• Polkadot spent $87 million worth of DOT in H1 2024, raising sustainability concerns.
• DOT’s price fell by 2.90%, with the RSI below the neutral level, indicating ongoing bearish sentiment.

In a significant update, Polkadot [DOT], the blockchain interoperability protocol established in 2016, has allocated $87 million worth of DOT tokens toward activities in the first half of 2024.

Is Polkadot under a financial crunch?

This spending leaves the company’s treasury, with $245 million worth of DOT remaining. 

Community members are now estimating that the remaining funds could potentially last for approximately two years, based on current market conditions. 

According to the treasury report,

“At the current rate of spending, the Treasury has about 2 years of runway left, although the volatile nature of crypto-denominated treasuries makes it hard to predict with confidence.” 

Expanding on the complexities, the report further added, 

“Polkadot’s Treasury is becoming more complex and harder to grasp. It is spending directly as well as allocating value in bounties and collectives to be spent in the future.” 

Mixed community reaction

The revelation of this expenditure has sparked intense debate among stakeholders concerned about the project’s financial sustainability.  

Expressing his discontent with the project, Victor Ji, co-founder of Manta Network, took to X (formerly Twitter) and noted, 

“ It is a highly toxic ecosystem that lacks any real value for web3, and it does not focus on users or adoption at all.” 

Adding to the fray was @DefiIgnas who highlighted that the firm’s financial position is “Deep in the negative”, a term often used to describe a situation wherein expenses or liabilities exceed income or assets. 

However, not everyone shared a similar line of thought. Amidst criticism, Web3Foundation CEO Fabian Gompf jumped in, to defend Polkadot and noted, 

“The whole notion of a “runway” for the on-chain treasury is misleading. The treasury has continuous inflows. It’s never going to run out of funds.” 

Impact on DOT’s price action

This news significantly impacted Polkadot’s native currency, DOT, which was trading at $6.17 at the time of writing, reflecting a 2.90% decrease over 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 sits below the neutral level.

Additionally, declining price volatility suggested that this bearish sentiment was here to stay.