Polkadot's decentralized autonomous organization (DAO) has passed a referendum to set a hard cap on the network's native token for the first time.
This decision sets the maximum supply at 2.1 billion Polkadot (DOT) tokens, marking a significant shift from the previous tokenomics model, under which new tokens were issued indefinitely each year. Under the old inflation model, Polkadot minted approximately 120 million DOT tokens annually, with no limit on the total supply.
The project stated that under the old model, the supply could balloon to over 3.4 billion tokens by 2040. The new framework introduces a mechanism for gradually reducing the issuance every two years. As of the time of writing, Polkadot's total supply is approximately 1.5 billion tokens.
According to Polkadot, the reduction in issuance will occur on Pi Day (March 14) every two years. The project also shared a chart illustrating the differences in supply under the new model.
Cointelegraph reached out to the Web3 Foundation, the team behind Polkadot, for more information but had not received a response by the time of publication.
This change comes as Polkadot seeks to expand its influence among institutional investors. On August 19, the project launched the Polkadot Capital Group, a new division aimed at connecting Wall Street firms with its blockchain infrastructure.
The division aims to link traditional financial participants with Polkadot's blockchain infrastructure, helping institutions explore cryptocurrency-related opportunities in areas such as asset management, banking, venture capital, exchanges, and over-the-counter (OTC) trading.
It will also showcase blockchain use cases such as decentralized finance (DeFi), staking, and the tokenization of real-world assets (RWA).
While this change may have long-term implications for the price of Polkadot tokens, it has not had an immediate positive effect. Since the announcement, the price of DOT has fallen from $4.35 to $4.15, a decline of nearly 5%.
Capping the DOT supply at 2.1 billion is expected to introduce long-term scarcity for the token and reduce inflationary pressure, making its value more predictable for investors.
Related: Base founder reveals native token plans at BaseCamp 2025 and announces the launch of Solana bridging
Original article: “Polkadot DAO Approves 2.1B Hard Cap on DOT Supply, Driving Tokenomics Transformation”
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