- Polkadot DAO passed Referendum 1710 with 81% approval, introducing a 2.1 billion cap on DOT supply.
- DOT’s price climbed 8% in a week and is now facing key resistance at $4.50 amid waning derivatives volumes.
- The DAO’s supply cap proposal aligns with Polkadot’s planned 2.0 upgrade, focusing on network scalability and reduced costs.
Polkadot’s decentralized governance body has approved a major tokenomics change. Referendum 1710, passed on September 14 with 81% support, introduces a hard cap of 2.1 billion DOT tokens. This decision shifts Polkadot from an unlimited inflationary model to a fixed-supply approach that aims to reinforce fiscal discipline.
Under the newly approved mechanism, DOT issuance will decline every two years beginning March 14. The phased issuance reduction will gradually push the total supply below 2 billion by 2040. Previously, the protocol minted approximately 120 million new tokens annually, contributing to an inflation rate near 10%. The change offers a more predictable monetary policy and a deflationary trajectory for the network.
Market Reaction and Price Movement
At the time of reporting, DOT was trading at $4.37, reflecting a 0.7% dip on the day but marking an 8% gain over the past seven days. Over the past month, the asset has appreciated 11%. Despite the recent uptrend, DOT remains significantly below its all-time high of 2021, showing a 92% decline from that peak.
DOT is approaching a crucial resistance level at $4.50. This price level has consistently capped upward movement in recent weeks. Technical indicators depict a confusing scenario. The Relative Strength Index (RSI) is 61, indicating slight bullish movement. MACD is positive, which indicates strength, but the momentum indicators are indicating a potential near-term pullback. Breaking above 4.50 would give avenues to 4.80 or 5.00, whereas 4.00 and 3.80 would be the support in the event of a rebound force.
Derivatives and Volume Trends Show Decline in Speculation
Market activity has slowed significantly. Trading volume over the past 24 hours declined by 51.5%, totaling $235.3 million. Open interest dropped by 2.35% to $605 million, while derivatives volume fell 43% to $446.5 million. These metrics indicate reduced speculative positioning despite continued interest in DOT futures.
The supply cap follows the return of Parity Technologies CEO Gavin Wood, who positioned this change as part of Polkadot’s preparation for its upcoming 2.0 upgrade. The update will introduce enhancements such as Agile Coretime and Elastic Scaling, aiming to boost network throughput and lower developer costs.
