Polkadot getting dragged into the mud. Mismanagement of budgets happens everywhere, but let's go over a recent post on Twitter about the marketing spending of Polkadot. Read the full article.
I've always felt the UI/UX of polkadot ecosystem to be horrible. To this date, it has failed it's mission and the tech investment was wasted.
The DOT/USDT looks bad, but the DOT/BTC chart looks much worse. To me, over spending on tech and marketing is really detrimental to project financial performance, this is true for the public markets but also for crypto ventures.
I'm not a marketing expert, but I know that you should always spend less on your CAC (Customer Acquisition Cost) than your LTV (Long Term Value per Customer). In the crypto industry CAC's are completely overblown and most protocol barely make any revenue since most projects have very few users. Most token holders are not users, they just buy the token but don't interact with the protocol and so don't generate fees/income for the protocol. Thus, only the treasury provide the needed income to protocol to survive, and in many cases just like Polkadot that treasury seems to be mismanaged. All marketing spend should be driven out of awareness into tractable conversion rate funnels. Spending to add a logo on a fleet of jets brings awareness but is not tractable into real benefit and is in my opinion retarded.
Some examples:
- $400,000 to put an animated version of its logo on CoinMarketCap
- In the first half of the year, Polkadot spent almost $5 million on influencers
- $180,000 to slap its logo on “an entire fleet of Europe-based private jets” for six months
- Spending grew from 12m USD in 2022 to 34m USD in 2023. Top spending categories in 2023 are: development (48%), outreach (24%), HR (14%), and operations (11%).
- 2023-Q4 saw a sharp spending increase with 15m USD being spent.
- spent $87 million total in the first half of 2024.
They spent $10 million on ads/sponsorships:
- Sports Sponsorship: $6.8M (1M DOT) deal with a soccer club
- Race Car Driver: $1.9M for sponsoring Conor Daly
- E-sports Partnership: $1.3M with tournament organizer HEROIC
Current treasury about $245M, so spending is unsustainable unless they liquidate a lot more tokens and sacrifice a lot of the staking income. Overall, this will weaken their token economy, and in my opinion they have not reached product market fit like 99% of other crypto ventures.
My prediction is that it will grow with the rest of the market but underperform BTC during the bull market and will have another massive crash once the next bear market comes. Show Less
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