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

Related reading: 'Half-year spending of $87 million, the treasury budget is only enough to support for another 2 years, what should we do after Polkadot?'

Surprisingly, Polkadot spent 37 million US dollars on promotion, accounting for the majority of the treasury expenditure. Among them, advertising expenses accounted for 21 million US dollars, including sponsorship fees of 10 million US dollars, marketing and public relations companies of 4.9 million US dollars, digital advertising of 4 million US dollars, and event expenses of 7.9 million US dollars, including event expenses of 4.5 million US dollars, business expansion of 3.9 million US dollars, and media production of 3.2 million US dollars.

BlockBeats has obtained the relevant receipt documents for Polkadot's market promotion activities and sorted out its budget allocation for the first half of the year.

KOL Delivery Disaster: Fake Fans, Content Wash Trading, Robot Accounts

From the partial statistics published on the Polka Market Bounty website, KOL accounts for a large proportion in the Polka market promotion activities, exceeding half of the overall budget. From the KPI data of content delivery, the effect of these KOL delivery activities seems to be good, with a total of over 15 million views, over 570,000 likes, and 60,000 replies.

In the first quarter, Polkadot's KOL promotion activities include four 'Evox promotion activities' targeting the North American region and three 'Lunar promotion activities' targeting the European region. The average budget for each promotion activity is around $300,000, and the duration is generally 30 days. The Evox activity includes approximately 30 to 40 KOLs, while the Lunar activity has significantly fewer KOLs, around 15. In addition, there is a community account called Dot Army with a single budget of $15,000.

However, BlockBeats found through in-depth research based on the KOL list that the actual quality of the content placed by these "Content Creators" is mostly 'Clip Coupons'. Most KOLs are muddling through in terms of fan numbers, promotional content, and response content, with excessively high costs.

For example, user X, whose handle is @DeFiExpertise, has only 25 followers, but his YouTube channel has over 70,000 subscriptions. Upon opening it, I found that there are 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 is @CriptoMindYT's KOL, although it has 12,000 fans, there is basically no overlap with the watchlist of ordinary encrypted Twitter users. Clicking on its followers list reveals that most of them are robot accounts. In addition, the account basically only acts as a 'custom KOL' for Polkadot, almost exclusively publishing Polkadot-related content. Apart from a few retweets quoting Polkadot Army and official Polkadot tweets, most tweets have only about 200 views.

There is also a KOL operation style and content for @SharkyCoins, which is almost identical to @ApeCryptos. They both post dozens of meaningless short sentences every day and forward each other's tweets, which inevitably raises suspicions about whether these KOL accounts are from the same robot account studio. Another account that focuses on mass-producing tweets is @MaxGanes, which has published over 100,000 tweets in total, creating nearly 20 illogical tweets with AI graphics every day.

Some other KOLs who focus on 'permanent profits' promote 20-50 targets in each tweet. There are even many 'one-time KOLs', such as @DegenHardy, @TheCrypomist, etc. The accounts that were still on the KOL list in April, like @CryptoEmily, have been cancelled as of the time of writing, while accounts like @CryptoEmily have already changed their names...

And it's interesting to note that the 'DOT Army,' which is listed separately in the budget, includes an 'official community account' and about 30 KOL service packages, with a single fee of $15,000 per month. The Dot Army community account often has highly-read tweets, such as one on June 30th about 'DOT ETF,' which had a reading volume of 110,000. However, when you click on the account's details page, you'll find that it only has around 200 followers. As mentioned earlier, these highly-read tweets are key targets for 'named KOLs' to retweet. And in their KOL service package accounts, over 90% of them will display 'no one you follow is following them'.

In addition to promoting on encrypted Twitter, Polkadot's KOL promotion also pays close attention to the YouTube channel, but many YouTube channel bloggers in the placement scenes often have a mismatch with the audience profile of encrypted users. For example, the content of the German YouTube channel MilkRoad, which was promoted in the first half of the year, is mainly about general investment, basically unrelated to the encrypted industry, and most of the videos have only a few hundred views. The content about Polkadot and DOT tokens is awkwardly inserted into these videos, with less than five hundred views in four months.

And in May, it even chose to advertise on the Marvel Snap Game channel, which has nothing to do with encryption. The explanation in the bill is "accurate positioning of high net worth audiences".

Surprisingly, Polkadot governance and the foundation seem to be not very concerned about the invalid investment of their KOL budget. After a quarter of KOL promotion activities, they actually raised the KOL budget for the second quarter, and the budget for a KOL promotion activity can reach $600,000 between May and June. 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 KOL.

It is also not difficult to see that Polkadot's KOL placements are basically targeted 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 Chinese community PolkaWorld, due to the rejection of the official funding proposal, suspended operation for half a month. Not long ago, Polkadot launched a new governance framework OpenGov, but PolkaWorld believes that the new treasury management mechanism has repeatedly led to the rejection of funding applications from many long-term contributors and organizations, forcing them to leave the Polkadot ecosystem. Now it seems that governance efficiency may be just 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 of the budget, as shown on the Market Bounty website in the form of 'PR' and 'website integrations'. Apart from that, Polkadot seems to have some 'spending preferences', unexpectedly allocating sky-high 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." Decrypt, Defiant, Cryptoslate and other crypto media outlets are packaged into PR services and billed by a governance entity called Community Project, which charges a 10% management fee and costs about $150,000 per PR campaign.

Some PR promotions directly allocate funds to the Community Project, but with specific requirements: arranging 75 articles and distributing content through 18 different channels, consuming $100,000. Also, there is a Chainwire media PR cost of $150,000 without specifying the service content.

In addition, Polkadot seems to have a special preference for logo display and has purchased exclusive logo dynamic display services on two major cryptocurrency price websites, Coingecko and Coinmarketcap. It cost $50,000 to purchase a six-month exclusive logo dynamic display on Coingecko, while the cost charged by Coinmarketcap is relatively higher. The logo dynamic display and management fees for two years amount to nearly $480,000, which is twice the average cost of Coingecko.

Although the change has been noticed, the rise in the attractiveness of DOT itself is minimal. Two months ago, someone asked on X, "Why is Polkadot's token logo the only one that turns into a pink flame on Coinmarketcap?" The first comment in the comment section was: "So what? Would you buy coins for a GIF?"

In the podcast video, the logo display is also a big deal, with two podcast programs spending $110,000 on only 8 episodes of content placement.

In addition to these 'conventional delivery channels', we also saw some puzzling deliveries in the Polkadot budget bill. For example, through the PR intermediary company Future, the Polkadot brand awareness was increased on the PC hardware website Tom's Hardware, costing $20,000 at a time.

There is another budget for printing the Impreza logo on private jets in Europe, and the planned promotional expenses of $180,000 are for "continuous logo exposure on a fleet of private jets in Europe for 6 months", with the reason given as "highly targeted brand promotion and awareness enhancement activities for high-spending groups".....

Compared to that, advertising screens at Singapore and Zurich airports seem to be more reliable, but the cost is still high. A single advertising screen in a terminal at Singapore airport costs 189,000 dollars.

This kind of inflated offer 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 the Ethereum Montenegro EDCON is also around $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 most of the recipients are priced in USD, in the case of price fluctuations, there is often an item in Polkadot's budget bill that is 'price difference compensation,' and this compensation is often $100,000.

KOL wash trading, have you considered this business?

Is Polkadot really stupid? It's an IQ tax that anyone with a discerning eye can see, but Polkadot keeps throwing money with its eyes closed again and again. Odaily mentioned in yesterday's report that the Polkadot community believes "the biggest value of Polkadot lies in its treasury", in fact, the crypto world is not lacking in its project operation and marketing.

Regarding the sky-high budget for Polkadot, there is no shortage of claims in the community that 'large investors are emptying the treasury'. Although unconfirmed, there have indeed been cases of arbitrage using loopholes in the treasury in decentralized governance projects and organizations. Previously, during the investigation of the Nouns community, it was learned that some community members used means to please the DAO initiators and Nouns major holders, and successfully passed their own promotion proposals with high asking prices but low cost and benefits. In the RookDAO case, the arbitrageurs directly controlled the protocol treasury by purchasing a large amount of tokens, sparking a battle for crypto world supremacy.

Related Readings:

1. "All DAO organizations, either not forking, or on the way to forking"

2. "Rook dissolves and pumps four times, how does the 'DAO Predator' hunt the DAO treasury?"

"KOL and foundations or individual teams may have drawer agreements, which is actually a situation that existed in the previous cycle," a person familiar with the encryption market promotion told BlockBeats. Although large projects like Polkadot usually follow public governance, many small project foundations have only a few people, and many decisions are directly made by the CEO, which gives decision makers many opportunities to take advantage of.

However, in the case of Polkadot, it seems a bit 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 from being 'foolish' in governance, as the current crypto world is indeed filled with IQ taxes and airdrop hunters centered around Twitter marketing.

For example, the KOL account mentioned above, there are almost no flaws in terms of the number of fans, tweet readings, and interaction. If it weren't for the loopholes in the watchlist, it would be almost impossible for ordinary people to notice that this is a batch of fake accounts. 'These accounts are generally written in batches by the studio, and then batched out, 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 even more difficult to discern the authenticity and quality of KOL promotional content.

However, many times, small projects choose to outsource to studios 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 refuse to do it, or they quote high prices randomly, making it difficult to reach an agreement. In addition, the communication between KOLs is often very fast. When a team reaches an agreement with one KOL, other KOLs will quickly become aware of it and immediately demand the same price. However, to have an effective TGE, the project must engage at least 100 to 150 KOLs. At this time, if the project lacks strength, it is easy to collapse, so outsourcing becomes the next best choice.

However, there are ways to go about it. Jesse (@Jessethecook 69), 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, which ultimately resulted in effective organic dissemination. In addition, one can manually screen and supervise the studio's promotional work. The most effective method is to check the followers list and comments section of KOLs to see if they are predominantly bots. "Alternatively, you can find reputable agencies, such as some mainstream media and top KOLs, who have their own KOL matrix. They usually have transparent pricing and won't deceive you," Jesse said.

However, being able to distinguish fake accounts is one thing, and being willing to do so is another. Informed sources told BlockBeats that from KOL promotion to foundation market reports, it is a feedback mechanism responsible to the upper level. After the PR company or KOL studio receives the task, they need to submit a good promotion data report to the project party or foundation. The project party then needs to prove to VC that they are still 'working'. This results in the fact that whether the promotion is truly effective is not truly included in the accountability system. In some cases, after the project foundation recruits a head of the Asia-Pacific market, the head may once again outsource the promotion work to a studio to produce a false report. 'Sometimes, the head even finds fake accounts to produce data reports that look better and cheaper than the real ones, so if the head finds a KOL who is seriously promoting, they may still have to explain to the foundation why the data is not as good as others'.

"A lot of project parties don't want to do things, they just want to get money out of the treasury, I know some projects, until they are warned by the exchange to be taken off the shelves, they don't start to look for publicity and distribution to do things, but in this case, they don't care about the actual benefits, after all, serious spending, you can't check it," a practitioner who understands the situation told BlockBeats. In fact, in some cases, KOLs are just a tool for the team to hollow out the treasury, and according to insiders' feedback, sometimes the indicators for arranging KOLs may come directly from investment VCs, "Many times, exchanges, retail investors and even fund LPs are wronged, and of course, LPs don't care about losing that money."

Whether it's the sky-high FDV valuation of VC, or the exorbitant promotion budget of the project party, many problems that have always existed in the encryption market have erupted one after another in the recent downturn. Jesse told BlockBeats that many times the responsibility does not lie with individuals, 'Not everyone wants to do evil, it's just that the system is too silly to give everyone the incentive for arbitrage.' Obviously, the market is entering an adjustment period, which may not be a bad thing. Without breaking, there is no standing, perhaps 'squeezing the abscess' is a necessary step before opening a new bull market.