Since its launch, the Polkadot ecosystem has presented itself as the champion of interoperability. However, its DOT cryptocurrency clearly lacks momentum, to the point that its community has pushed for a cap on its total supply.
Polkadot caps the total supply of its DOT cryptocurrency
The Polkadot protocol is one of the Ethereum killer projects that are very popular in 2021. The goal is to offer an alternative to the problems encountered by Ethereum at the time, such as significant congestion on its blockchain and the high fees associated with it.
This strategy quickly enabled its DOT cryptocurrency to reach record levels, with an all-time high of around $55 on November 4, 2021. Since then, the decline has exceeded 90%.
It is in this context that Polkadot’s DAO (Decentralized Autonomous Organization) has just proposed a major overhaul of the tokenomics initially applied to the DOT cryptocurrency.
A proposal to cap its total supply at 2.1 billion units has just been adopted with 81% of votes in favor.
The Polkadot DAO has expressed its support for a strict cap by adopting referendum 1710 on the “Wish For Change” track, with 81% voting in favor. By 2040, the supply will be around 1.91 billion according to the referendum model, compared to around 3.4 billion according to the current model.
Polkadot
On the agenda: “scarcity, predictability, and long-term alignment”
This is a historic decision, as the DOT cryptocurrency had previously had no set limit on its issuance, with a procedure that essentially involved the creation of 120 million new tokens each year.
In practice, this change to the terms of its initial tokenomics gives way to a logic of programmed scarcity, with the issuance of DOT cryptocurrencies gradually decreasing every two years on March 14, presented as “Pi Day.”
This announcement, which is supposed to bring “scarcity, predictability, and long-term alignment” to Polkadot’s native cryptocurrency, has so far had no real positive effect on the price of DOT. In fact, it is currently down 3.5% over the last 24 hours, but still up 11% over the last 15 days.
This decision by Polkadot’s DAO demonstrates how much the scarcity model applied to Bitcoin is becoming the benchmark, compared to cryptocurrencies whose performance is largely down. Will this be enough to revive investor interest in DOT? Stay tuned to find out.
