Polkadot Faces Criticism Over High Spending And Limited Returns In H1 2024

Polkadot’s financial report for the first half of 2024 revealed expenditures of $87 million (11 million DOTs), with $37 million dedicated to marketing efforts.

This substantial spending has drawn criticism from the community, who argue that the returns have not justified the costs. At the current rate of expenditure, Polkadot’s funds are projected to last for about two more years.

Polkadot's financial report for the first half of this year showed that it spent as much as $87 million (11 million DOTs), $37 million of which was spent on marketing. The community criticized the high expenditure for not bringing the expected returns. At the current consumption…

— Wu Blockchain (@WuBlockchain) July 2, 2024

Polkadot’s $37 million marketing spend aimed to attract new users, developers, and businesses. Breakdown of the marketing expenditure includes:

– Ads and Sponsorships: $10 million
– Sports Sponsorship: $6.8 million for a deal with a prestigious soccer club
– Race Car Driver Sponsorship: $1.9 million for Conor Daly
– E-sports Partnership: $1.3 million with tournament organizer HEROIC
– Influencers: $4.4 million
– Agencies: EVOX ($2.2 million), Lunar Strategy ($1.3 million), Chainwire ($490,000), Unchained ($460,000)
– Digital Ads: $4 million
– CoinMarketCap: $1 million
– EVOX: $900,000
– Events: $7.9 million
– Conference Attendances and Side Events: $4.5 million
– Polkadot Decoded China: $560,000
– Three {bash} Parties: $540,000
– Token2049 Side Event: $420,000
– Main Events: $2.9 million
– Polkadot Decoded
– Sub0

Polkadot spent $37m USD in outreach during the first half of 2024, targeting new users, developers, and businesses

• $10m on ads/sponsorships
• $4.4m on influencers
• $4m on digital ads

Yet Polkadot still seems invisible on X and elsewhere. pic.twitter.com/pk0haLvuNm

— Ignas | DeFi (@DefiIgnas) July 1, 2024

In total, Polkadot spent $86 million in the past six months. The Polkadot Treasury currently manages $245 million (38 million DOT) in assets, with $188 million (29 million DOT) being liquid. At this burn rate, the project could deplete its funds in less than two years.

Additionally, Polkadot’s annual token supply growth rate of 10% significantly increases the total supply, with most of this inflation funding staking rewards. At a $10 billion market cap, this equates to $1 billion per year for stakers, raising concerns about the high cost for network security. Despite this, a proposal to reduce inflation was rejected by 57% of the community.

Polkadot’s high spending and the community’s dissatisfaction with the results highlight the challenges the project faces in balancing growth and financial sustainability.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.

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