Polkadot’s $37 Million Marketing Spend Prompts Backlash, Ecosystem Revenues Fall
Polkadot's 2024 spending has drawn concern from the community. (Credit: Hameem Sarwar @ CCN)
- Polkadot spent $37 million on sponsorships, marketing, influencers, and advertising.
- Ecosystem revenues are reportedly down by over 50% due to lower transaction fees.
- Asian developers and Web3 projects feel that they have been discriminated against by Polkadot
Polkadot (DOT) community members are concerned that the recent treasury spending spree has drawn a mixed response from the community.
This comes following a treasury report from Polkadot which details the tens of millions on marketing and other initiatives since the start of 2024.
$37 Million on Marketing
Polkadot’s “2024-H1 Polkadot Treasury Report” has detailed the decentralized autonomous organizations (DAOs) spending for the first half of 2024. However, many of the insights have drawn criticism from the community.
The $37 million marketing budget set out to attract new users, developers, businesses, and extend the brand’s reach. But, it seems to have only attracted criticism and concern from the community. These marketing expenses include:
- Inter Miami CF soccer club sponsorship deal: $6.8 million
- Events: $4.4million
- Conference Attendances and Side Events: $4.5 million
- Influencers: $4.8 million
Sentiment amongst the community is mixed. Some, such as crypto content creator Esther Jade , argue that the Inter Miami FC sponsor is an incredible opportunity to position the Polkadot brand on someone like Lionel Mesi.
In defense of influencer marketing, Ignis issued a “hot take ” and acknowledged that it was probably the most efficient marketing strategy for Web3 companies. Ignis said that Polkadot should prioritize spending on “devs, liquidity mining, attracting unique dApps”, and then they can invite key opinion leaders (KOLs) to cover their offerings.
Two Year Lifespan?
Polkadot’s Treasury commands around $245 million in assets across three chains . In the last six months, it has spent a total of $86 million. According to Polkadot’s head ambassador, Tommy Enenkel, this current spending rate could diminish the Treasury’s reserves in approximately 2 years .
However, Fabian Gompf, CEO of Polkadot’s Web3 Foundation, argued that the treasury won’t be running out any time soon. He estimates the current runway to be at least five years. He reasons that the treasury has continuous inflows, approximately 7% of staking rewards.
“It’s never going to run out of funds. IMO the treasury *should* spend its funds on more ‘out there’ initiatives not covered by the foundation.”
Notably, Polkadot’s token supply has a 10% annual growth which mainly bolsters staking rewards. With a market cap of around $8.7 billion, stakers are receiving $870 million a month. Seemingly, this creates a security risk for the network, as stakeholders that primarily stake to sell are placing a lot of selling pressure on the token.
“It would create new incentives to inject DOT into the DeFi economy of Polkadot. And it would open up DOT to a new pool of potential stakeholders who see the current tokenomics as destructive.” As a result, Polkadot’s report advocated for a reduced inflation rate to ease this pressure. However, in April, the proposal was rejected by 57% of voters.
That said, Gompf conceded that there may have been some overspending in recent months, and was critical of funds. allocated low-return activities.
Polkadot Ecosystem Revenues Down?
The other portions of Polkadot’s spending went toward investing in its ecosystem. This includes $23 million on developing network features and upgrades, including Subwallet, Governance, SDK, and more.
It also spent $15 million was on liquidity incentives, $5.5 million on talent and education, $3.8 million on network/core ecosystem maintenance, and a further $2.1 million on research.
This may be in response to the Polkadot ecosystem’s decline in revenue, which fell by around 57% from 414,291 DOT recorded in the second half of 2023, to 171,696 DOT in 2024. The report highlights that this is largely due to a significant drop in network fees, which also fell drastically.
Continued token inflation should keep the treasury afloat, but it may take more than that to win back the community, or even some developers.
MANTA Discrimination
In the wake of the report, Manta Network founder Victor Ji fired a barrage of criticisms, shade, and damning allegations. For context, Manta began its journey as a Layer-1 blockchain – or “parachain” – on Polkadot’s Substrate framework, and has since gone on to introduce a Layer-2 solution tailored for Ethereum.
Ji states that Polkadot has failed to bring real value to the Web3 ecosystem overall and that the DOT network has failed to drive adoption in any meaningful way. According to Ji, the Polkadot team is incapable of operating in a decentralized manner and has failed to support developers building on their technology stack.
Perhaps most damning of all are claims that Polkadot prioritizes European/American projects over Asian projects. Ji goes as far as to claim that less than a quarter of attendees at the Polkadot Academy event in Hong Kong were Asian.
Web3 Foundation (W3f) Grants team member, Seraya, questioned Ji’s position. He did so by demonstrating that China and Singapore were among the top 3 countries funded through W3F grants.
Ji then notes the Asian project rejection rate, to which Seraya requests to see specific data that support those claims. Ji didn’t immediately reply to this thread, though instead took to his page to further outline his position.
Seemingly, other Asian developers have also expressed dissatisfaction with Polkadot’s “discrimination” in private DMs with Ji, suggesting there may be some truth to these claims.
Polkadot Responds
After spending millions to get eyes on them, Polkadot’s slight overspend may have finally received some attention, though not the attention they desired.
If anything, Polkadot’s report is a testament to their commitment to Web3 transparency. In response, they’ve also held a couple of live discussions on X in a bid to clear the air.
They most likely knew that the massive marketing spend, waning treasury reserves, and declining revenues would make for some rather bearish news. But there are many dynamics and forces at play that are working to ensure the longevity of the Polkadot ecosystem and the project itself.
