Polkadot Marketing Cost Controversy Sparks Claims of Discrimination

Polkadot’s recent spending has ignited a firestorm of debate among stakeholders who fear the project is burning through cash fast. But the outcry has given way to a new controversy as some within the Polkadot community say it’s not just a problem of how much is being spent but also on whom, alleging discrimination.

Victor Ji, co-founder of Manta Network, criticized Polkadot’s ecosystem as "highly toxic” Tuesday, urging Asian founders to consider development work on other platforms. In an interview with Decrypt, Ji said projects based in Asia aren’t getting the same treatment as Western ones applying for Polkadot grants, while also being underrepresented on social media.

“I’m not trying to raise controversial stuff,” he said. “I don’t think we get comparable support, [...] and we aren’t the only ones. I talked to a lot of founders, particularly ones based in China.”

A recent treasury report showed Polkadot, a blockchain network developed by Ethereum co-founder Gavin Wood, spent $37 million on marketing initiatives in the first half of this year—nearly half of its total spend of $87 million so far. Containing around $245 million worth of DOT, the report estimated that the treasury also has two years of runway left at its current spending clip.

“Marketing expenditures, when done responsibly and in a targeted way, are a source of revenue growth,” Katie Butler, a co-founder of Distractive, a marketing agency committed to the Polkadot ecosystem, told Decrypt in a written statement.

“As we mature as an ecosystem, we need more checks and balances to add scrutiny to decision-making and help ensure the community has the information it needs in order to make informed decisions about promotional spend,” she continued.

Access granted

Crypto projects associated with Polkadot’s ecosystem can submit applications to receive funding through grants. Ji said that most of the proposals he’s seen from Asian developers are getting rejected, and that the region has been ignored in a way that’s unsustainable.

To illustrate his point, Ji wrote on Twitter (aka X) about a discrepancy in Polkadot grants given to Western projects versus those located in Asia. However, not every developer attached to the Polkadot space for that region has had the same experience.

In response to Ji, one Twitter user referenced StellaSwap, a popular decentralized exchange built by a Singapore-based firm. In April, a proposal passed granting StellaSwap 1,000,000 DOT (about $6.5 million worth today) from Polkadot’s treasury to grow DeFi activity on the network through pioneering liquidity incentives.

Based on his team’s experience, StellaSwap Labs co-founder Aziz Zainuddin doesn’t feel that discrimination toward Asian founders in Polkadot’s ecosystem exists. The pushback his team’s proposal received felt factual and objective, as opposed to being racially motivated. 

“The scrutiny was very high,” Zainuddin told Decrypt in an interview. “Even though there was a vocal minority, we didn't attribute that to any racial discrimination.”

Still, most ecosystems in crypto lean culturally toward North America and Europe, Zainuddin added. Describing Asians as a minority within the crypto community at large, he said it’s understandable that people would perceive barriers, as a result.

“I can understand why [Ji] might feel like that, but in our case, we certainly didn't,” he said. “There wasn't even any indication of racial prejudice that we got from the grant process.” 

Additionally, an Asian research institute focused on Polkadot’s ecosystem received operational funding in May through a grant of 29,700 DOT (about $193,000). Dubbed the Polkadot Ecology Research Institute, the organization of Chinese builders and researchers was founded in 2019.

Stating that it has supported over 70 Polkadot-related activities, the organization estimated in its application that the Ecology Research Institute has reached around 40,000 people. So far, the project has submitted eight different grants for funds from the Polkadot treasury.

For Ji, a lack of representation on Polkadot’s social media is problematic. Compared to how many Polkadot projects exist in the region, he’s observed “low levels of exposure for Chinese builders” through Polkadot’s official Twitter.

The demographic makeup of a Polkadot Academy event in Hong Kong this March also didn’t sit right with Ji either. Even though the event was based in Asia, he said that less than a quarter of the attendees appeared to be from the region.

The crypto founder said he felt rebuffed at the event when meeting Wood, who didn’t know that Manta had recently launched. “This definitely means something,” he said, describing Manta as one of Polygon’s biggest projects at the time.

Manta Atlantic is known as an execution environment for decentralized applications using zero-proof technology, built using Polkadot’s Substrate framework for so-called parachains. Last September, Manta unveiled Manta Pacific, an Ethereum-based layer-2 scaling network.

Marketing malaise

The marketing spend included in the Polkadot report drew criticism from some community members, who argued the allocations haven’t been a worthy return on investment (Disclosure: Decrypt has produced sponsored content paid for by the Polkadot Community DAO).

However, Yanick Savov, co-founder of NoSpec Consulting and a prominent figure in the Polkadot community, told Decrypt that some of that spent DOT is future-looking.

For example, $9 million of that $37 million figure is tied up in a marketing partnership with Inter Miami FC for the next year and a half. Along those lines, he emphasized that certain allocations are not recurring expenses.

Addressing concerns about how the marketing spend might impact core development, Savov said the treasury is there for the community and token holders to push forward Polkatod’s OpenGov, a decentralized, open governance platform.

Pedro Oliveira, co-founder and CEO of Talent Protocol, highlighted a common challenge in the blockchain space: balancing user acquisition with technological advancement. He warned that high marketing spend can divert resources from core development, potentially slowing innovation.

Oliveira suggested several steps for Polkadot to ensure long-term sustainability, including implementing emergency protocols, empowering a small leadership team, reducing marketing costs, focusing on core technology improvements, and exploring new revenue streams. 

"Polkadot’s community should evaluate the option of transitioning into an open-source public good, maximizing its technological contributions while reducing operational costs," he said.

At the same time, some feel a community can have too much control. James Davies, founder and CPO of Crypto Valley Exchange, argued that instead of a purely democratic process, tighter spending controls were needed to ensure Polkadot’s long-term viability. 

"Devolving some decision-making to a data-driven core team is crucial," he said, adding that transparency and community support are still essential toward Polkadot’s long-term goals.

“The treasury is funded by a combination of transaction fees and normal network operations, so increased usage guarantees that there is a continuous inflow of new funds,” Butler of Distractive stated. “For maturity's sake, we also need to continually introduce checks and balances to improve where funds are spent.”