The new framework reduces issuance every two years starting on March 14, to create long-term scarcity and predictability. The change came shortly after the launch of Polkadot Capital Group, a new division designed to connect Wall Street with the network’s blockchain infrastructure. While the market reaction was initially negative, analysts suggest the cap could strengthen the token’s long-term appeal.
Polkadot Sets 2.1 Billion Token Limit
Polkadot introduced one of the biggest changes to its tokenomics since launch, after its decentralized autonomous organization (DAO) approved a referendum to impose a hard cap on the network’s native token. For the first time, the maximum supply of DOT will be limited, set at 2.1 billion tokens.
Previously, the protocol followed an inflationary model with no cap, and minted about 120 million new tokens every year. If left unchanged, that system could have expanded the supply to more than 3.4 billion tokens by 2040.
The new framework is designed to introduce long-term scarcity and reduce inflationary pressure. Polkadot confirmed that token issuance will now gradually decrease every two years, beginning on March 14, which is known as Pi Day. A chart released by the project illustrated how the supply trajectory under the revised model diverges from the old inflationary system. Currently, Polkadot has a circulating supply of about 1.5 billion tokens, which means that the network is already well on its way toward the new cap.
The timing of the decision is interesting as it happened after the network launched the Polkadot Capital Group on August 19. This is a new division focused on bridging traditional finance with its blockchain infrastructure. The goal of the initiative is to attract Wall Street firms into areas like asset management, banking, venture capital, exchanges, and over-the-counter trading.
DOT’s price action over the past 24 hours (Source: CoinMarketCap)
Despite the long-term benefits of a capped supply, the immediate market response was negative. DOT fell by close to 4.1% after the announcement, slipping from $4.35 to $4.18. Still, analysts believe that the cap could ultimately make DOT more attractive by bringing a bit more predictability to its value.
