365Crypto
Polkadot plans to create a $2 million Bitcoin reserve to stabilize after DOT’s price fall. The idea is to convert 500,000 DOT into wrapped Bitcoin called tBTC.
Before swapping, Polkadot will stake the DOT to earn rewards and keep DeFi borrowing active. They’ll also keep 1,000 DOT for transaction fees.
The Bitcoin conversion will happen slowly over a year using a steady buying method called dollar-cost averaging.
Once enough tBTC is gathered, small amounts will be added as liquidity to help the Polkadot DeFi platform.
Supporters say this reduces risk from price swings and opens new doors for decentralized finance. The Bitcoin reserve protects treasury value and future budgets.
This move reflects a wider trend where companies and governments hold Bitcoin as a safe asset.
Meanwhile, DOT’s price is down 7% in 24 hours and is near its lowest since October 2023. It lost over 62% of its value compared to Bitcoin in the past year.
Footnotes:
tBTC: A wrapped version of Bitcoin on Polkadot, which is decentralized and secure.
Dollar-cost averaging: Buying assets little by little over time to avoid big price swings.
Liquidity: The ease of buying or selling assets without big price changes.
