On June 29th, members of the Polkadot community released the Polkadot Treasury Operations Report for the first half of 2024, with a total expenditure of 87 million USD. At the current spending rate, these reserves will only be sufficient to support the Polkadot Treasury for another 2 years.

Surprisingly, Polkadot spent $37 million on promotional expenses, accounting for the majority of the treasury expenditure. Advertising expenses accounted for $21 million, including sponsorship fees of $10 million, marketing and public relations companies of $4.9 million, digital advertising of $4 million. Event expenses amounted to $7.9 million, including event expenses of $4.5 million, business development of $3.9 million, and media production of $3.2 million.

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

KOL Crisis: Fake Fans, Content Wash Trading, Bot Accounts

Based on some of the statistics published on the Polkadot Market Bounty website, KOLs have a significant share in the promotion activities in the Polkadot market, exceeding half of the overall budget. From the KPI data of content delivery, it seems that the effects of these KOL delivery activities are good, with a total browse volume of over 15 million, a total of over 570,000 likes, and a total of 60,000 replies.

In the first quarter, the KOL promotion activities in the Polkadot ecosystem include four 'Evox promotion activities' targeting North America and three 'Lunar promotion activities' targeting Europe. The average budget for each promotion activity is around 300,000 US dollars, with a typical duration of 30 days. The Evox event includes approximately 30 to 40 KOLs, while the Lunar event has significantly fewer KOLs, around 15. In addition, there is a community account Dot Army with a single budget of 15,000 US dollars.

However, after in-depth research by BlockBeats based on the KOL list, it was found that most of these so-called 'Content Creators' are actually engaged in 'Clip Coupons' activities, with most KOLs fabricating their fan base, promotional content, and replies, resulting in inflated costs.

For example, User X, whose Handle is @DeFiExpertise, has only 25 followers, but their YouTube channel has over 70,000 subscriptions. Upon closer inspection, it is found that they have only posted less than 10 videos in total, and the account has been active for less than 3 months. If we calculate based on the release time of the first video, the channel was registered or became active exactly when the current Evox event started.

And this Handle for @CriptoMindYT's KOL, although it has 12,000 fans, but there is basically no overlap with the watchlist of ordinary encryption Twitter users. When you click on the list of followers, you will find that most of them are robot accounts. In addition, this account basically only does "customized KOL" for Polkadot, almost only publishes content related to Polkadot, and most of the tweets have a reading volume of only about 200, except for a few retweets that quote Polkadot Army and Polkadot official Twitter content.

There is also a KOL operation style and content with @ApeCryptos, whose Handle is @SharkyCoins, which almost identical. They will post dozens of meaningless short sentences every day and forward each other's tweets, which inevitably makes people suspicious whether these KOL accounts are from the same robot account studio. There is also @MaxGanes, who also focuses on batch production of tweets. The account has published more than 100,000 tweets in total, creating nearly 20 illogical tweets with AI graphics every day.

Some other KOLs who focus on 'always making a profit' promote 20-50 targets in each tweet. There are even many 'one-time KOLs', such as @DegenHardy, @TheCrypomist and other accounts still on the KOL list in April have all been cancelled as of the time of writing, while accounts like @CryptoEmily have already changed their names...

It is interesting to note that the "DOT Army" separately listed in the advertising budget includes an "official community account" and around 30 KOL service packages, with a single fee of $15,000 per month. The community account, Dot Army, often has very high reading articles, such as the tweet about "DOT ETF" on June 30, which has reached 110,000 views. However, when you click on the details page of the account, you will find that there are only about 200 fans. After contacting the previous text, it will be discovered that these high-reading tweets are the key forwarding objects of the "list KOLs". In the accounts of their KOL service packages, more than 90% will display "no one you are following is following".

In addition to promoting on encrypted Twitter, Polkadot's KOL promotion also pays attention to the Youtube channel. However, many Youtube channel bloggers in the advertising scenes often have a mismatch in audience portraits with encrypted users. For example, the German Youtube blogger MilkRoad channel content in the first half of the year is mainly about general investment, which is basically unrelated to the encrypted industry, and most of the videos have only a few hundred views. Content about Polkadot and DOT tokens is awkwardly inserted into these contents, and the video has less than 500 clicks in four months.

In May, they even chose to advertise on the Marvel Snap game channel, which has nothing to do with encryption. The explanation in the bill is "precisely targeted high-net-worth audience".

Surprisingly, it seems that Polkadot governance and the foundation are not very concerned about the invalid allocation of their KOL budget. After a quarter of KOL promotion activities, they have actually raised the KOL budget for the second quarter again. During the period from May to June, the budget for a KOL promotion activity can reach $600,000. However, it can be seen that the new promotion plan has submitted more detailed reports to the governance on the specific traffic evaluation and requirements of KOLs.

In addition, it is not difficult to see that Polkadot's KOL promotions are mainly targeted at the European and American markets, and they are all large-scale expenditures, but there are hardly any promotions for the Asian market. BlockBeats reported in September last year that PolkaWorld, the Chinese community of Polkadot, suspended operation for half a month due to the rejection of its proposal for official funding. Not long ago, Polkadot launched a new governance framework called OpenGov, but PolkaWorld believes that the new treasury management mechanism has led to many long-term contributors and organizations having their funding applications repeatedly rejected, forcing them to leave the Polkadot ecosystem. Now it seems that governance efficiency may only be one aspect of the problem.

"Logo Addiction" and "Media VIP"

In addition to KOL promotion, media placement and platform display account for a high proportion in the budget, as shown on the Market Bounty website as 'PR' and 'website integrations'. In addition, Polkadot seems to have some 'spending preferences', unexpectedly allocating huge budgets in unexpected places, which is quite puzzling.

In media PR placements, The Block's exorbitant fees are the first thing that catches the eye. Several research reports and sponsored articles, plus one billboard maintenance, cost $138,000, including a $12,000 'management fee'. Other encryption media such as Decrypt, Defiant, Cryptoslate, etc., are bundled into PR services and collected by a governance entity called Community Project, which charges a 10% management fee, with each PR promotion costing about $150,000.

Some PR promotions directly allocate funds to the Community Project, but clearly specify specific requirements: arrange for 75 articles and distribute content through 18 different channels, consuming $100,000. As well as Chainwire media PR costs of $150,000 without specifying the service content.

In addition, Polkadot seems to have a special preference for logo display. It has purchased exclusive logo dynamic display services on two major cryptocurrency price websites, Coingecko and Coinmarketcap. The cost of purchasing exclusive logo dynamic display for half a year on Coingecko is $50,000, while the cost charged by Coinmarketcap is relatively higher. The cost of two-year logo dynamic display plus management fee is nearly $480,000, with an average cost that is twice as much as that of Coingecko.

Although the change has been noticed by everyone, the attractiveness of DOT itself has shown little rise. Two months ago, someone asked on X, 'Why did the token logo of Polkadot on Coinmarketcap turn into a pink flame?' The first comment in the section was, 'So what? Would you buy a coin for a GIF?'

In the podcast videos, the display of the logo is also a big deal. The placement of the two podcast programs, which only have 8 episodes of content, cost $110,000.

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

There is also a budget for printing Polkadot Logo on private planes in Europe. This $180,000 promotion expense plan is for a 6-month continuous logo exposure on a fleet of private planes in Europe, with the reason given as 'highly targeted brand promotion and awareness enhancement activities for high-spending consumers'...

By comparison, advertising screens in Singapore Airport and Zurich Airport appear to be relatively reliable, but the cost is still high. Just one advertising screen in a terminal at Singapore Airport costs $189,000.

This kind of inflated quotation is also reflected in the sponsorship costs of Polkadot. In the Web3 event in Vietnam in the past few months, Polkadot consumed a sponsorship fee of $50,000. In comparison, the platinum sponsorship during Ethereum's EDCON in Montenegro is also about $50,000, and this $50,000 can also give you the opportunity to negotiate with Vitalik in the VIP room.

Interestingly, because most of Polkadot's budget expenses are settled in DOT, but perhaps the recipients are mostly priced in USD. In the case of price fluctuations, there is often an item called 'price difference compensation' in Polkadot's budget bill, and this compensation is often $100,000.

KOL wash trading and fluff, have you considered this business?

Is Polkadot really stupid? It's an obvious IQ tax that anyone with common sense can see, yet Polkadot keeps blindly throwing money. In a report by Odaily yesterday, the Polkadot community believes that the 'biggest value of Polkadot lies in its treasury', but in reality, the crypto world is not lacking in project operations and marketing.

Regarding the sky-high budget for Polkadot, the community is not lacking in the saying of 'large investors emptying the treasury', although unconfirmed, there are indeed cases of exploiting loopholes in the treasury in decentralized governance projects and organizations. Previously, during its research on the Nouns community, Luodong learned that some community members used methods to please the DAO initiators and Nouns' major holders, allowing them to pass their own promotion proposals with very high asking prices, but in reality, the cost and benefits were extremely low. In the case of RookDAO, arbitrageurs directly controlled the protocol's treasury by purchasing a large amount of tokens, staging a 'Battle of the Rings' in the crypto world.

"KOLs, foundations, or team individuals might have undisclosed agreements, which have been happening since the previous market cycle," said an insider who works in promoting the cryptocurrency market to BlockBeats. Although major projects like Polkadot usually follow public governance, many small projects have foundations consisting of only a few people, and many decisions are made directly by the CEO. This has given decision-makers many opportunities to take advantage of.

However, in the case of Polkadot, it seems difficult for individuals to complete such 'covert transactions', because everything from proposals, voting to foundation payments is publicly visible. However, this does not prevent the community from 'acting stupid' in governance, because the current crypto world, centered on Twitter, is filled with IQ tax and free riders.

For example, the KOL account above, there are almost no flaws in terms of the number of fans, tweet reading volume, and interaction. If it weren't for the loophole in the watchlist, it would be almost impossible for ordinary people to detect that this is a batch of fake accounts. "These accounts are generally written by the studio in batches, and they are very real in browsing, replying, and liking," a practitioner who had previously worked in a KOL studio told BlockBeats, he said, now with AI tools, it is even more difficult to discern the truth and quality of KOL promotion content.

But many times, small projects choose to outsource to a studio out of helplessness. According to a practitioner with relevant experience, when small projects negotiate cooperation with top KOLs, either the KOLs look down on them and are unwilling to cooperate, or they quote high prices, making it difficult to reach an agreement. In addition, information spreads quickly among KOLs. When a team negotiates with one KOL, other KOLs will soon know and immediately demand the same price. However, if you want a TGE to be effective, you must engage at least 100 to 150 KOLs. At this point, if the project lacks strength, it is easy to collapse, so the only choice is to outsource as a last resort.

However, there are still ways to handle this. Jesse (@Jessethecook69), who specializes in KOL promotion, told BlockBeats that many projects did not seek KOLs in the early stages, but instead focused on building a strong community, resulting in effective organic promotion. In addition, manual screening can be used to verify and supervise the promotion work of the studio. The most effective method is to click on the KOL's follower list and comment section to see if it is mainly composed of robots. "Alternatively, you can find reputable and reliable organizations, such as some mainstream media outlets and top KOLs who have their own KOL matrix. They usually have clear pricing and won't cheat you," says Jesse.

However, it is one thing to be able to screen fake numbers, and it is another thing to be willing to screen them. Insiders told BlockBeats that the promotion from KOL to the foundation market report is a responsible feedback mechanism, and after the PR company or KOL studio receives the task, it needs to hand over a good promotion data report to the project team or foundation, and the project team needs to prove to the VC that it is "still doing things". 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 fake reports, "There are even times when the data report made by the person in charge of the fake account is better 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 trap money from the treasury. I know some projects that only start to seek marketing and promotion when they are warned by the exchange to delist, but in this case, they actually don't care about the actual benefits, after all, it's a legitimate expense, and even if you trap them, you can't check it." A practitioner familiar with the situation told BlockBeats. In fact, in some cases, KOL is just a tool for the team to empty the treasury. According to insiders, sometimes the targets arranged for KOL may come directly from investment VC. "Many times, exchanges, retail investors, and even fund LPs have been taken advantage of, of course, LPs don't care about losing that money either."

Many of the problems that have existed in the cryptocurrency market, such as the high FDV valuation of VC and the sky-high promotion budgets of project parties, have erupted in the recent downward market. Jesse told BlockBeats that many times the responsibility is not on individuals, 'not everyone wants to be malicious, but the system is too stupid to give everyone the motivation to arbitrage.' Obviously, the market is entering an adjustment period, which may not be a bad thing. No pain, no gain, and perhaps 'squeezing the pus' is a necessary step before the start of a new bull run.