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Highlights
- The initiative aims to build Bitcoin reserves for the Polkadot Treasury, enhance on-chain liquidity, and strengthen DeFi ecosystem incentives.
- Supporters see it as a strategic move for risk management and diversification as DOT price tanks 60% in 2025.
- Polkadot is advancing other projects, including the development of a DOT debit card.
Polkadot is exploring its own Bitcoin reserve, with a new proposal making rounds that aims to convert 500,000 DOT tokens into tBTC, an Ethereum-based Bitcoin-backed ERC-20 token. The proposal aims to implement Hydration’s “rolling DCA” mechanism and accumulate BTC over the course of the next year. The DOT community has given mixed reactions to this proposal.
Polkadot to Leverage Hydration to Convert DOT to BTC
The DOT organization explained that it would leverage the Hydration system to convert DOT into tBTC through an automated system of recurring purchases. Unlike standard DCA setups, Hydration’s rolling feature streamlines the process, requiring users to top up a proxy account that automatically renews the DCA schedule. This proposal has come to light soon as the U.S. Securities and Exchange Commission (SEC) delayed the decision on spot Polkadot ETF.
The plan also shows that a small contribution of 0.005 tBTC would go to the Hydration Omnipool using Threshold Network’s non-custodial Bitcoin bridge. At current rates, 1 DOT would equate to approximately 0.000041 tBTC.
This initiative seeks to build Bitcoin reserves for the Polkadot Treasury, thereby boosting on-chain liquidity and providing better incentives for DOT’s decentralized finance (DeFi) ecosystem. Currently, the proposal is in the community discussion phase and awaits a formal vote.
From governments to corporations, and now blockchain platforms, everyone’s eyeing strategic BTC reserves. Ukrainian officials also also working on a BTC reserve bill, which, if approved, will be taken care of by the central bank.
Community Remains Divided on Bitcoin Reserves
Considering the poor price performance of DOT tokens this year, in 2025, some Polkadot community members have backed the idea of having their own Bitcoin reserves. With DOT price already correcting 60% since the start of 2025, they believe that a BTC reserve would help prevent the free fall. One of the DOT community members wrote:
“I believe the “DOT ATL, BTC ATH” argument misframes the situation.
This proposal is about risk management and operational continuity, not market timing or speculation”.
He further stated that if they wait for perfect timing for BTC entry, they would never be able to diversify. Some skeptics also questioned this proposal, stating: “I just don’t see how we can do this and for it to really provide any value, short or long term”.
Additionally, the blockchain platform is also working on introducing the first Debit card for DOT tokens, by working with Nova wallet.
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