Polkadot Proposes Storing Bitcoin in Treasury: Bold or Risky?

The Polkadot community is discussing a proposal to use 501,000 $DOT (~2 million USD) to purchase tBTC – non-custodial Bitcoin – over the past year through a Rolling DCA strategy on Hydration. This move aims to diversify the treasury, reduce dependence on $DOT, while integrating tBTC into the Hydration Omnipool to create liquidity and yield.

👉 Significance:

- Yield-generating asset: tBTC is not just a reserve but also generates yield through Omnipool.

- Pure Web3: Utilizing the tBTC bridge from Threshold Network, ensuring decentralization.

- Pioneering: Polkadot could become the first DAO to use Bitcoin as on-chain “reserve gold.”

📊 Strategy:

- Diversification: Reducing risk as 92% of the Treasury (78 million USD, according to DeFiLlama) is $DOT, which has significantly depreciated.

- Role transformation: From L1 multichain to a reserve fund, leveraging Bitcoin for growth and sustainable cash flow.

- Long-term benefits: If Bitcoin appreciates, the Treasury increases in value, supporting ecosystem funding.

⁉️ Risks:

- Low liquidity: tBTC is not yet popular on Polkadot, which may pose challenges.

- Price risk: Rolling DCA does not guarantee avoiding peak purchases if Bitcoin rises sharply.

- Technical dependency: Success relies on the tBTC bridge and yield efficiency.

✅ Assessment: The proposal indicates that Polkadot wants to build a decentralized investment fund, but also suggests a lack of confidence in $DOT. The “swap” to Bitcoin may be seen as a legitimate token dump, amidst the Treasury losing value due to selling $DOT to maintain operations. This is a bold move but fraught with risks, placing Polkadot at a crossroads: to solidify its position or merely find a temporary solution?