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Polkadot (DOT) has decided to put a cap on its token supply, overhauling the whole outlook for the digital asset. In a post on X, Polkadot announced to the community that it was setting a new cap of 2.1 billion.
Notably, this referred to the total number of DOT that can ever exist on the network. Currently, Polkadot has approximately 1.6 billion DOT in circulation. This suggests that, for now, about 500 million new DOTS can still be minted.
This represents about 29% of the current supply. Polkadot has assured users that the minting of this additional volume will be phased in over the next 135 years. The goal is to avoid overwhelming the market and impacting the price with oversupply.
According to the explanation, the current issuance rate is at 7.4%. That is, 7.4% of the total supply is created annually and distributed mainly to validators and nominators for securing the network.
However, in line with the new fixed cap, this minting rate would drop to 3.3% by March 2026. This implies that DOT will become scarcer in the long term. Many expect that this will increase the value of the asset with time, given that the total coin now has a maximum supply cap.
Members of the Polkadot community have hailed the move as a strategic one that would contribute to growth. They maintain that lower inflation could drive long-term improvements. Primarily by lowering inflation and increasing the scarcity of the asset, Polkadot is putting a bullish catalyst in play.
Following the announcement, the Polkadot price climbed from a low of $3.94 to a peak at $4.06. As of press time, DOT is changing hands at $4.03, which represents a 1.1% increase in the last 24 hours. However, trading volume remains deep in the red zone, down by 40.09% to $279.21 million.
If Polkadot investors warm up to engaging the asset, this could trigger more price gains in the coming days, with a $6 target in the midterm.
Meanwhile, the community is looking forward to its new 2.0 upgrade. The objective of the upgrade is to improve the performance of smart contracts and increase adoption. It will also signal to Cardano, the blockchain’s rival, that Polkadot is stepping up in the ecosystem.
There is a competitive rivalry between the two blockchains in terms of system improvements. About a year ago, when Cardano successfully activated the Chang network upgrade, the Polkadot team’s message included, “Welcome to the world of on-chain governance, expect chaos.”
