DraftKings, a sports betting company, has joined the Polygon network as a validator

DraftKings, a sportsbook company, joined the Polygon network in early 2022 as a validator. For a year, the company charged 100% of the MATIC staking fees.

Start of cooperation

In March, Polygon Labs announced a "major implementation milestone" for its technology infrastructure by entering into an agreement with DraftKings. As part of the arrangements, the betting platform used one of its network validators, “marking the first time a major public firm has taken an active role in blockchain governance.”

However, at that time, Polygon representatives did not disclose important information - they allocated millions of MATIC tokens to DraftKings for deployment.

According to on-chain data , in October 2021, after concluding another “strategic blockchain agreement,” the project fund sent 2.5 million MATIC to an address associated with the bookmaker.

This is how DraftKings became one of more than 100 Polygon validators. Most of them charged a staking fee of 5-10% of the reward, but the new protocol partner decided to go in a different direction.

Commission manipulation

DraftKings set its validator fees at 100%, meaning a large number of small delegates did not receive a single token as a reward for their blocking.

One regular user, Boris Mann, who provided his coins to the bookmaker, lost a potential profit of $800.

“The whole point was to lock [the tokens] and forget about them,” he explained.

Gradually, the DraftKings validator became one of the largest on the network, and its main delegate was Polygon himself, who blocked a total of 60 million MATIC.

“Funds naturally have huge storages of native tokens on their blockchains. They need to bet on this and diversify assets while taking care of performance and decentralization,” said Eduard Lavidal, co-founder of the Stakin staking platform.

However, it is still unclear how Polygon benefited from this one-sided collaboration.

Shutdown

From November 2022 until the validator shutdown in mid-October 2023, DraftKings withdrew a total of 3.2 million MATIC (~$2.4 million at the time of writing) in rewards. This figure is several times higher than the earnings of other network participants for the same period.

At the same time, the bookmaker actively blocked its own tokens received from commissions. According to validator.info , without the 60 million MATIC provided by Polygon, the company would have received only about $128,000.

The validator was also closed for unknown reasons. Over the summer, he started doing a poor job of verifying transactions, and by September he had already received several strikes from the blockchain.

On October 19, Polygon removed DraftKings from its list of validators and transferred its slot to crypto exchange Upbit. On November 9, the project fund withdrew its delegated tokens and sent them to an anonymous participant with a zero commission.

“We are working with a third party vendor to restore our node to the Polygon network, adhering to standard procedures that all validators must follow. This will not impact our customers,” a DraftKing employee said.

To recap, on November 16, the price of gas on the Polygon network jumped almost 1000% to levels of around 5000 Gwei (~$0.1) as users began actively creating Ordinals-inspired POLS tokens.

Polygon Labs previously revealed the proposed Polygon 2.0 architecture .