Recently, a series of negative news about the Polkadot (DOT) ecosystem has attracted widespread attention from the industry and investors. From high marketing expenses, lack of actual business highlights, to governance issues and accusations of racial discrimination, Polkadot seems to be facing a severe crisis. Industry insiders warn that Polkadot's financial situation is worrying, and the funds can only last for 2 years at most, and it is very likely to become the next FTX.
It is reported that Polkadot's marketing and promotion expenses in the first half of 2024 are close to 37 million US dollars, equivalent to 42.4% of Polkadot's annual budget, accounting for the bulk of its overall expenditure (total expenditure of 87 million US dollars and net loss of 108 million US dollars). This expenditure is mainly used for advertising, influencer endorsements, events, gatherings and conference hosting, aimed at attracting new users, developers and enterprises to join the Polkadot ecosystem.
Unfortunately, these expensive marketing campaigns have not brought significant growth to Polkadot’s business. Zombit’s analysis report pointed out that Polkadot’s on-chain activity in the first half of 2024 did not increase significantly, and the growth of active users, transaction volume and other key indicators was weak. There are not many eye-catching applications and progress in the ecosystem, which is in stark contrast to Polkadot’s marketing expenditure of up to $37 million.
Some analysts pointed out that according to the financial report released by Polkadot itself, as of June 30, 2024, the balance of the Treasury pool (similar to the reserve) was only $960 million. Although Polkadot has a certain inflation mechanism to inject new funds into the Treasury, considering Polkadot's recent high expenditures and potential continued high expenditures, Treasury funds may be difficult to maintain for too long.
At the current spending rate, the Treasury can only last for 24 months at most. In other words, Polkadot is likely to exhaust its main source of funds within 2 years, at which time the sustainable development of the network will be severely restricted and face major challenges.
Some Polkadot supporters have tried to clarify this concern, arguing that Polkadot has a sustainable financial model and that Treasury is not the only source of funds. But in fact, Polkadot's revenue model is not clear, and there is still great uncertainty about the sustainability of Treasury.
This undoubtedly raises questions from the outside world: Does the Polkadot Foundation have problems with fund management, and is it abusing fund funds for ineffective marketing and promotion? For the long-term development of the Polkadot ecosystem, this is undoubtedly a hidden danger that cannot be ignored.
What is more worrying is that Polkadot’s governance mechanism has also been questioned. A developer named Victor Ji pointed out that Polkadot’s governance is too centralized, there is not enough community participation, and there is a lack of transparency and fairness in the decision-making process, and there is even discrimination against Asians.
Specifically, some suggestions and opinions raised by Asian developers within Polkadot are often ignored or perfunctorily addressed, while developers from Europe and the United States receive more attention and support. This differential treatment has caused dissatisfaction among many Asian developers.
This accusation has undoubtedly hit the credibility of Polkadot and directly affected its continued development. As a global blockchain project, if Polkadot really has this kind of regional discrimination problem, it will be difficult for it to continue to gain the trust and support of the majority of users.
These signs have undoubtedly triggered market concerns about Polkadot. Some analysts have bluntly stated that Polkadot may become the next cryptocurrency explosion after FTX. High marketing costs, lack of actual results, controversial governance issues, and the impending depletion of funding pools are undoubtedly exacerbating the crisis of Polkadot, making people worry that it is repeating the mistakes of FTX.
The Polkadot team responded to the outside world's doubts. They said that the use of Treasury funds was decided by governance voting and was not an uncontrolled squandering. At the same time, they also claimed that Polkadot adopted a "self-sufficient" model and could continue to obtain financial support through various channels and would not run out of funds within 2 years. At the same time, they also denied the allegations made by Victor Ji, saying that Polkadot has never engaged in any racial discrimination.
However, these explanations have failed to fully convince the public, and numerous negative news have caused widespread concerns among users and investors. Polkadot seems to focus more on marketing and public posturing, often criticizing other projects rather than solving their internal flaws. Despite Polkadot's bright early prospects and technological advantages, if there are no necessary changes, it may gradually be forgotten like EOS and Tezos.
In general, expensive marketing, lack of governance, ethnic discrimination, and running out of funds have become a "time bomb" for Polkadot. As for whether it will really follow in the footsteps of FTX, it may take some time to observe. After all, there are key differences between Polkadot and FTX.
FTX’s collapse was accelerated by its role as an exchange, where liquidity issues can quickly spiral out of control. Polkadot, as a blockchain platform, operates differently. Its collapse may be slower, driven by a loss of trust among users and developers rather than an immediate liquidity crisis.
Whether Polkadot's crisis can be resolved depends on its ability to transform. Solving user experience issues, improving DEX liquidity, and improving governance are key steps. Unlike FTX, Polkadot has the opportunity to correct its course and use its technological advantages to regain community trust, and can avoid the pitfalls that led to FTX's dramatic collapse. The next few months will be crucial for Polkadot to adjust its strategy and maintain its growth.
