Coinspeaker Polkadot’s 2024 Spending Spree Triggers Community Alarm
The recent report released by the Polkadot Treasury for the first half of 2024 has brought to light a potential funding crisis looming on the horizon. Decentralized finance (DeFi) researcher DeFi Ignas has delved into the details, underscoring the Treasury’s limited financial runway.
The Polkadot treasury currently manages assets worth $245 million (38 million DOT), with $188 million (29 million DOT) in liquid form. Over the past six months, the Treasury spent a total of $86 million. Interestingly, it may only have about two years of operational funding left at its current burn rate. This raises concerns among community members that it could face bankruptcy in 2026.
Polkadot allocated a significant portion of its expenditures in the first half of 2024, $37 million, to an extensive outreach program designed to attract new users, developers, and businesses to the platform.
The Treasury spent $10 million on ads and sponsorships. This includes a $6.8 million deal with a prestigious soccer club, $1.9 million for sponsoring race car driver Conor Daly, and $1.3 million for an e-sports partnership with tournament organizer HEROIC.
DeFi Ignas reported that the total events expenditure reached $7.9 million, including $4.5 million on conference attendance and side events. These included Polkadot Decoded China, several bash parties, and Token2049.
The influencer budget was another big expense, with $4.9 million spent on influencers and various agencies like EVOX, Lunar Strategy, Chainwire, and Unchained. Polkadot also spent $4 million on digital advertising, as per the report. There were also some less effective investments, such as $1 million on the DED meme coin, which ended up being a massive failure.
Despite this extensive spending, Polkadot’s visibility on social media platforms, including social media platform X, remained surprisingly low. The community called this marketing expenditure “abuse”. One X user wrote:
“The marketing spending, and its abuse let’s be clear, was fomented by a group of whales. So much wasted here & there.”
Moreover, modular layer 2 ecosystem Manta Network’s co-founder commented on the recent report and stated:
“As the founder of the previous largest (non-DOT) TVL in Polkadot, we do not want to engage with the Polkadot ecosystem and team at all. It is a highly toxic ecosystem, and there are many facts about the discrimination we have faced as Asian founders.”
He further advised Polkadot developers to consider transitioning to other ecosystems such as Solana, Ethereum, and Bitcoin.
Solution
To address these financial challenges, Polkadot is adopting a more structured approach. Executive bodies such as bounties and collectives are assuming departmental roles in the system.
These bodies handle various functions including security, data research, core development, network operations, marketing, and business development. They are competent individuals capable of evaluating proposals and delivering value. The Treasury’s strategy involves delegating more responsibility to these executive bodies.
Currently, DOT is trading at $6.32, reflecting a 9% price recovery in the last seven days. However, the 14th largest cryptocurrency by market cap is 88% down from its all-time high of $55, achieved in November 2021.
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Polkadot’s 2024 Spending Spree Triggers Community Alarm
