Blockchain Data Reveals Preferential Treatment
Blockchain data indicates that the crypto project Polygon gave DraftKings preferential treatment, portraying it as an “equal” member of the validator community while secretly engaging in a controversial financial arrangement.
DraftKings as a Network Validator for Polygon
In early 2022, sports-betting company DraftKings publicly announced its role as a network validator for the Polygon blockchain. However, on-chain data reveals that Polygon provided DraftKings with millions of MATIC tokens to enhance its validator’s profitability, a fact undisclosed to the public.
Validator’s Performance and Removal from the Network
Despite receiving compensation, DraftKings failed to maintain its validator’s performance and was eventually removed from the network in the preceding month.
Financial Setup Exposed
Polygon’s undisclosed financial setup with DraftKings was revealed through an examination of on-chain records related to the validator program. Former employees and validator operators familiar with Polygon’s staking ecosystem were also interviewed for insights.
Financial Ties and Delegation of Tokens
On-chain data shows that DraftKings received millions of dollars in crypto directly from Polygon in October 2021. DraftKings then earned additional millions through a special staking relationship, a detail neither company disclosed to the public.
- Representatives for Polygon and DraftKings declined to discuss the financing details due to confidentiality agreements.
- DraftKings’ validator charged a 100% commission, deviating from the typical 5%-10% charged by other validators on the Polygon network.
Delegated Tokens and Special Treatment
Most Polygon validators charge a commission on rewards earned from delegated tokens. However, DraftKings’ validator charged a 100% commission, impacting small-time delegators who received no MATIC tokens as a reward.
Unusual Allocation of Tokens
Polygon Foundation delegated a significant amount of MATIC tokens to DraftKings, with an undisclosed allocation that deviated from typical industry practices. The size of the stake and the 100% commission arrangement were highly unusual.
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