Polkadot seeks stability with $2M Bitcoin reserve strategy amid DOT downturn

A caller proposal wrong the Polkadot ecosystem is pushing for the instauration of a Strategic Bitcoin Reserve.

According to the proposal, the program involves converting 500,000 DOT, valued astatine astir $2 million, into Threshold Bitcoin (tBTC), a wrapped mentation of Bitcoin secured done threshold cryptography, which ensures decentralization and non-custodial management.

Polkadot’s Bitcoin proposal

Before conversion to Bitcoin begins, the 500,000 DOT volition archetypal beryllium staked successful aDOT, a yield-generating collateral token.

This volition let the treasury to gain returns connected its DOT holdings portion expanding liquidity for DeFi borrowing.

Additionally, 1,000 DOT volition beryllium acceptable speech to screen transaction fees progressive successful executing this strategy.

From there, the Polkadot treasury would execute the BTC conversion gradually implicit a year, utilizing Hydration’s rolling dollar-cost averaging (DCA) feature. This method enables daily, incremental purchases to support a dependable Bitcoin inflow.

Once capable tBTC is accumulated, portions of it (0.005 tBTC per transaction) would beryllium added arsenic liquidity to the Hydration Omnipool. The connection stated:

“This is intended arsenic a archetypal measurement towards diversification into Bitcoin wherever aboriginal proposals could see different bridged BTC assets. The tBTC stays nether the power of the Treasury and is intended to beryllium maintained arsenic a reserve, not a excavation for payments.”

Supporters of the program accidental the determination would trim vulnerability to marketplace swings and make caller opportunities for DeFi connected Polkadot. The reserve is besides designed to sphere the treasury’s worth and guarantee capable funds for aboriginal budgets.

Meanwhile, Polkadot’s determination mirrors a broader manufacture displacement of organizations and governments viewing Bitcoin arsenic a strategical reserve plus to hedge against economical instability and currency devaluation.

Data compiled by Hodl15Capital shows that the apical 100 firm holders of the apical crypto clasp much than 818,000 Bitcoin successful their coffers.

DOT’s terms struggles

Polkadot’s involvement successful gathering a Bitcoin reserve comes arsenic its DOT token faces marketplace challenges.

According to CryptoSlate’s data, DOT’s terms has dropped 7% successful the past 24 hours to $3.80, its lowest level since October 2023.

In Bitcoin terms, the token has fallen to an all-time debased of 0.00003658 BTC, losing implicit 62% of its worth successful the past year.

The station Polkadot seeks stableness with $2M Bitcoin reserve strategy amid DOT downturn appeared archetypal connected CryptoSlate.