The Polkadot Foundation released its financial report for the first half of 2024 last weekend. The report reveals that the foundation has spent $87 million (11 million DOT) in the first six months of the year. Approximately $36.7 million was used to expand the service scope (about 42%), $23.1 million was allocated for development (about 26.7%), and $15 million was dedicated to ecological economy (about 17.6%).
However, the community has criticized the Polkadot Foundation for allocating a significant amount of resources to marketing budget while there is a lack of relevant news about Polkadot in the market. There has been minimal discussion within the community over the past six months. Upon closer examination, it can be observed that Polkadot’s marketing budget is primarily spent on sponsoring sporting events, such as sponsoring famous football clubs with $6.8 million and F1 racing with $1.9 million.
Currently, the Polkadot Foundation controls assets worth $245 million on three different blockchain networks, with $188 million classified as “illiquid” and not immediately convertible. According to official statements, at the current burn rate of $87 million per six months, the foundation incurs an annual net loss of approximately $108 million (17 million DOT). If the DOTUSD exchange rate remains unchanged, the remaining funds of the Polkadot Foundation will be depleted within two years.
Furthermore, with DOT experiencing a yearly inflation rate of 10%, most of which is used for staking rewards, this results in a substantial security cost for a network with limited usage. In other words, with a market cap of $10 billion, $1 billion flows to stakers each year.
This represents a significant security cost for a network that is not widely used. Despite the foundation’s attempts to propose a reduction in the inflation rate, it was ultimately rejected with a 57% opposition vote.