In response to Wish-For-Change referendum #1394, I am presenting a proposal to introduce a Bitcoin Reserve for the Polkadot Treasury as seen here. This proposal will convert 500,000 DOT into tBTC over the course of a year using Hydration’s “rolling DCA” feature. After a short accumulation period, chunks of 0.005 tBTC will be provided as liquidity into the Hydration Omnipool. This will allow diversification of the Polkadot Treasury portfolio while also supporting ecosystem DeFi incentives. One of the strongest assets of the past decade, Bitcoin continues to perform. This is an opportunity for Polkadot to hedge against uncertainty while signaling to the broader industry that we do believe in and support a multi-chain future. Following some discussion, I hope to bring this proposal on-chain early next week.

We should instruct the PCF to open an investment account on behalf of the treasury. We should roll funds over time from the treasury into investments with yield and use the yield to buy DOT and top up the treasury on a regular basis. Treasuries were one thing that were brought up. Raw materials are normally pretty good too somewhat anti/counter-inflationary and with regular yield. Unless we want to vote in an active manager all we can do is build a passive portfolio and rotate yields back into DOT. Maybe we can buy some MSTR and get Saylor on board. :sweat_smile: but I am unfamiliar with any outlet that would allow the Polkadot DAO access to traditional asset classes in a decentralized manner That is the entire purpose of PCF ( REF - WIKI ) A real world entity of, for and by the Polkadot Community. The PCF is “Web 2.5”, it’s a 1.0/2.0 compatible/compliant entity that acts as a bridge to 3.0. This entity would have no issues establishing a traditional investment holdings account. Update: After giving it more consideration and running the numbers I just don’t see how we can do this and for it to really provide any value short or long term. Even with amazing yields it’s likely to do more harm than good with the additional downward pressure that we’re already contending with from other DCAs mixed with lack of interest. We need interest (and excitement) that we will only get by deploying services and applications that people want to use over traditional services because they’re better and/or cheaper. A few niche production ready use cases are really all we need to turn things around in a big way. With that increased interest it would make the numbers for ideas like this more practical.

@tom.stakeplus I appreciate your thoughtful input and update. I would love to see a proposal develop a professional strategy, hire an active manager and instruct the PCF to work in this capacity. Realistically, that is a large task and outside of my scope. [image] tom.stakeplus: A few niche production ready use cases are really all we need to turn things around in a big way. With that increased interest it would make the numbers for ideas like this more practical. Asset Hub :crossed_fingers:

A better idea might be to use the PCF as a holdings company where it can issue tokens or nfts representing the underlying asset and hold that underlying asset on behalf of the network. Then you could do something like --use the PCF to buy a solar farm, setup a bitcoin mine on the solar farm, then issue RWAs for both the solar panel and the miners. Have hydra setup capabilities for users to fill loans or take out loans using the RWAs as collateral. Same thing could be done for equities / etc. Treasury earns a fee for holding the assets (think “ADRs” – unsponsored “PDR”? ) and a premium for being the issuer.

This should be posted on X where people can openly comment on it. My counterargument was flagged by the community. Bring the discussion to the public.

It looks like it was actually flagged by the community, not moderators. “This post was flagged by the community and is temporarily hidden.”

What you have written Write in simple and decent way

This proposal seems to be a tacit admission that DOT is inferior to BTC. It doesn’t make economic sense to devalue your “currency” to buy a different currency to circularly stabilize your currency. Note: Currency is only in quotes since cryptoassets can function as more than pure currency.

We do not have a decentralized BTC bridge yet, so we lack the technical capability to do this right now. At a wild guesstimate, the current ETH bridge could be adapted to BTC, with a running cost under 0.005 BTC = 500 USD per day, or 0.73 BTC = 76k USD per year, maybe I’m way low balling these costs though. Also BTC withdrawls would take one day, but could be done “quickly” for maybe 0.0025 BTC = 250 USD. Assuming those costs wind up prohibitively expensive.. An inexpensive BTC bridge would use a scalar resharing DKG run among the polkadot validators. There exist decentralized BTC bridges like dFinity, but afaik they cannot scale beyond maybe 40ish validators. As I mentioned here polkadot has a unique technical advantages for doing large DKGs, thanks to (machine) elves aka parachain. In other words, polakdot could become the only really decentralized BTC bridge using a large-ish validators set, say 500-1000 nodes. We’re moving this direction ala RFC#144 but only slowly. At present though, we favor first doing an aggregatable DKG that’s not the scalar DKG suitable for a BTC bridge, nor close to post-quantum tricks for tranche zero either. At a technical level, we research guys should first properly explain our case for doing the aggregatable DKG before the scalar DKG. You guys should argue that a BTC bridge, aka scalar DKG, looks economically so valuble we should change our minds.[1] Ask the scalar DKG happen before JAM too maybe, but that’s a huge commitment from Parity.[2] In summary.. You’re asking for a BTC bridge first & foremost. We’ll eventually do a BTC bridge that’s more decentralized than other ecosystems, just because elves (parachains) provides a better framework for DKGs. We’re making some progress this direction ala RFC#144. Yet so far, we’ve prioritized ETH bridges over BTC bridges, and now we’ve prioritized DKG not suited for a BTC bridge, so someone should convice both research and parity to make the BTC bridge a higher priority. Footnotes: [1] I’m personally dubious that a “bitcoin reserve” aka spending DOTs to buy BTC helps much, although sure maybe more useful than AMMs running huge DOT faucets. Ideally, you’d instead want polkadot managing other people’s BTC which they then use or trade within our ecosystem. I suppose one could explain how larger traders use BTC, USDT/USDC, and others, plus what non-faucet services would entice them into doing their trading on polkadot. Afaik we’re talking advanced stuff like options here, for which afaik none of our AMMs look suitable. Anecdotally, ZK options would be a killer app for bitcoin holders, but that’s way off for many reasons. Alternatively one could fix all our usability issues maybe? [2] JAM services would typically be divided into parachain-like services with a single state root, and actor-like services with multiple state roots, but developers avoid baking state roots, actors, etc in too deeply then zero state roots becomes possible, and this brings liveness advantages for DKGs. Ergo, there is a temptation to wait for JAM for all of this, which could take a while longer.

[image] burdges: We do not have a decentralized BTC bridge yet My thoughts: We have Interlay as a semi decentralized bridge. I’ve previously bridged BTC from the Bitcoin blockchain to Interlay, and it was a smooth experience, it worked well, and I think the product is really cool. However, if I’m not mistaken, Interlay currently has some limitations. That said, I believe these can be addressed if BTC holders begin operating BTC vaults themselves. → Interlay Docs

Bitcoin Reserve for the Polkadot Treasury

Governance

et90266 June 10, 2025, 9:27am 15

Thanks for catching! (I’ve updated my post to say flagged “by community”).

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Bitcoin Reserve for the Polkadot Treasury

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