Spending Spree Polkadot Foundations Remaining Funds to Run Dry in Two Years

Spending Spree Polkadot Foundations Remaining Funds to Run Dry in Two Years

Spending Spree Polkadot Foundations Remaining Funds to Run Dry in Two Years

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 2024, with approximately $36.7 million allocated to expanding its service scope (about 42%), $23.1 million to development (about 26.7%), and $15 million to ecological economics (about 17.6%).

Critically, the community has voiced concerns over the Foundation’s substantial marketing budget expenditure, despite limited visibility of Polkadot in the market and minimal community discussion over the past half-year. A closer look reveals that Polkadot’s marketing budget primarily supports sports event sponsorships, such as $6.8 million for sponsorship at renowned football clubs and $1.9 million for F1 racing sponsorships, among others.

Currently, the Polkadot Foundation controls assets worth $245 million across three different blockchain networks, of which $188 million are illiquid and cannot be immediately liquidated. According to official statements, at the current burn rate of $87 million every six months, the Foundation faces an annual net loss of approximately $108 million (17 million DOT). If the DOTUSD exchange rate remains unchanged, the Foundation’s remaining funds could be depleted within two years.

Additionally, with DOT releasing at a continuous annual inflation rate of 10%, most of which is used for staking rewards, approximately $1 billion flows to validators annually under a $10 billion market cap.

This presents a significant security cost for a network with relatively low user adoption. Despite official attempts to propose a reduction in the inflation rate, it was ultimately rejected with a 57% opposition vote.