Polkadot Criticized for Heavy Spending on Marketing With Little Effect

Polkadot's mid-year 2024 report reveals operational expenses totaling $87 million, with $37 million allocated to marketing efforts.

Polkadot Criticized for Heavy Spending on Marketing With Little Effect. Image: Polkadot

The Polkadot (DOT) community is currently debating the latest operational report for the first half of 2024, which saw actual expenditures reaching $86.5 million (11.1 million DOT).

Specifically, during H1/2024, Polkadot significantly increased operational costs across all facets including research, marketing, community development, economic maintenance, education, and training... The total expenditure during this period amounted to 11.1 million DOT, more than doubling the 5 million DOT spent in the latter half of 2023.

Polkadot's accounting balance sheet for H1/2024 and H2/2023. Source: Polkadot

Meanwhile, the project's revenue for the first six months totaled only 171,696 DOT, marking nearly a third decline compared to H2/2024.

Explaining the surge in spending, Polkadot representatives cited the crypto market's recovery in the first half of the year, which led to numerous ambitious ecosystem development proposals that required substantial funding. The report also noted that due to DOT price recovery, the dollar-denominated value of spending increased significantly compared to DOT-denominated amounts.

The largest expenditure category was community development, totaling 4.9 million DOT, equivalent to $36.7 million USD. This category includes activities such as advertising, sponsorships, media, and event organization... This has also been the most contentious point within the community, as some argue that such large expenditures have not yielded proportional returns for Polkadot, particularly in terms of project visibility on social media platforms like X (Twitter).

Some have even found specific expenditures, such as $53,000 to animate the logo on CoinGecko into a GIF format, to be frivolous.

Critics argue that the aforementioned spending might have been what brought Polkadot attention from the community for the first time in years, rather than the millions paid to KOLs for content creation and project promotion.

The report also discusses Polkadot's remaining treasury assets, currently standing at 32 million DOT (200 million USD). The project acknowledges that at the current spending rate, Polkadot will only have enough funds to operate for an additional two years, assuming DOT prices remain stable.

Additionally, another concern looming over Polkadot's development prospects is the current inflation rate of DOT, with 10% of circulating supply being added to the market annually as staking rewards.

Polkadot representatives acknowledge community concerns regarding spending and inflation, urging all parties to engage in constructive dialogue to find mutually beneficial solutions.

The issue of project spending is not new within the crypto industry, with recent controversies involving Arbitrum and Uniswap.

In a related development, Manta Network founder Victor Ji criticized Polkadot, labeling it a "toxic" ecosystem that fails to bring value to Web3. He claimed to have faced discrimination as an Asian origin individual and expressed reluctance to engage with Polkadot's team again. Manta Network was among the early projects built on Polkadot before departing to develop the Manta Pacific layer-2 on Ethereum.