Polkadot’s Core Technology
Polkadot enables interoperability between different blockchains, allowing seamless data exchange. Independent blockchains become parachains, connected through the central Relay Chain.
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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.
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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.
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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.”
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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.
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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.