Polkadot bitcoin strategic reserve for the Treasury proposed
This proposal will convert 500,000 DOT into tBTC over the course of a year using Hydration’s rolling DCA feature.
The plan suggests using 501,000 DOT to gradually purchase tBTC over one year via Hydration’s Rolling DCA mechanism. The tBTC would be added to Hydration Omnipool as liquidity using Threshold Network’s non-custodial Bitcoin bridge. The proposal is still under forum discussion and not yet live on-chain.
This will allow diversification of the Polkadot Treasury portfolio while also supporting ecosystem DeFi incentives. Bitcoin continues to perform.
The community sees this as an opportunity for Polkadot to hedge against uncertainty while signaling to the broader industry that we do believe in and support a multi-chain future.
Proposal objective(s) or solution(s):
The central proposition entails the creation of a schedule that converts DOT into tBTC via the DCA feature on Hydration, a parachain on Polkadot.
The attributes of this proposal are:
- Cost-efficiency (approx. 0.4% of the total amount)
- No necessity to appoint curators who oversee and manage the process
- Conversion is done in small amounts over a longer period which provides a hedge for price volatility and manipulation
DCA schedule parameters: [tBTC]
- Total duration with current EMA7 price: 365 days
- Total amount: 500,000 DOT
- Trade frequency: One trade every 20 blocks (approx. 2 minutes)
- Per trade: 1.9 DOT
- Per day: 1370 DOT
- Add to Omnipool after accumulating: 0.25 tBTC
- Total fee estimation: 0.4% of total amount acquired
Fee estimation breakdown:
- Trade fee: 0.3% (0.25% to Liquidity Providers, 0.05% to the protocol)
- Slippage fee: 0.045% (→AMM)
- Transaction fee on Hydration: 0.035% (→Protocol treasury)
- Transaction fee on Polkadot Asset Hub: 0.02% (→Asset Hub collators)
The creator of this proposal says it is not about manipulating scarcity; it is about economic resilience through portfolio diversification, something the Buffett approach supports and is demonstrated in how Berkshire Hathaway holds their operating capital.