DeFi
“All networks have similar expenses” – DL News
- Polkadot spent nearly $87 million in the first half of 2024, according to a new report.
- Nearly half of that went to marketing efforts, such as paying influencers to promote blockchain.
- The spending has drawn scrutiny, but it is not unusual for a crypto project, according to one of the report’s authors.
Polkadot, one of the oldest blockchains, is under fire after publishing details of its spending in the first half of 2024.
The cooperative that governs Polkadot has notably spent $37 million on marketing initiatives that critics say have done little to improve its image.
That $37 million figure represented 42% of Polkadot’s spending, according to Tommi Enenkel, the cooperative’s “chief ambassador.” sharing report details online.
Polkadot spent just 29% of its budget on marketing in the second half of 2023, Enenkel said.
“Polkadot still seems invisible on X and elsewhere,” said Ignas, a pseudonymous crypto influencer said on the social media platform formerly known as Twitter, which has long served as a water cooler for the crypto industry.
One of the report’s authors, known by the pseudonym Jeeper, dismissed the idea that Polkadot’s spending was excessive or even unusual by industry standards.
“All the networks have similar expenses, but they are done behind closed doors, and no one can see what they are paying and to whom,” they said. DL News.
It’s the latest controversy to hit Polkadot, an early competitor to Ethereum that has been overtaken by newer blockchains.
Join the community to receive our latest stories and updates
Last year, Polkadot’s parent company, Parity Technologies, took its staff by surprise when it announced that most of them would be laid off ahead of a company retreat on the Spanish island of Mallorca, DL News reported.
Meanwhile, its token, DOT, is lagging. DOT has lost 88% of its value from its 2021 record high of $55.
And Ether and Solana SOL are down 30% and 41% respectively from their all-time highs.
Spend on influencers
Like many other crypto projects, Polkadot is controlled by the people who hold its token. These people can propose and vote on ways to spend the cryptocurrency in Polkadot’s treasury, which was worth about $245 million as of July 1, according to Enenkel.
“Polkadot is a large and vibrant decentralized ecosystem with many different contributors, where the community drives all important decisions,” said a Parity Technologies spokesperson. DL News.
“The Treasury is one of several funding mechanisms designed to support new projects built on Polkadot.”
Polkadot spending increased 140% in the first half of the year to nearly $87 million, compared to about $27 million in the second half of 2023.
But the co-op isn’t about to run out of money, according to Jeeper. Indeed, Polkadot’s treasury is continually replenished with new DOT.
“Unlike other networks that redistribute inflation only to staking, Polkadot can decide what portion of inflation goes to the Treasury and allocate it to network growth,” Jeeper said.
Nonetheless, Polkadot has come under scrutiny for how it has chosen to spend this money.
According to a InvoicePolkadot spent $180,000 to put its logo on “an entire fleet of private jets based in Europe” for six months.
“In addition to generating awareness among an elite target group, we anticipate social media shares from various celebrities using the fleet,” the invoice reads.
According to anotherPolkadot spent more than $400,000 to put an animated version of its logo on CoinMarketCap, a popular website used to track cryptocurrency prices.
In the first half of the year, Polkadot spent nearly $5 million on influencers — also known as key opinion leaders, or KOLs — likely so they could promote the blockchain.
According to Jeeper, the increase in marketing spending was expected.
“Since last year, many network participants were unhappy with the marketing, which led to increased spending,” they said. “Token holders were in favor of a large marketing campaign.”
And a lot of that was a one-time purchase, Jeeper continued.
“Most of these expenses – such as sports sponsorships, platform integrations, media campaigns, etc. – cover the next one to two years and have already been paid,” they said. “So we will see the impact of current expenses throughout the 2024-2025 period.”
Polkadot has taken the criticism in stride. DOT is up 5% since details of the report were shared on Friday.
“[Good morning] to all marketers and KOLs,” Polkadot tweeted defiantly, Tuesday morning.
Tim Craig and Aleks Gilbert are DeFi correspondents at DL News. Got a tip? Contact us at tim@dlnews.com or aleks@dlnews.com.