- 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.
As an analyst with a background in financial analysis and blockchain technology, I find the recent developments surrounding Polkadot [DOT] concerning. The news of $87 million worth of DOT being spent in H1 2024 raises sustainability questions for the project. With only approximately two years’ worth of funds remaining based on current market conditions, the community is understandably debating the project’s financial stability.
Polkadot (DOT), the blockchain interoperability protocol founded in 2016, has earmarked approximately $87 million in DOT tokens for initiatives 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.
Based on present market trends, community estimates suggest that the remaining funds may sustain the project for around two years.
According to the treasury report,
As an analyst, I’d assess that with our ongoing expenditures, the Treasury possesses roughly two years’ worth of resources. However, due to the unpredictable nature of crypto-denominated funds, it proves challenging to estimate this figure with absolute certainty.
Expanding on the complexities, the report further added,
“The management of Polkadot’s funds, known as the Treasury, is growing more intricate and challenging to understand. It now dispenses funds directly while also earmarking values for future use in the form of bounties and collectives.”
Mixed community reaction
The disclosure of this expense has ignited passionate discussion amongst those involved, as they ponder the financial longevity of the project.
Victor Ji, a co-founder of Manta Network, expressed his disappointment with the project on X, formerly known as Twitter.
This ecosystem is extremely harmful to web3 with little to no beneficial value. It pays no attention to user experience or adoption whatsoever.
In addition, @DefiIgnas brought up the company’s dire financial situation, stating that it has more obligations than income or assets to cover, a condition frequently referred to as being “deep in the negative”.
As a researcher studying the developments in the blockchain world, I’ve come across various perspectives regarding Polkadot. While some share my initial optimism, others have raised concerns. In response to this criticism, Fabian R. Gompf, CEO of Web3Foundation, stepped forward to defend Polkadot.
As a crypto investor, I’d like to clarify that the concept of a “runway” for the on-chain treasury can be misleading. In reality, the treasury receives constant inflows and will never exhaust its funds.
Impact on DOT’s price action
The latest news has led to a noticeable effect on Polkadot’s cryptocurrency, DOT, which was priced at $6.17 as of this moment, representing a 2.90% drop in value over the last 24 hours based on CoinMarketCap’s data.
As a crypto investor, I closely monitor the market trends and analyses various data points to make informed decisions. Recently, AMBCrypto’s interpretation of Santiment’s data on DOT‘s Relative Strength Index (RSI) caught my attention. Based on their findings, the RSI of DOT stood at 48. For those unaware, an RSI below 50 indicates a bearish trend, as it is considered oversold territory and below the neutral level. Therefore, this data reinforces my belief that the current market sentiment towards DOT may be bearish.
Additionally, declining price volatility suggested that this bearish sentiment was here to stay.
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2024-07-04 05:11