The Polkadot community has engaged in discussions regarding a significant proposal aimed at diversifying its Treasury portfolio and supporting decentralized finance (DeFi) incentives within the ecosystem. In response to Referendum #1394, the proposal suggests converting 500,000 DOT from the Polkadot Treasury into Bitcoin’s tBTC within approximately one year. This conversion will be executed using Hydration’s “Rolling DCA” (Dollar Cost Averaging) mechanism. The acquired tBTCs will subsequently be added as liquidity to the Hydration Omnipool through the Threshold Network’s secure Bitcoin 
$91,081 bridge. The proposal is currently under forum discussion and has yet to be voted upon on-chain.
Creating a Bitcoin Reserve for the Polkadot Treasury
Central to the proposal is the conversion of 500,000 DOT held in the Polkadot Treasury into tBTC. This process is not a one-time purchase but rather a year-long endeavor. Purchases will utilize the “Rolling DCA” feature offered by the Hydration protocol. This mechanism automates purchases in small increments over time, mitigating the impact of market volatility.
Once the conversion is complete, the obtained tBTC assets will provide liquidity to the Hydration Omnipool. This liquidity addition utilizes a secure bridge technology developed by the Threshold Network, allowing users to bring their Bitcoin into the Polkadot ecosystem without involving third-party custodians. Proponents of the strategy argue that it will diversify Treasury assets and boost liquidity, thereby encouraging DeFi activities on the Polkadot platform.
Background and Expectations of the Proposal
The proposal emerged as a result of Referendum #1394, known as “Wish-For-Change,” which initiated debates concerning the governance of the Polkadot Treasury. A community member presenting the proposal highlighted Bitcoin’s performance as one of the strongest assets over the past decade. This provides an opportunity for Polkadot as a hedging strategy against uncertainties.
Furthermore, this move is viewed as a demonstration of the altcoin Polkadot’s belief in and support for a multi-blockchain future, presenting a clear message to the broader cryptocurrency market. The proposal holds the potential to pave the way for deeper integration of the Polkadot ecosystem with a major asset class like Bitcoin.
As discussions continue in the forum, the proposal is anticipated to be formally put to a chain vote early next week.
