Polkadot Considers $50 Million Bitcoin Conversion for Treasury Diversification

Polkadot is considering a significant move to convert part of its treasury into Bitcoin, a decision that has sparked intense debate within the community. The proposal, introduced by a community member known as hippiestank, suggests converting 500,000 DOT, valued at approximately $50 million, into Bitcoin. The plan aims to diversify the Polkadot treasury and enhance its long-term financial stability by creating a strategic Bitcoin reserve.

The proposal, introduced in early June, outlines a dollar-cost averaging (DCA) approach to gradually accumulate Threshold Bitcoin (tBTC) over a year. This strategy is intended to act as a hedge during market downturns, deepen on-chain liquidity, and boost incentives for Polkadot’s decentralized finance (DeFi) ecosystem. The plan involves using Hydration’s automated system to carry out the conversions, topping up a proxy account that feeds into a rolling DCA schedule. A small amount, 0.005 tBTC, would also be added to the Hydration Omnipool, enabling liquidity provisioning through Threshold Network’s decentralized bridge.

Supporters of the plan view Bitcoin as a hedge against market uncertainty and a way to preserve value. They argue that waiting for ideal market conditions would make diversification impossible and leave the treasury exposed. However, critics question the timing of the proposal, noting that DOT is currently trading near yearly lows while Bitcoin is holding steady above $100,000. Some community members express concerns about the potential downward pressure this move could exert on the market.

Despite the concerns, the proposal emphasizes that the move is about risk management and operational continuity, not market timing or speculation. The author of the proposal suggests that the vote could go on-chain as early as next week, depending on feedback. If passed, Polkadot would become one of the few blockchain ecosystems experimenting with a Bitcoin-backed treasury, potentially setting a precedent across the space.

This debate within the Polkadot community reflects broader questions about risk management, governance transparency, and the evolving role of crypto treasuries in long-term protocol sustainability. The decision ultimately rests with the community, and discussions are ongoing. The outcome of this proposal could have significant implications for how other blockchain ecosystems approach treasury management and risk mitigation.