TLDR
- Polkadot is considering a proposal to convert 500,000 DOT into tBTC over one year.
- The proposal would use Hydration’s automated rolling DCA system for recurring DOT-to-tBTC conversions.
- A small amount of tBTC would be added to the Hydration Omnipool using a non-custodial Bitcoin bridge.
- The move aims to increase Bitcoin exposure and improve DeFi liquidity within the Polkadot ecosystem.
- DOT has declined significantly against Bitcoin since January, prompting strategic reserve discussions.
A new Polkadot governance proposal aims to convert 500,000 DOT into Bitcoin-pegged tBTC using an automated DCA method. The initiative would introduce BTC exposure to the Polkadot Treasury while strengthening on-chain DeFi liquidity. Discussions remain active on community forums, though the proposal has yet to enter the voting phase.
Polkadot Explores Bitcoin Through tBTC and Hydration
The proposal introduces a 12-month plan to convert DOT into tBTC via Hydration’s rolling dollar-cost averaging (DCA) system. Hydration automates recurring purchases using a top-up model that requires minimal manual intervention. The system renews the DCA schedule continuously as long as the proxy account remains funded.
This method intends to ease the DOT-to-BTC transition while avoiding price shocks and execution errors. It ensures DOT conversion happens incrementally over time instead of in bulk. The use of Hydration also introduces technical efficiency into the Treasury’s asset diversification strategy.
A total of 0.005 tBTC would be deposited into Hydration’s Omnipool through the Threshold Network’s Bitcoin bridge. This bridge supports non-custodial BTC transfers and aligns with Polkadot’s decentralized infrastructure goals. At current exchange rates, 1 DOT converts to about 0.000041 tBTC.
Bitcoin Gains Traction Among Institutions and Protocols
Bitcoin’s transition from a speculative token to a digital reserve asset has accelerated over the past few years. Governments, corporations, and central banks have begun allocating BTC to balance sheets and treasuries. This trend is now influencing decentralized protocols, including Polkadot.
Polkadot’s Treasury, by acquiring BTC exposure, joins a growing list of entities seeking long-term positioning in Bitcoin. If this had begun earlier, Treasury reserves might have increased significantly despite DOT’s recent underperformance. Since January, DOT has declined roughly 60% against BTC, making timing crucial.
The proposal estimates that earlier Bitcoin allocations could have added $1.5 million in unrealized gains over six months. While price volatility remains, Bitcoin’s cycle-based performance shows historical gains of 5x to 10x. This history may justify a gradual and systematic entry like Hydration’s DCA method.
Community Weighs Benefits of Strategic Reserve Move
The move may also deepen DeFi liquidity within the Polkadot ecosystem while reinforcing network incentives. By injecting tBTC into the Omnipool, the Treasury supports decentralized trading and enhances BTC-based liquidity. The use of tBTC links Ethereum and Polkadot, improving interoperability.
Discussions continue in governance forums, with no formal vote scheduled yet. The community is evaluating both strategic and technical implications of the plan. If passed, this could mark Polkadot’s first direct engagement with Bitcoin as a Treasury asset.
