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.
So Polkadot at all time low is worth less to you than BTC at all time high?
Big question in my head is why does Polkadot / DOT exist in the first place then?
@PolkadotFollower
I believe Polkadot exists to provide trustless digital infrastructure in a world where truth and verification is becoming increasingly necessary.
I believe Bitcoin exists to change the way we interact with money and store value on a global scale.
Both are valuable.
Wouldn’t it make sense to make the swap back when BTC was 1/5th its current value and DOT about the same? It’s too late for that, ship has sailed. If that truly is the case the leadership should have done it back then.
I keep seeing all of this buy ETH, BTC, USDC with DOT but nothing of lets increase DOT through intense burn and value accrual cycle.
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What problem is this trying to solve?
Diversify the treasury?
- While I understand the desire to diversify the treasury, timing matters.
Selling DOT at an ATL for Bitcoin at an ATH would send a profoundly negative signal to the market. Where is the confidence in our own token?
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Buffett famously said he prefers buying back $BRK shares when they’re underpriced, rather than spending cash on overpriced acquisitions.
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DOT is “on sale” at these prices.
Increase Treasury value?
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The Treasury already holds $122M in assets.
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Polkadot’s problem ≠ a small Treasury balance.
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Polkadot’s problem = languishing $DOT price, which is driving away retail, developers, VCs, degens etc.
- I could be wrong about this, but I have not seen any data that points to a large Treasury being correlated to the token’s market cap.
Hedge DOT volatility?
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Yes DOT has decreased ~60% vs. BTC since the WFC was first proposed in January, however had it been enacted then, the net gain for the Treasury would have been ≈$1.5M, all else being equal. So the Treasury would now have $124M in assets instead of $122.5M. That’s a 2.46% annualize return.
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Looking ahead, if this proposal was enacted at today’s prices, a doubling of BTC vs. USD would equate to a mere 1.58% increase of the Treasury’s assets, all else being equal.
IMO we should be focusing on initiatives that directly increase DOT demand and shrink circulating supply. Not on initiatives that add more sell pressure on DOT or aimed at growing the Treasury.
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