The tech and crypto industry had gone through a chilly winter these past few years, with many companies forced to cut headcounts. But even if in most cases it’s associated with bad news, sometimes reducing staff can also be a blessing in disguise for the project.
This is the case of Parity Technology, the lead development company behind Polkadot, a high-profile Layer-1 blockchain developed by ethereum co-founder Gavin Wood, where the financial restructuring also spurred a deeper move towards decentralization. Amid many cases of decentralization theater, it seems that the financial difficulties forced the ecosystem to start walking the talk.
The layoffs at Parity occurred last October, as it let go about 30% of the staff — mostly from the marketing and business development departments. The stated purpose was to focus all the resources on Polkadot development and decentralize the marketing efforts, handing over their management to the community.
It was perhaps the tough but necessary choice for the ecosystem. Polkadot was losing ground to competition, as many of the original parachain projects — external teams building on the blockchain — had failed to generate significant traction.
A few months after this strategic move, the ecosystem seems to be thriving. The latest stats from Messari show major growth for Polkadot in the last quarter of 2023. The active addresses increased both for parachains (+93%) and the Relay chain (+90%), while communications via the XCM grew by 150%. The ecosystem now counts 2,100 developers, ranking second in all of Web3.
These numbers are reflected by the positive on-chain environment. Now individuals and teams in the community have real access to the Polkadot on-chain Treasury and can develop initiatives to promote and enrich the project. Since the move, around 1,138,990 DOT (around $8M) have been distributed towards projects supporting the ecosystem, while there are many proposals with active voting and participation.
Polkadot had a quite vibrant governance ecosystem even before this move, powered by its on-chain treasury with over 42M DOT ($284M as of writing). This stash is funded by the network’s activity, including portions of transaction fees, staking rewards and other smaller sources. However, some argued that the community wasn’t able to find an efficient use for these funds in previous years, especially when it came to marketing and outreach.
Now, with the new OpenGov system and the renewed focus on decentralization, everything happens in public through the Polkassembly portal, a dedicated forum and dashboard for making new proposals.
With this, Polkadot is well on its way to becoming a community-managed project. It comes in stark contrast to Ethereum, which seems to be going on a path of increasing the minimum amount of Ether needed to stake to 4096 ETH (almost $10M) — which would likely make the network more centralized.
How Polkadot Projects Are Using The Treasury
In addition to marketing, active projects are also using the public treasury to obtain additional funding through dedicated tracks like Medium Spender.
For example, Talisman Wallet obtained a retroactive grant for about $500,000 in DOT in December.
In January, they announced the private beta of their new product, Signet. Signet is a workflow management solution for Web3 organizations, helping teams bring their processes on-chain easily through dedicated tools.
An example of a project that obtained funding through the Medium Spender program is Kilt, an enterprise-focused blockchain. It has recently announced a collaboration with Deloitte to use a logistics solution built on the Kilt blockchain to handle its supply chain. The software is called KYX and it’s a combination of Know Your Customer and Know Your Cargo, allowing companies to verify the authenticity of both shipments and providers.
Another project with a curious Treasury integration is Zeitgeist, a prediction markets provider. It has recently enabled users to bet on the outcome of governance votes on Polkadot, which sometimes can become quite heated. The initiative was done in an effort to increase engagement within the ecosystem, in addition to just having one more fun thing to bet on.
After a tough period, Polkadot transitioned to finally make use of its large resources and well-developed governance mechanism. Whether this will be enough to be once again among the most popular ecosystems to build on remains to be seen — but for now, it certainly looks like it’s heading in the right direction.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Nikolai Kuznetsov
Nikolai Kuznetsov is a financial analyst and professional trader. Based in Israel, he has been trading in multiple markets and educating traders as a teacher and mentor. Nikolai has extensive experience in stock market analysis, investment research and in various assets such as cryptocurrencies, FX, commodities, equities and bonds. In the last decade, Nikolai has devoted his energy and skillset to the crypto market, contributing analysis pieces, trade commentaries and op-eds to publications such as Cointelegraph, Forbes, TheNextWeb, and Investing.com, among others. He also holds a black belt in Brazilian Jiu-Jitsu.
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