Polkadot’s Core Technology
Polkadot enables interoperability between different blockchains, allowing seamless data exchange. Independent blockchains become parachains, connected through the central Relay Chain.
Growing Demand for Polkadot’s Technology
This technology is becoming increasingly essential with Web3’s development. For instance, Circle integrated USDC with Polkadot via the Asset Hub parachain last year.
Sluggish Growth in New Projects
However, new projects seem to be joining Polkadot at a slow pace. According to a recent financial report by the developers, the team spent $36.7 million on marketing in the first half of 2024. This accounted for 13% of their reserves at the beginning of the period. Marketing has now become the primary expense, overtaking development costs from the previous quarter.
Controversial Spending
The community is outraged by the overall marketing expenses and specific questionable items. For example, $4.9 million was spent on wooing unspecified “influential individuals,” and $180,000 on “branding a private jet.”
Financial Challenges
Advertising costs have surged while the network shows a net loss of $108 million annually, with the Treasury’s current reserve at $200 million. DOT inflation stands at 10%. If spending continues at this rate, funds will be depleted in less than two years.
Future Outlook and Challenges
Despite these financial concerns, the developers hope for DOT’s appreciation to offset high spending. However, DOT has declined by 29% this year, missing the market rally post-Bitcoin-ETF launch. This negative price trend and dubious budget planning will make it harder for the team to attract investors and partners.
