkadot’s treasury is becoming increasingly complex and challenging to manage. It’s spending directly and allocating value in future bonuses and collectives.”
Mixed Community Reactions
Disclosure of this expenditure has sparked intense debate among stakeholders concerned with the project’s financial sustainability.
Victor Ji, co-founder of Manta Network, expressed dissatisfaction on X (formerly Twitter), stating,
“It’s a toxic ecosystem that lacks any real value for web3 and doesn’t care about users or adoption.”
@DefiIgnas emphasized that the company’s financial situation is “very dire,” a term often used to describe expenditures or debts exceeding income or assets.
However, not everyone shares the same view. Amidst criticism, Fabian Gompf, CEO of Web3Foundation, defended Polkadot, stating,
“The entire notion of the treasury ‘running out’ is misleading. There’s a continuous inflow of funds. It will never deplete.”
Impact on DOT Price Action
According to CoinMarketCap data, this news significantly affected Polkadot’s native DOT, which was trading at $6.17 at the time of writing, reflecting a 2.90% decline in the past 24 hours.
Analysis by AMBCrypto of DOT’s Relative Strength Index (RSI) from Santiment data further confirmed this viewpoint, showing an RSI of 48, indicating a bearish trend below neutral levels.
Additionally, decreased price volatility suggests that this bearish sentiment may persist.
