Inside DraftKings’ Discreet Dealings with Polygon
Allegedly, Polygon Labs engaged in a financial arrangement with a publicly-traded sports betting firm involving cryptocurrency.
This collaboration saw the firm managing one of Polygon’s network validators, an association kept discreet from the broader community.
Under the guise of a regular validator, DraftKings, in early 2022, was publicly acclaimed as a significant addition to Polygon’s validator network. However, undisclosed to the public, Polygon had a distinct pact with DraftKings, involving substantial payments in MATIC tokens spread over 20 months.
Investigations conducted by CoinDesk brought to light that DraftKings received a hefty sum of MATIC tokens at the commencement of the partnership in late 2021. Additional tokens were funneled through a specialized staking relationship.
While partnerships between blockchain companies and high-profile entities are customary, this exclusive deal wasn’t extended to most of Polygon’s validators, unveiling a significant inequality from Polygon’s claims of equal community participation by DraftKings.
Originally, Polygon reportedly allocated 10 million MATIC for DraftKings, but eventually transferred a whopping 60 million tokens. This allowed DraftKings to withdraw more than 3 million tokens, valued approximately at $2 million based on current rates. Without Polygon’s contribution, DraftKings’ earnings would have drastically plummeted, showcasing its heavy reliance on Polygon rather than a true contributing member.
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Additionally, the introduction of previously unstaked tokens notably reduced rewards available to other validators. DraftKings also implemented an unprecedented 100% commission, a stark contrast to the typical 5%-10% charged by other validators.
Despite these privileges, DraftKings failed to fulfill its duties as a Polygon validator, receiving warnings in September and October. Eventually, on October 19, it was ousted from the network, and its 60 million MATIC tokens were seamlessly transferred to another validator without any fees.
A representative from DraftKings has mentioned initiatives to reinstate their validator node, asserting adherence to standard procedures without any impact on their clientele.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
