Polkadot DAO Approves 2.1 Billion Token Supply Cap As Inflation Model Comes to an End

Polkadot DAO approved a plan to cap the DOT token supply at 2.1 billion, ending unlimited yearly inflation.

DOT price is testing strong resistance at $4.50 while showing signs of both strength and possible pullback.

Trading volume and open interest in DOT have dropped, showing reduced market activity and lower speculation.

Polkadot’s decentralized governance has approved a key proposal to limit the total supply of DOT tokens. The community voted on Referendum 1710, with 81% in favor of capping the token’s supply at 2.1 billion. Until now, Polkadot operated under an unlimited inflationary model, minting around 120 million new tokens each year. This model had no maximum supply, resulting in an annual inflation rate of about 10%.

The new plan introduces a gradual reduction in token issuance every two years starting March 14. By adhering, the supply will not go above 2 billion by 2040. The vote is not legally binding, but it will represent a major change of direction toward a stricter, fiscally controlled ecosystem. The move indicates the increasing popularity of supply predictability and less inflationary pressure.

Market Reaction and Price Movement

As of the time of writing, DOT was trading at $4.37, or 0.7% down in the last 24 hours. Even though the token dropped in the short term, it increased by 8% and 11% in the last week and 30 days, respectively. Last week, DOT traded at $4.04 with a 6.7% weekly gain, testing resistance at $4.07. However, DOT still sits 92% below its all-time high from 2021.

The price is pressing against a key resistance zone at $4.50. Polkadot soared 5.68% to trade at $4.50, and the volume of trade increased by nearly 80%. This level has been reused to limit new rallies, rendering it an important mark. Breaking above may result in a target of $4.80 or $5.00. Should the momentum die, the nearest cushion is at $4.00, with a greater one at $3.80.

Decline in Trading and Derivatives Activity

Polkadot's 24-hour trading volume dropped 51.5% to $235.3 million, signaling a slowdown in market activity. Data from Coinglass shows open interest fell 2.35% to $605 million. Meanwhile, derivatives volume declined 43% to $446.5 million. These numbers suggest traders are scaling back speculative positions amid current price swings.

While interest in DOT futures remains high, the reduction indicates caution among market participants. This comes as technical indicators show mixed signals. The RSI stands at 61, pointing to mild bullishness. The MACD has turned positive, signaling underlying strength. Still, momentum indicators warn of possible corrections.

Network Upgrades and Future Plans

The proposal conforms with the upcoming network upgrade of Polkadot, which is planned later this month. The 2.0 upgrade comes with features that are intended to lower the cost of the developer and enhance network throughput. Key components include Agile Coretime and Elastic Scaling. These changes intend to increase efficiency without affecting scalability.

Gavin Wood, now back as CEO of Parity Technologies, supports the shift in monetary policy. The upgrade and new issuance model are part of a broader plan to strengthen the network. Polkadot DAO, which launched its OpenGov system in 2023, continues to shape the project’s future through decentralized governance.