The Polkadot community has proposed creating a Bitcoin Strategic Reserve for its Treasury, as outlined in a forum discussion initiated by community member “hippiestank” in response to Wish-For-Change referendum #1394. The plan involves converting 500,000 DOT (worth approximately $50 million) into tokenized Bitcoin (tBTC) over one year using Hydration’s Rolling Dollar-Cost Averaging (DCA) mechanism to mitigate price volatility. An additional 1,000 DOT is reserved for transaction fees.
The acquired tBTC would be added to the Hydration Omnipool as liquidity via the Threshold Network’s non-custodial Bitcoin bridge, aiming to diversify the Treasury’s assets, enhance DeFi ecosystem incentives, and hedge against market uncertainty. Supporters argue that Bitcoin’s strong historical performance could stabilize the Treasury, especially given DOT’s 60% value decline against BTC since January 2025, potentially yielding $1.5 million in gains if implemented earlier.
They emphasize risk management and operational continuity over market timing, citing the Ethereum Foundation’s diversification as a precedent. Critics, however, question the timing—Bitcoin is above $100,000 while DOT is near yearly lows—and seek clearer risk management strategies, with some expressing concerns about added downward pressure on DOT’s price. The proposal is still under discussion in Polkadot’s governance forums and has not yet moved to an on-chain vote, though it may do so soon pending further feedback.
If approved, Polkadot would join a small group of blockchain networks experimenting with Bitcoin-backed treasuries, potentially setting a precedent for others. Converting 500,000 DOT into tokenized Bitcoin (tBTC) could hedge against DOT’s volatility, as Bitcoin has historically outperformed many altcoins, including a 60% gain against DOT since January 2025. This could stabilize the Treasury, ensuring funds for future development, grants, and operations.
Critics argue that Bitcoin’s current price above $100,000 represents a potential peak, risking poor entry timing. If Bitcoin’s price corrects, the Treasury could face losses, especially if DOT’s value rebounds concurrently. Adding tBTC to Hydration’s Omnipool via Threshold’s non-custodial bridge could boost Polkadot’s DeFi ecosystem by increasing liquidity and incentivizing participation. This aligns with Polkadot’s interoperable vision, potentially attracting new users and projects.
The focus on DeFi integration might divert resources from other Treasury priorities, such as core protocol development or community initiatives, if not carefully balanced. Proponents suggest that a diversified Treasury could signal confidence in Polkadot’s long-term strategy, potentially boosting market sentiment. The gradual DCA approach minimizes immediate market disruption. Selling 500,000 DOT could exert downward pressure on DOT’s price, already near yearly lows, potentially alienating holders and raising concerns about further devaluation.
If successful, Polkadot could set a model for other blockchain networks to diversify treasuries with Bitcoin, enhancing resilience against market downturns. The Ethereum Foundation’s diversification is cited as a positive example. Failure or significant losses could deter other networks from similar experiments, damaging Polkadot’s reputation as a governance innovator. The proposal showcases Polkadot’s decentralized governance, encouraging community-driven innovation and strategic planning.
Disagreement over the proposal highlights potential governance inefficiencies, as prolonged debates or a rejected vote could delay Treasury action. Advocate for risk management through diversification, emphasizing Bitcoin’s historical stability compared to altcoins. Highlight the potential for Treasury growth, citing a hypothetical $1.5 million gain had the strategy been implemented earlier.
They view integration with Hydration’s Omnipool as a step toward strengthening Polkadot’s DeFi ecosystem, aligning with its interoperability goals. Argue that the DCA mechanism mitigates timing risks, making the strategy prudent regardless of Bitcoin’s current price. Critic’s question the timing of buying Bitcoin at over $100,000, fearing a market correction could lead to losses while DOT remains undervalued. They express concern about selling 500,000 DOT, which could further depress its price and erode community trust.
They demand clearer risk management strategies, such as defined exit points or stop-loss mechanisms, to protect Treasury funds. And worry that the focus on Bitcoin might overshadow other pressing Treasury needs, like funding core development or community programs.
The divide reflects broader tensions in crypto communities: balancing innovation with caution, diversification with loyalty to native assets, and short-term market risks with long-term strategic goals. The outcome of this proposal—still in discussion and not yet at the on-chain voting stage—will test Polkadot’s governance model and could influence how other blockchain communities approach Treasury management.
