Polygon Marketing Scandal: Spending Money to Get Listed Companies as Nodes, DraftKings Slacking Off and Kicked Out of Verification Program

CoinDesk has compiled information on the partnership between Polygon and the U.S. publicly traded company and sports betting platform DraftKings. Polygon initially claimed that DraftKings becoming a validator was a "major milestone," but this was merely a false marketing hype created by Polygon at the expense of retail stakers to build mainstream adoption.

Marketing Hype: Publicly Traded Company DraftKings Becomes Polygon Validator

DraftKings signed a strategic partnership agreement with Polygon on October 18, 2021, becoming one of the first corporate validators.

DraftKings will establish validation nodes and potentially contribute to Polygon's governance and network security.

However, undisclosed at the time was that DraftKings received 2.5 million MATIC tokens from Polygon, approximately $3.2 million, and Polygon later entrusted a large amount of tokens to DraftKings for staking.

Note: CoinDesk is uncertain if DraftKings paid for this. Representatives from Polygon and DraftKings declined to discuss transaction details citing confidentiality agreements.

DraftKings Receives Tens of Millions in MATIC Funding, Validator Node Removed for Poor Performance

Throughout most of 2022, DraftKings staked 65 million MATIC tokens, with 60 million (91%) being entrusted by Polygon, and the majority of the remainder being DraftKings' own MATIC, including the 2.5 million MATIC from Polygon and 3 million MATIC earned through staking.

After becoming a node, DraftKings continuously reinvested staking rewards back into staking until November 7 of last year when it stopped reinvesting.

Its validation node operated for almost a year until September of this year when it began showing poor validation performance, and on October 19, Polygon removed DraftKings and allocated the validation vacancy to the exchange Upbit.

Polygon Sacrifices Stakers for the Sake of DraftKings

DraftKings, unlike other nodes, charges a 100% commission on staked tokens, taking all stakers' staking rewards for themselves.

This indicates that Polygon likely initially gifted DraftKings 2.5 million MATIC tokens for marketing purposes and later entrusted the foundation's 60 million MATIC to DraftKings.

Is Polygon sacrificing stakers just to have a publicly traded U.S. company as a Polygon validator?

CoinDesk points out:

DraftKings' profits come at the expense of Polygon stakers. The annual issuance of MATIC staking rewards by Polygon is limited and distributed proportionally to stakers. However, at least 80% of DraftKings' MATIC is directly entrusted by the Polygon Foundation, meaning these tokens were not previously staked, diluting staking rewards that other stakers would have received.