Polygon's Secret Deal

30 Nov 2023

DraftKings' Polygon validator
Being a validator on Polygon's network comes with responsibilities. By design, only 100-odd entities – corporations, staking services, crypto exchanges and others – may lend their computing power to the network at once. They do the work of verifying transactions on the platform. The network rewards their efforts by automatically sending them Polygon's crypto, called MATIC. This is the key to the process known as staking.
Validators "stake" MATIC as collateral against their doing honest work. They can earn more MATIC rewards by staking more MATIC tokens. MATIC owners who don't run their own validators can "delegate" their tokens to others, who do. Most Polygon validators charge a 5%-10% commission on the rewards earned from these delegated tokens.
DraftKings' validator was different. It charged a 100% commission, meaning its dozen or so small-time delegators didn't get a single MATIC token as reward.
"The whole point was to set and forget it," said Boris Mann, one such DraftKings delegator, who estimated he missed around $800 because he didn't realize the company took the whole staking reward as commission.
The DraftKings validator grew to be among the Polygon network's largest. Its biggest delegator was Polygon: The project had delegated 60 million MATIC tokens to help DraftKings earn more staking rewards.
Polygon apparently wasn't concerned with letting DraftKings eat its lunch – it seems that was kind of the point.

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