The depletion of Polkadot Treasury is worsening! Adjusting Treasury expenditures is imminent
In our previous discussion, we mentioned the sharp decline in the total funds of the Treasury. Additionally, on May 17th, we published an article on how to increase Treasury revenue: “Polkadot Insights | Polkadot Treasury Funds Experiencing Steep Decline, How to Provide More Income to the Treasury.”
Recently, the Treasury has experienced a further decrease of almost 20% compared to the previous period, intensifying the excessive consumption of Treasury funds. The Polkadot Treasury is a crucial development fund that must be used with greater caution. To ensure the sustainability of the Polkadot Treasury, measures must be taken to increase revenue and reduce expenses. While our previous article focused on increasing revenue, this article will concentrate on reducing expenses.
How should the Treasury funds be utilized?
The process of using Treasury funds to develop Polkadot can be likened to the government using financial resources to govern. Drawing inspiration from traditional Treasury practices, the Treasury can be divided into two parts: annual income and surplus funds. This presents three concrete questions: how should the annual income be utilized, how should the surplus funds be used, and how to ensure a sustainable flow of surplus funds.
How should the annual income be utilized?
A reasonable approach would involve setting a limit on the Treasury’s annual fund usage, not exceeding 100% of the annual income. Different fellowships can be established based on various goals like technology-oriented, marketing-oriented, etc., allocating a fixed percentage of funds from the annual income to these fellowships. Each department needs funds for essential public goods expenses to maintain its basic operational needs. For example, salaries for Technical Fellowship members and operational costs for platforms like Polkassembly are essential to ensure the continuous operation of the Polkadot ecosystem.
The remaining funds can be used to support unplanned initiatives in various directions, exploring new possibilities that could be more effective.
How should the surplus funds be utilized?
Surplus funds should primarily be allocated for one-time or non-long-term purposes. For instance, establishing an ecosystem fund to invest in promising projects within the ecosystem, similar to the Polkadot Pioneers Prize initiated in 2022.
Ensuring a sustainable flow of surplus funds is crucial for the long-term development of Polkadot. This can be achieved by maintaining a balance between income and expenses, considering the necessity of fixed expenses for public goods.
In conclusion, the Treasury’s expenditures can be managed by proposing annual spending plans and prioritizing essential public goods expenses to ensure the basic operational needs of Polkadot. While challenges may arise in reaching consensus on plans due to the decentralized nature of Polkadot’s governance, collaboration and consensus-building are essential for driving effective governance practices.
Ultimately, addressing the issue of adjusting Polkadot Treasury expenditures requires a collaborative effort involving various stakeholders to ensure the sustainable growth and development of the ecosystem.