Critics argue that Polkadot’s advertising spend is exerting vital promoting strain on the DOT markets.
Some Polkadot neighborhood members are fearful that the decentralized autonomous group (DAO) is overspending on advertising and occasions.
Within the first half of 2024, Polkadot spent $87 million in complete, with $37 million allotted to advertising, promoting, and occasions, in keeping with the DAO’s H1 2024 report, printed on June 28. In the meantime, $49.4 million lined growth, financial system, training, operations, and analysis. Bounties notably accounted for $11.4 million.
With Polkadot’s Treasury overseeing $245 million in property, Tommi Enenkel, Polkadot’s head ambassador, estimated that the present price of spending would deplete the Treasury’s funds reserves after roughly two years, igniting alarm amongst Polkadot neighborhood members.
“It is insane to me how a lot cash the Polkadot treasury is losing on misplaced advertising,” mentioned Seunlanlege, a former Polkadot developer.
Fabian Gompf, the CEO of Polkadot’s Web3 Basis, CEO argued that Polkadot’s treasury received’t be operating out of funds anytime quickly, estimating its present runway is at the least 5 years.
“The entire notion of a ‘runway’ for the on-chain treasury is deceptive. The treasury has steady inflows,” Gompf mentioned. “It’s by no means going to expire of funds. IMO the treasury *ought to* spend its funds on extra ‘on the market’ initiatives not lined by the muse.”
Nevertheless, Gompf conceded that the on-chain treasury “has spent an excessive amount of” on advertising initiatives delivering poor ends in current months.
Polkadot’s treasury funds advertising, infrastructure growth, and neighborhood incentives. In 2024, the Treasury earned over 5.2 million DOT from inflation.
Pushback
Whereas the report acknowledged pushback from the neighborhood in regards to the heavy spending and corresponding DOT gross sales, its authors argued that the customers offloading staking rewards locations larger downward promoting strain on DOT.
“Promote strain from stake-to-sell customers can considerably outpace any promoting strain that the Treasury creates,” the report mentioned.
Nevertheless, Swenthebuilder, a Polkadot neighborhood member, attributed the heavy promoting strain within the DOT markets to involved traders responding to “wasteful Treasury spending.”
“The Polkadot neighborhood sees it and is rightfully involved,” they added.
Ignas, co-founder of Pink Brains, argued that influencer advertising is probably the most environment friendly advertising technique accessible to web3 firms. They argued that Polkadot ought to prioritize working with key opinion leaders (KOLs) and builders from the web3 neighborhood over costly adverts.
“Spend extra money on devs, liquidity mining incentives, attracting distinctive dApps, after which invite high KOLs to jot down on what it’s a must to supply,” tweeted Igas. “It is also simple to criticize these KOLs within the record, however with $20k per thirty days for a couple of tweets, they’re those laughing.”
DOT inflation
The report advocated for lowering DOT’s inflation price to ease promoting strain within the markets.
“Decreasing DOT inflation… would cut back promote strain from these stakeholders that primarily stake to promote,” the report famous. “It will create new incentives to inject DOT into the DeFi financial system of Polkadot. And it could open up DOT to a brand new pool of potential stakeholders who see the present tokenomics as damaging.”
Nevertheless, in April, a governance proposal advocating for lowering the speed of annual DOT inflation from 10% was narrowly rejected with 57% of votes forged opposing the proposed measure.
On the time of writing, the value of DOT is $6.43 after gaining 1% within the final 24 hours, in keeping with CoinGecko.
