- Polkadot spent almost $87 million in the first half of 2024, a new report found.
- Almost half of that went to marketing efforts, like paying influencers to promote the blockchain.
- The spending has drawn scrutiny, but it's not unusual for a crypto project, according to one of the report's authors.
Polkadot, one of the longest-running blockchains, is under fire after releasing details of its spending in the first half of 2024.
Among other things, the cooperative that governs Polkadot spent $37 million on marketing initiatives that, critics say, have done little to boost its profile.
That $37 million figure accounted for 42% of Polkadot’s expenses, according to Tommi Enenkel, the cooperative’s “head ambassador,” who shared details of the report online.
Polkadot spent only 29% of its budget on marketing in the second half of 2023, Enenkel said.
“Polkadot still seems invisible on X and elsewhere,” pseudonymous crypto influencer Ignas said on the social-media platform formerly known as Twitter, which has long served as the crypto industry’s watercooler.
One of the report’s authors, who goes by the pseudonym Jeeper, pushed back against the notion that Polkadot’s spending was profligate or even unusual by industry standards.
“All the networks have similar spending, but they are happening behind closed doors, and no one can see what they are paying and to whom,” they told DL News.
It’s the latest controversy to befall Polkadot, one of several early Ethereum competitors that has been overtaken by newer blockchains.
Last year, Polkadot parent company Parity Technologies blindsided its staff when it announced 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, has lagged. DOT has lost 88% of its value from its record $55 in 2021.
And Ether and Solana’s SOL are down 30% and 41% from their all-time highs, respectively.
Spending on influencers
Like many other crypto projects, Polkadot is controlled by people who hold its token. Those people can propose and vote on ways to spend the crypto in Polkadot’s treasury, which was worth about $245 million on July 1, according to Enenkel.
“Polkadot is a large and vibrant decentralised ecosystem with many different contributors, where the community is at the helm of all meaningful decision-making,” a spokesperson for Parity Technologies told DL News.
“The Treasury is one of multiple funding mechanisms to support new projects building on Polkadot.”
In the first half, Polkadot’s spending rose 140% to almost $87 million from about $27 million in the second half of 2023.
But the cooperative isn’t about to run out of money, according to Jeeper. That’s because the Polkadot treasury is continually topped up by newly issued DOT.
“Unlike other networks which redistribute the inflation only to staking, Polkadot can decide what portion of the inflation goes to the treasury and allocate to the growth of the network,” Jeeper said.
Nevertheless, Polkadot has drawn scrutiny for how it chose to spend that money.
According to one invoice, Polkadot spent $180,000 to slap its logo on “an entire fleet of Europe-based private jets” 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 read.
According to another, Polkadot spent more than $400,000 to put an animated version of its logo on CoinMarketCap, a popular website used to track crypto prices.
In the first half of the year, Polkadot spent almost $5 million on influencers — also known as key opinion leaders, or KOLs — presumably so they could promote the blockchain.
The jump in marketing money was expected, according to Jeeper.
“Since last year, a lot of network participants were unhappy about marketing, and this was the reason for increased spending,” they said. “Token holders had a consensus for a big marketing push.”
And much of it was a one-time purchase, Jeeper continued.
“The bigger part of these spends — like sports sponsorships, platform integrations, media campaigns etc. cover the next one to two years and already have been paid,” they said. “So, we will observe the impact of current spends throughout 2024-2025.”
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. Have a tip? Reach out at tim@dlnews.com or aleks@dlnews.com.
