Polkadot Q1 2025 Treasury Report: Expenditures Become Rational, First Achieve Positive Income!

This is the Polkadot Treasury report for Q1 2025. This report is part of the Treasury reporting series and serves as an important tool for Polkadot stakeholders to understand the current state of the Treasury.

Key Points

1. The balance sheet shows that the current Treasury assets are approximately $13.5 million (33.5 million DOT).

Asset Aspects:

• $102 million (25.3 million DOT) is discretionary funds. Of which, $6 million is stablecoin cash reserves; additionally, 2.9 million DOT ($11.5 million) has been used for automatic stablecoin exchanges.

• $25 million (620,000 DOT) has been reserved for strategic plans, such as marketing, DeFi tools, games, business development, etc.

• $7.8 million (1.9 million DOT) has been deployed in DeFi market operations.

Liabilities:

• Liabilities of $3.6 million (780,000 DOT) need to be paid by the end of the year.

2. Expenditure Situation

• In Q1 2025, the Treasury spent a total of $18.6 million (3.9 million DOT). Excluding inflation and burn, the operational loss for this quarter was 3.8 million DOT. However, accounting for inflation and burn, the net profit was 80,000 DOT, marking the first quarter where the Treasury achieved net positive income.

• The three categories with the most expenditures are: Outreach $7.5 million, Development $5.6 million, Operations $2.1 million.

• Department expenses (Bounty tasks and collectives): about 30% ($5.6 million, 1.1 million DOT) of the expenses were completed through departments (bounties/collectives).

3. Stablecoin situation: $5.9 million of stablecoins have been exchanged, $11.9 million of stablecoins have been spent.

4. OpenGov has injected funds into the economic growth of the ecosystem: a total of $7.7 million has been used as liquidity, provided to four different DeFi protocols.

5. This is the first quarter since the report where the Polkadot Treasury has achieved a net positive income.

6. Polkadot has reserves for up to 10 years. Thanks to the recently adjusted inflation model, the Treasury's long-term financial situation has become more robust and stable.

About this report

The Polkadot DAO manages millions of dollars in assets, thus adhering to best practices in the field of accounting and pioneering in the Web3 space. This report includes a balance sheet and a profit and loss statement. The balance sheet will comprehensively display all active accounts managed by the Treasury and the distribution of assets across various operations; while the profit and loss statement will detail the various expenditures of the Treasury.

We thank the Web3 Foundation for funding this report, which is part of the OpenGov.Watch program. We also appreciate the OpenSquare team for providing the API to retrieve expenditure data from the dotreasury.com project, and the Parity data team for providing supplementary information.

Introduction to the Polkadot Treasury

To help new readers unfamiliar with Polkadot understand this report, we would like to first introduce some core concepts that guide most voters in strategic decision-making. Ensuring alignment with the Treasury and ecosystem's strategic focus:

• Strategic vision oriented: Polkadot is committed to realizing the core vision of Web3—giving users back control of the internet. Its ecosystem is known as Polkadot Cloud, a complete Web3 service stack that helps developers build powerful and scalable applications and business models at extremely low costs, far below other ecosystems.

• Polkadot is an unstoppable, self-sustaining network: Research, development, and operations focus on providing secure, resilient core Web3 infrastructure. Bridges, wallets, data services, SDKs, governance tools, developer tools, and nodes are all funded by OpenGov, allowing the network to continuously develop without relying on external organizations.

• Polkadot's growth logic: Focused on enterprise-level adoption around key industries, its BD and market operations focus on competing for market share in the following five areas: DeFi, RWA and fintech, gaming and entertainment, AI and DePin, social and identity, and GovTech. Decentralized BD teams collaborate with investors, accelerators, and ecosystem support teams to help teams onboard and successfully operate on Polkadot!

• Talent training system: The Polkadot Blockchain Academy offers offline courses lasting several weeks multiple times a year, having trained hundreds of founders and developers, providing qualified talent support for new projects. Meanwhile, global hackathon events annually expose thousands of developers to the Polkadot tech stack.

• The promotional capabilities of the Polkadot DAO have surpassed any other DAO: Covering original media content, dissemination and advertising, market research, decentralized ambassador programs, and organization and participation in global events across multiple dimensions. All these functions are now operated autonomously by the DAO, avoiding the single point of failure risk caused by centralization.

• OpenGov is evolving towards specialized departments to enhance governance efficiency: Exclusive departments composed of experts in various fields are forming around key ecological functions (such as marketing, fintech integration, etc.) to handle related proposals more efficiently, thereby reducing the burden on the main governance channel, allowing token holders to focus on higher-level strategic decisions.

Balance Sheet

As of the end of Q1 2025, the Polkadot DAO's balance was 33.5 million DOT / $135 million.

After deducting liabilities, the surplus is 32.6 million DOT / $131 million.

1. Assets

The complete table can be viewed here: https://docs.google.com/spreadsheets/d/1QdBL8iA-h2Y-CRbv71H4FpJdCxK1nCMPg1s2iMST1ko/edit?gid=949038484#gid=949038484

1.1 Asset Structure

In the balance sheet, we categorize the asset structure as follows:

👉 Cash and cash equivalents: 25 million DOT / $102 million.

This classification includes DOT, USDT, and USDC, which can be immediately or very quickly made available for the Treasury. Cash is stored on the relay chain and AssetHub system chain.

• Relay Chain: 16.6 million DOT ($67 million)

• AssetHub:

  - 4.3 million DOT ($17 million)

  - 4.8 million USDT (approximately 1.2 million DOT)

  - 11,000 USDC (approximately 2,800 DOT)

Additionally, a trustless, fully automated stablecoin exchange program has been successfully completed, while another is ongoing on the Hydration DeFi chain.

• Stablecoin exchange program #2 (https://polkadot.subsquare.io/referenda/1104) still has approximately 2.9 million DOT ($11 million) pending exchange, planned to run until Q3 2025.

• Another exchange plan for 5 million DOT (https://polkadot.subsquare.io/referenda/1501) was approved only after the balance sheet statistics were completed. Therefore, it is not included in the Q1 balance sheet but is specially mentioned here as an important subsequent event.

👉 Designated Assets ($6.2 million DOT / $25 million)

"Designated assets" refer to assets controlled by OpenGov but clearly earmarked for specific purposes, primarily to support the executive bodies of the DAO (such as bounty mechanisms and collectives). Additionally, Polkadot holds MYTH tokens worth $1 million, which are planned to be distributed to DOT holders through an airdrop.

• Bounty Mechanism: Polkadot currently holds 3.5 million DOT (approximately $14.2 million) in the bounty mechanism, which will be used to support teams and individuals that provide value to the ecosystem. https://polkadot.subsquare.io/treasury/bounties

• Technology (Fellowship): The Polkadot Technical Fellowship is the core maintainer of the runtime, directly funded by the DAO. The Technical Fellowship has two funding accounts: salary account: 2 million USDT (approximately 506,000 DOT); payment account: 2 million DOT (approximately $7.8 million).

• MYTH Airdrop: As part of the strategic partnership with Mythical, Polkadot exchanged 1 million DOT for MYTH tokens. Of these, MYTH worth $2.3 million has been distributed to DOT holders through airdrop. Approximately $470,000 worth of MYTH remains stored in the airdrop account and will be used for incentive distribution in the future.

Although this portion of assets still belongs to the DAO, it is classified as "designated assets" in the balance sheet due to its specified purpose.

👉 Non-custodial liquidity provision ($1 million DOT / $4.1 million)

The Polkadot Treasury will deploy some idle funds into the Polkadot economic system. Currently, 1 million DOT (approximately $4.1 million) has been injected into the Hydration Omnipool as DOT liquidity provision.

👉 Accounts Receivable Loans ($923,000 DOT / $3.7 million)

These funding positions belong to a peer form of "custodial liquidity," indicating that the funds are held by the project party and used for specific purposes:

• 1.5 million USDT has been deployed to Centrifuge's RWA yield pool. https://polkadot.subsquare.io/referenda/1122

• Bifrost used 500,000 DOT for its liquid staking DOT product (vDOT) https://polkadot.subsquare.io/referenda/432

• Pendulum borrowed 50,000 DOT for its stablecoin bridging vault https://polkadot.subsquare.io/referenda/748

These operations indicate that the Treasury is diversifying ways to reinvest assets back into the ecosystem while balancing returns and ecological support.

1.2 Treasury Asset Portfolio

The assets currently held by the Polkadot Treasury include: DOT, USDT, USDC, and MYTH.

The largest holding asset is the native token DOT, totaling 30.9 million DOT (approximately $12.4 million), accounting for 92% of the asset portfolio.

Among stablecoins, USDT accounts for 5.8% (approximately $7.8 million), and USDC accounts for 1.6% (approximately $2.1 million).

Unairdropped MYTH accounts for approximately 0.35% ($470,000).

1.3 Asset distribution by chain

The Polkadot Treasury holds assets stored across 7 chains, with parachains being an important part. 15% of the assets are deployed to various DeFi parachains, such as:

• Hydration: $16.9 million

• Centrifuge: $1.5 million

• Bifrost: $2 million

• Pendulum: $201,000

Thanks to the Polkadot governance mechanism, all on-chain operations can be executed cross-chain in a trustless manner under the security umbrella of Polkadot.

The remaining 85% of the Treasury's assets are stored on three system chains for daily payments and funding calls by various executive bodies.

2. Liabilities

The Polkadot Treasury has introduced a periodic payment mechanism for arranging monthly or quarterly payments. These payment arrangements are listed as "Accounts Payable" in the balance sheet.

• Total accounts payable is approximately $3.5 million (870,000 DOT)

• Technical Fellowship's maximum salary expenditure per 28-day cycle is $250,000.

2.1 Details

Confirmed future payments total $3.5 million, including:

• 640,000 DOT

• 310,000 USDC

• 2.8 million USDT

These payment arrangements will continue until December 2025.

Income Statement

In this income statement, we take DOT as the primary accounting unit, as the Treasury's main source of income—inflation—is priced in DOT.

For the expenditure part, we additionally provide a table priced in dollars, as understanding expenditure situations from a stable value perspective is also very important.

In other words:

• The income section (such as DOT added through inflation mechanisms) is expressed in DOT;

• The expenditure section (such as project funding payments, operational expenses) will include the corresponding estimated dollar values, helping to intuitively understand the scale and direction of the Treasury's spending.

Polkadot's expenditures in Q1 2025 totaled 3.8 million DOT (approximately $18.6 million). After accounting for income, inflation, and burn mechanisms, the net income was 80,000 DOT.

This also makes Q1 2025 the first quarter in recorded history where the Treasury achieved a slight net profit.

Expenditure Overview

In Q1 2025, Polkadot's total expenditure reached $18.6 million (3.8 million DOT). Among them, the largest expenditure category was Outreach, amounting to $7.5 million (1.5 million DOT).

Next is software development (Development), with expenditures of $5.6 million (1.2 million DOT).

Network infrastructure operation and maintenance expenses total $2.1 million (420,000 DOT).

Business Development expenses total $1.9 million (400,000 DOT).

Expenditure for ecological incentives totaled $860,000 (200,000 DOT).

Expenditure for research amounted to $740,000 (120,000 DOT).

In the following content, these expenditure categories will be explained in more detail. But before that, let’s take a look at what areas Polkadot's funds have been used for.

Expenditure Classification

The expenditure categories and subcategories in this report have been set by our team as follows:

🔬 Research: Covers research on security, governance, anti-fraud measures, reports and analysis, user experience (UX), and developer experience (DX).

💻 Development: Includes the development of the Polkadot protocol and its core SDK, cross-chain bridges, wallets, data services and indexers, SDK tools, governance tools, smart contracts, and various other technologies.

⚙️ Operations: Refers to the costs of software, hardware, and services incurred in running the network (such as RPC services, historical nodes, etc.), auxiliary services (such as block explorers, indexers), and legal-related expenses (such as foundation's legal expenditures).

📣 Outreach: Marketing, Business Development, Community Development: Includes marketing (media production, public relations, advertising) and community development (meeting organization, attendance, offline community activities, ecosystem building, ambassador programs, etc.).

🏢 Business Development: Focused on driving the development of vertical industry applications, such as gaming, DeFi integration, GovTech, music industry solutions, consulting, solution architecture design, and developer relations (DevRel).

🎓 Talent & Education: Supports educational programs, hackathons, talent recruitment, and incubation, particularly through the Polkadot Blockchain Academy, which provides several weeks of offline training.

💰 Economy: Funds used to incentivize liquidity and stimulate on-chain economic activity.

Expenditure Details

We have observed that the 'rational spending' trend that began in the second half of 2024 continued into Q1 2025 and showed more robustness. Expenditures this quarter were primarily concentrated on Outreach and Development, while Business Development and Research expenditures were below average. Operations expenditures remained relatively stable, close to the average line; this is the Treasury's first consecutive second quarter providing incentives for the on-chain economy; Talent & Education had no expenditures this quarter.

Now let's take a closer look at the various specific expenditure categories.

📣 Outreach

This quarter, Polkadot spent $7.5 million on ecosystem outreach, primarily for marketing, events, and community building. This expenditure structure is the most complex, containing multiple subclasses and sub-subclasses, particularly focused on marketing and offline activities.

$7.5 million was used for market promotion, event hosting, and community building. The Outreach section is the largest and most complex category of total Treasury expenditures, containing multiple subcategories and even more detailed sub-subcategories. The core expenditures are concentrated in two directions:

🔸 Marketing

🔸 Event Hosting

Next, we will detail the specific expenditure breakdown for these two sections.

Marketing, advertising, public relations, and community management totaled $5.5 million:

• Collaboration with Brave Browser: The partnership (integrating Polkadot into the Brave browser) cost $3 million, making it the largest single expenditure.

• Public Relations expenses ($870,000): Key service providers include Bitwire ($520,000) and Distractive ($300,000).

• Content production and dissemination ($520,000): Kusamarian ($390,000) leading as the largest native media brand; Dotcast Media received $76,000 for Spanish content.

• KOL influencer marketing ($470,000): Including Growgami ($190,000), Kaito ($150,000), Fracas ($100,000).

• Other marketing expenses ($440,000): Including two game-related promotional projects: GiantX Esports advertising ($170,000) and support for Evrloot game ($60,000).

• Digital advertising ($140,000): Where Coingecko accounted for $110,000.

• Social media and community management: $100,000 spent to support community operations teams.

Events total $1.5 million:

• Meetings and side events participation ($1.3 million) is the major expenditure;

• Bash series event expenses $450,000;

• The controversial Blockspace Hackerhouse Mansion project at ETHDenver received $170,000;

• Other events above $100,000 also include Consensus Hong Kong ($160,000), Crecimiento LATAM ($112,000), and the post-subsidy proposal for The Blockspace event at Consensus ($100,000);

• A total of 74 meetups globally, costing $270,000.

Ambassadors and community agents, totaling $410,000:

• Launch of the Polkadot Ambassador Program: $270,000 spent;

• Support for Polkadot projects in Africa: $90,000 spent;

• Notable ambassador William received support of $45,000.

💻 Development

Development total expenses are $5.5 million, primarily used for developing Polkadot's core infrastructure and the related tools necessary for operation and interaction.

• Data Services & Indexing: Token Terminal $1 million, Giant Squid $170,000.

• Cross-chain Bridges: Snowbridge: ongoing payments of $1.2 million.

• Polkadot Protocol & SDK: Polkadot-API: $660,000; Fellowship technical members' salaries: $290,000.

• Wallets: NovaWallet $1 million.

• Account Abstraction: Interstellar received funding of $600,000.

• Block Explorers: Subscan received funding of $250,000 for developing new features.

• Developer Tooling: dAppForge (providing IDE plugins for Substrate and ink!) $120,000, RegionX (core time trading market) $90,000.

⚙️ Operations

Operations total expenses of $2.1 million, covering software and hardware expenses necessary to ensure network operation.

• Remote Procedure Calls (RPC) received funding of $890,000.

• Block Explorers and Community Platforms spent a total of $760,000.

  Polkassembly: $530,000

  Subscan: $160,000

  Statescan: $67,000

• Data Services SQD: $260,000

• Testnet Paseo: $110,000

• Polkadot Staking Dashboard received funding of $82,000.

🏢 Business Development

Business Development expenses total $1.9 million, primarily focusing on market expansion in several verticals, developer relations (DevRel) related activities, and funding technical experimental projects in specific fields.

The Games sector again became the largest expenditure item, totaling $800,000.

Game Bounty Mechanism: Fund strategic projects with $500,000 Blockdeep: Provides services for Mythical airdrop, receiving $300,000.

Privacy and Security

• Peer3 (peer-to-peer smart contract SDK): $350,000 spent.

• Ideal Network (random number beacon project): $300,000 spent.

• Security audit subsidy: $220,000

Total expenditure for DeFi integration is $180,000.

Overall, this category focuses on promoting the application landing and developer support in specific verticals, facilitating ecosystem expansion.

💰 Economy

Economic Incentives: Total expenditure of $860,000, used for DeFi Singularity activities, incentivizing DOT and vDOT that bridge in.

🔬 Research

Research expenditures totaled $740,000!

Primarily funds projects that are in experimental stages, research-oriented, or used to reveal new data. Among them, OG Tracker received $600,000 for the next phase of funding.

Department Expenditures (Bounties & Collectives)

Departments, also known as executive bodies, are sub-DAOs established under Polkadot OpenGov to promote the development of specific areas. By focusing on handling specific matters, they help simplify governance processes and reduce the burden on the main voting track. Starting from Q3 2024, about 30% of total expenditures are completed by these executive bodies. It is important to note that the numbers below do not represent new expenditures but rather a reclassification of previously mentioned data from a different perspective.

Bounties

The bounty mechanism is similar to functional departments in traditional organizations, with clear authorization and budget to achieve specific goals. In Q1 2025, the bounty mechanism spent a total of $5.3 million, accounting for 28% of total expenditures. Key highlights include:

• Marketing Bounty: $2.2 million

• Events Bounty: $950,000

• Node Infrastructure Program: $720,000 for critical node operation.

• Games Business Development Bounty: $500,000

• DeFi and Infrastructure Business Development Bounty: $180,000

• Polkadot Assurance Legion: Provides security audit services worth $220,000.

• Testnet Paseo expenses: $110,000

Collectives

This report still only covers the Technical Fellowship; the newly established "Ambassador Fellowship" will be presented in the next report.

Technical collective salary expenditures are as follows:

• 2025-01: $95,000

• 2025-02: $92,000

• 2025-03: $103,000

Additionally, the Technical Collective Subtreasury incurred expenses for the first time this quarter, paying for two positions, totaling $38,000.

Analysis

Stablecoins

This chapter will review the historical flow of stablecoin funds in the Polkadot Treasury and provide outlooks for future trends.

Historical Stablecoin Fund Flow

From March 2024 to the end of Q1 2025, the Polkadot Treasury has cumulatively exchanged:

16 million USDC.

16 million USDT

The average monthly stablecoin inflow is approximately $2.4 million.

At the same time, expenditures and income remain roughly synchronized:

• Paid $14 million USDC and $12 million USDT to proposers.

• Additionally, $1.5 million of idle USDC has been used for lending to Centrifuge's RWA yield pool.

OpenGov has just approved the third round of stablecoin exchange programs, expected to bring in $2.8 million of stablecoin inflows to the Treasury each month.

Trends

From a long-term trend perspective, the balance of assets priced in DOT and available cash is slowly increasing. However, since the Treasury's main asset is still DOT, the overall Treasury value is highly correlated with the DOT price.

Balance Sheet Changes

This quarter's balance sheet added 2 million DOT.

This growth is partly attributed to the addition of stablecoins to the asset structure, thereby enhancing stability.

Nonetheless, the dollar value of the Treasury remains affected by DOT fluctuations.

Changes in Treasury cash

Available cash in DOT increased by 2 million DOT. However, due to changes in the DOT exchange rate, the dollar-denominated cash experienced a slight decline.

Original report: https://forum.polkadot.network/t/2025-q1-polkadot-treasury-report/12951/1

#Polkadot