Polkadot is considering a governance proposal to convert 500,000 DOT tokens into Threshold Bitcoin (tBTC) over a 12-month period, employing Hydration’s automated rolling dollar-cost averaging (DCA) system. This approach aims to gradually increase Bitcoin exposure within Polkadot’s Treasury while enhancing decentralized finance (DeFi) liquidity on the network.
The proposal involves depositing a small amount of tBTC into Hydration’s Omnipool via a non-custodial Bitcoin bridge powered by the Threshold Network, aligning with Polkadot’s commitment to decentralization. The conversion incrementally reduces price shocks and execution errors, facilitating a smoother transition from DOT to Bitcoin-pegged assets.
This strategic initiative reflects a broader trend where institutional and decentralized protocols seek digital reserve assets like Bitcoin to stabilize and diversify holdings. Polkadot, facing a 60% price decline of DOT against BTC since January 2025, evaluates this move as a risk management and operational continuity measure rather than speculative timing.
Community responses are mixed; supporters emphasize benefits including hedging against market volatility and increasing DeFi liquidity, while skeptics question the timing against Bitcoin’s all-time high prices and the potential downward pressure on DOT from large sales. Ongoing forum discussions precede any formal voting process.
If approved, this conversion plan would mark Polkadot’s first direct Bitcoin Treasury exposure, strengthening BTC-Polkadot interoperability and supporting decentralized trading through enhanced liquidity pools.