Polygon has been accused of showing favoritism towards DraftKings by giving them special treatment.
This message was posted on November 30, 2023 at 04:02 AM.
The latest update was on November 30, 2023 at 04:57 in the morning.
In October of 2021, DraftKings (NASDAQ: DKNG) revealed a collaboration with the cryptocurrency Polygon to facilitate the introduction of nonfungible tokens (NFTs) on DraftKings Marketplace.
A picture promoting the partnership between DraftKings and Polygon. It has been claimed that the online currency showed favoritism towards the gaming company. (Source: Polygon Blog)
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When the announcement was made, Polygon, a digital currency built on the Ethereum blockchain, held the 21st spot in terms of market value. However, it has since risen to the 14th position.th
However, a recent article challenges the validity of the DraftKings/Polygon partnership, implying that the Web3 company may have shown favoritism towards the gaming company.
Earlier today, Danny Nelson of CoinDesk reported that Polygon compensated DraftKings with a significant amount of MATIC tokens in exchange for running a validator network. This agreement was established after a joint announcement in March 2022, where the online sportsbook company, based in Boston, revealed its collaboration with Zero Hash to stake their digital assets in order to support the Polygon (MATIC) blockchain network.
According to a statement from the sportsbook operator, DraftKings is improving its working capital and liquidity through its collaboration that involves operating a validator node for Polygon’s governance and network security.
The article from CoinDesk highlighted that Polygon did not reveal their compensation agreement with DraftKings for operating a validator network. Currently, the validator is not functioning, potentially indicating that Polygon incurred losses from their partnership with DraftKings. Neither party provided a statement to CoinDesk regarding this issue.
On-Chain Data Confirm Special DraftKings, Polygon Relationship
In the world of cryptocurrency, on-chain data acts as a digital record that tracks different transactions involving digital assets.
After analyzing the information, CoinDesk verified that beginning in October 2021, DraftKings was given “millions of dollars in cryptocurrency from Polygon” and subsequently made millions more from their staking partnership. Only a small number of Polygon’s validators were given similar advantages.
Polygon also saw advantages from this agreement. In October 2021, when the partnership with DraftKings was revealed, the value of the cryptocurrency was $1.76. However, by December 27, 2021, it had increased to $2.77. As of now, it is trading at 76.22 cents.
Polygon addresses common issues with blockchains, such as expensive gas fees and sluggish transaction speeds, while maintaining a high level of security. The developers of this token compare its multichain approach to similar systems like Polkadot, Cosmos, Avalanche, and others.
The asset aims to surpass its competitors by utilizing Ethereum’s network effects to their fullest potential, while also providing increased strength and security.
DraftKings is distinct from the Polygon community.
A Polygon executive, whose identity remains unknown, informed CoinDesk that DraftKings was not considered an equal member of the community, as blockchain data revealed that the gaming company had received abnormally high compensation for operating the now-defunct validator network.
In a statement made in March 2022, Sandeep Nailwal, co-founder of Polygon, expressed a different viewpoint from the arrangement mentioned.
In the statement, he stated that DraftKings will join the current validators as a valued member of the community.
Unfortunately, this information did not explicitly state that Polygon would be allocating a large number of tokens to DraftKings. This caused further issues for other operators on the Polygon network because the tokens sent to DraftKings were not staked. As a result, the rewards earned by other delegators were decreased. This was reported by CoinDesk.
Polygon recently removed DraftKings from their validator program, however, the two parties still have a relationship involving NFTs. A representative from DraftKings stated that they are currently striving to regain their position as a Polygon validator.
