On June 29, members of the Polkadot community released the Polkadot Treasury Operation Report for the first half of 2024. The Polkadot Treasury spent a total of $87 million. If calculated at the current spending rate, these reserves will only be enough for the Polkadot Treasury to last another two years.

Related reading: "Spending $87 million in half a year, Polkadot's fiscal expenditure chaos has exceeded its income? "

To the surprise of the community, Polkadot spent $37 million on promotion alone, accounting for the bulk of the treasury expenditure. Of this, $21 million was spent on advertising, including $10 million in sponsorships, $4.9 million in marketing and public relations companies, and $4 million in digital advertising. Event costs totaled $7.9 million, including $4.5 million in event expenses, $3.9 million in business development, and $3.2 million in media production.

In response, BlockBeats found the relevant receipt documents for Polkadot's marketing activities and sorted out its budget allocation for the first half of the year.

KOL Disaster: Fake Followers, Content Inflating, Robot Accounts

According to some statistics published by the Polkadot Market Bounty website, KOLs account for a large proportion of Polkadot's marketing activities, exceeding half of the overall budget. Judging from the KPI data of content delivery, the effect of these KOL delivery activities seems to be good, with a total content view of more than 15 million times, a total like of more than 570,000 times, and a total of 60,000 replies.

In the first quarter, the KOL promotion activities of the Polkadot ecosystem included four "Evox promotion activities" for North America and three "Lunar promotion activities" for Europe. The average KOL budget for each promotion activity was around $300,000, and the duration was generally 30 days. The number of KOLs included in the Evox activity was about 30 to 40, while the number of KOLs in the Lunar activity was significantly less, about 15. There is also a community account Dot Army, with a single budget of $15,000.

However, BlockBeats conducted an in-depth investigation of the actual quality of these content delivery based on the KOL list and found that most of these so-called "Content Creators" are "fleecing", and most KOLs fish in troubled waters in terms of the number of fans, promotional content, and reply content, and the fees are inflated.

For example, the KOL with the handle of user X @DeFiExpertise has only 25 fans, but his Youtube channel has more than 70,000 subscribers. Clicking on it, it was found that there were less than 10 videos posted in total, and the account life was less than 3 months. If we simply calculate according to the release time of the first video, the time when the channel was registered or became active was exactly the time when the current Evox event started.

Although this KOL with the handle @CriptoMindYT has 12,000 followers, it basically has no overlap with the follower list of ordinary crypto Twitter users. Clicking on its follower list, it is found that most of them are robot accounts. In addition, this account basically only acts as a "custom KOL" for Polkadot, and almost only publishes content related to Polkadot. Except for a few retweets citing Polkadot Army and Polkadot official Twitter content, most of the tweets have only about 200 views.

There is also a KOL with a handle of @SharkyCoins whose operation style and content are almost the same as @ApeCryptos. They post more than a dozen meaningless short sentences every day and retweet each other's tweets. This makes people wonder whether such KOL accounts are from the same robot account studio. Another account that focuses on mass production of tweets is @MaxGanes. This account has posted more than 100,000 tweets in total, and produces nearly 20 illogical tweets with AI graphics every day.

Other KOLs that focus on "eternal profit" will promote 20-50 targets at a time in each tweet. There are even quite a few “one-time KOLs”, such as @DegenHardy, @TheCrypomist and other accounts that were still on the KOL list in April, but have been cancelled at the time of writing, while accounts like @CryptoEmily have changed their names......

The "DOT Army" listed separately in the advertising budget is also very interesting. It includes an "official community account" and a service package of about 30 KOLs, with a single fee of $15,000 per month. Among them, the community account Dot Army often has tweets with extremely high reading volume, such as the tweet about "DOT ETF" on June 30, which has reached 110,000 readings. However, when clicking on the details page of the account, it is found that it has only about 200 fans. In connection with the above, it will be found that these tweets with high reading volume are the key forwarding targets of the "list KOLs". Among the accounts in its KOL service package, more than 90% will show "No one is following you among the people you follow."

In addition to crypto Twitter, Polkadot's KOL promotion also pays attention to the Youtube channel, but many Youtube channel bloggers in the delivery scenarios often have a misalignment with crypto users in terms of audience portrait. For example, the German Youtube blogger MilkRoad's channel, which was launched in the first half of the year, mainly focused on general investment, basically unrelated to the crypto industry, and most of the videos had only a few hundred views, while the content about Polkadot and DOT tokens was awkwardly inserted in the middle of these contents, and the video clicks in 4 months were less than 500.

In May, the Marvel Snap game channel, which has nothing to do with crypto, was chosen for delivery, and the explanation in the bill was "precisely targeted high-net-worth audiences."

Surprisingly, Polkadot governance and the Foundation do not seem to care much about the ineffective use of their KOL budgets. After the first quarter of KOL promotion activities, they actually raised the KOL budget for the second quarter again. From May to June, the budget for a KOL promotion activity can reach 600,000 US dollars. However, it can be seen that the new promotion plan has submitted a more detailed report to the governance in terms of the specific traffic evaluation and requirements of KOLs.

In addition, it is not difficult to see that Polkadot's KOL placement is basically aimed at the European and American markets, and they are all large-scale consumption, but there is basically no placement for the Asian market. BlockBeats reported in September last year that the Polkadot Chinese community PolkaWorld suspended operations for half a month due to the rejection of its proposal for official funding. Not long ago, Polkadot launched a new governance framework, OpenGov, but PolkaWorld believes that the new treasury management mechanism has caused many long-term contributors and organizations to have their funding applications repeatedly rejected, forcing them to leave the Polkadot ecosystem. Now it seems that governance efficiency may be only one aspect of the problem.

"Logo addiction" and "Media VIP"

In addition to KOL promotion, media placement and platform display also account for a high proportion of the budget, which is shown as "PR" and "website Intergrations" on the Market Bounty website. In addition, Polkadot seems to have some "placement addictions", giving sky-high budgets in unexpected places, which makes people confused.

In media PR placement, The Block's super high fees first caught the eye. Several research reports and sponsored articles plus 1 dashboard maintenance cost $138,000, including a $12,000 "management fee". Other crypto media such as Decrypt, Defiant, Cryptoslate, etc., are packaged as PR services, which are executed by a governance entity called Community Project and charged a 10% management fee. The cost of each PR promotion is about $150,000.

Other PR promotions are directly allocated to Community Project, but the specific requirements are clearly marked: arrange 75 articles and 18 content distributions through different channels, and consume $100,000. And the Chainwire media PR fee of $150,000 without indicating the service content.

In addition, Polkadot seems to have a special liking for logo display, and has spent money to purchase exclusive logo dynamic display services on two major crypto price websites Coingecko and Coinmarketcap. Among them, it cost $50,000 to purchase Coingecko's exclusive logo dynamic display for half a year, and the fee charged by Coinmarketcap is relatively higher. The two-year logo dynamic display plus management fee is nearly $480,000, and the average cost is twice that of Coingecko.

Although everyone has indeed noticed this change, it has little effect on the increase in the attractiveness of DOT itself. Two months ago, someone asked on X, “Why is Polkadot the only token logo on Coinmarketcap that turns into a pink flame?” The first reply in the comment section was, “So what? Would you buy a coin for a GIF?”

The logo display in the podcast video is also a big deal, with only 8 episodes of the two podcast programs costing $110,000.

In addition to these "conventional delivery channels", we also saw some puzzling delivery in Polkadot's budget bill. For example, through Future, a PR agency, Polkadot's brand awareness was increased on the PC hardware website Tom's Hardware, with a one-time expenditure of $20,000.

Another budget is to print the Polkadot logo on European private jets. This $180,000 promotional expenditure is planned to be "continuously exposed on a fleet of European private jets for 6 months". The reason given is "highly targeted brand promotion and awareness-raising activities for high-spending groups".....

In comparison, the advertising screens at Singapore Airport and Zurich Airport seem relatively reliable, but the cost is still a bit too high. Only one advertising screen in a terminal at Singapore Airport cost $189,000.

This inflated quotation is also reflected in Polkadot's event sponsorship fees. At the Vietnam Web3 event a few months ago, Polkadot spent $50,000 in sponsorship fees. In comparison, the platinum sponsorship during Ethereum Montenegro EDCON is only about $50,000, and this $50,000 also gives you the opportunity to negotiate with Vitalik in the VIP room.

What’s interesting is that since Polkadot’s budget expenses are basically settled in DOT, but perhaps the recipients are basically priced in US dollars, in the case of currency price fluctuations, Polkadot’s budget bill often has an item called “make up the difference”, and this supplement is often $100,000.

KOLs are swiping the volume to make money, have you ever considered this business?

Is Polkadot really stupid? Anyone with a discerning eye can see the IQ tax, but Polkadot has repeatedly paid money with its eyes closed. Odaily mentioned in yesterday's report that the Polkadot community believes that "Polkado's greatest value lies in the treasury." In fact, the currency circle is not short of business in terms of project operation and marketing.

In response to Polkadot's sky-high budget, there is no shortage of claims in the community that "big players empty the treasury." Although it has not been confirmed, there are indeed cases of arbitrage from the treasury by exploiting loopholes in the mechanism in decentralized governance projects and organizations. When investigating the Nouns community, Rhythm learned that some community members had persuaded the DAO initiators and Nouns main holders to vote for their high-priced but low-cost and low-benefit promotion proposals. In the case of RookDAO, arbitrageurs directly controlled the protocol treasury by purchasing a large number of tokens, staging a "Baowan dispute" in the currency circle.

Related reading:

1. "All DAO organizations are either forking or on the road to forking"

2. "Rook quadrupled by dissolution, how did the "DAO predator" hunt the DAO treasury? 》

"KOLs and foundations or team members may have a drawer agreement, which actually existed in the last cycle," an insider engaged in crypto marketing told BlockBeats. Although large projects like Polkadot usually adopt public governance, many small project foundations have only a few people in total, and many decisions are made directly by the CEO, which gives decision makers many opportunities to take advantage of.

However, in the case of Polkadot, it seems difficult for individuals to complete such "secret transactions" because everything from proposals, voting to foundation payments is publicly visible. However, this does not prevent the community's governance from being "stupid", because the current Twitter-centered marketing in the currency circle is indeed full of IQ taxes and wool parties.

For example, the KOL account above has almost no flaws in terms of the number of fans, tweet readings and interactions. If it were not for the loopholes in the follow list, it would be difficult for ordinary people to detect that this is a batch of fake accounts. "These accounts are generally written by the studio in a unified manner, and then swiped out in batches, and they are very real in browsing, replying and liking," a practitioner who previously worked in a KOL studio told BlockBeats. He said that now with AI tools, it is more difficult to distinguish the authenticity and quality of KOL promotion content.

But many times, small projects choose to outsource to studios out of helplessness. According to feedback from a practitioner with relevant experience, when small projects negotiate cooperation with top KOLs, either the KOLs look down on them and are unwilling to do it, or they offer high prices, making it difficult to negotiate. In addition, the message transmission between KOLs is often very fast. When the team negotiates with a KOL, other KOLs will soon know and immediately ask for the same price. However, if a TGE wants to be effective, it must have at least 100 to 150 KOLs. At this time, if the project does not have strength, it is easy to fail, so it can only choose outsourcing as a second choice.

However, it is not a solution. Jesse (@Jessethecook69), who specializes in KOL promotion, told BlockBeats that many projects did not find KOLs in the early stage, but focused on building a good community, and the final organic communication effect was also very good. In addition, you can also verify and supervise the promotion work of the studio through manual screening. The most effective way is to click on the KOL's follower list and comment area to see if it is mainly robots. "Or just find a reputable and reliable organization, such as some mainstream media and top KOLs will have their own KOL matrix. They usually have clear prices and will not cheat you," said Jesse.

However, being able to identify fake accounts is one thing, and being willing to identify them is another. Insiders told BlockBeats that from KOL promotion to foundation market reports, there is a feedback mechanism that is responsible to the upper level. After receiving the task, the PR company or KOL studio needs to hand over a good promotion data report to the project party or the foundation, and the project party needs to prove to the VC that they are "still working." This has led to the fact that whether the promotion is really effective is not truly included in the accountability system. In some cases, after the project foundation recruits the person in charge of the Asia-Pacific market, the person in charge will once again outsource the promotion work to the studio to make a fake report. "Sometimes, the data report made by the person in charge with a fake account is even better looking and cheaper than the real one, so if the person in charge finds a KOL who is serious about promotion, he may have to explain to the foundation why the data is not as good as others."

"Many project parties don't want to do anything, they just want to get money out of the treasury. I know some projects that didn't start looking for publicity and promotion until they were warned by the exchange to be delisted. But in this case, they don't care about the actual benefits. After all, it's a serious expense, and you can't check it even if it's taken," a practitioner who knows the situation told BlockBeats. In fact, in some cases, KOL is just a tool for the team to empty the treasury. According to feedback from insiders, sometimes the indicators for arranging KOLs may come directly from investment VCs. "Many times, exchanges, retail investors and even fund LPs have been suckers. Of course, LPs don't care about losing that little money."

Whether it is the super high FDV valuation of VCs or the sky-high promotion budget of project parties, many problems that have always existed in the crypto market have erupted in succession in the recent downward market environment. Jesse told BlockBeats that many times the responsibility does not lie with individuals. "It's not that everyone wants to do evil, but the system is too stupid to give everyone the motivation to arbitrage." Obviously, the market is entering a period of adjustment, which is not necessarily a bad thing. Without destruction, there is no construction. Perhaps "squeezing out the pus" is a necessary step before starting a new bull market.

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