Does Payment for Use Hinder Crypto's Search for a Use Case?

• Polygon Labs and DraftKings: Unveiling the Costly Secrets of Major Crypto Deals
• DraftKings' Performance as a Validator
• Polygon's Announcement of the Collaboration
• Polygon's Deal with DraftKings: The Hidden Costs
• Implications for Polygon's Ecosystem
• Repercussions of Polygon's Practices
• What's Next for Crypto?

Polygon Labs and DraftKings: Unveiling the Costly Secrets of Major Crypto Deals

Polygon$0.967 -3.65% Labs' undisclosed multi-million MATIC token payment to DraftKings, a digital sports entertainment company, has come to light. This move was intended to enlist DraftKings as one of the 100 validators on Polygon's Ethereum$2,315 -2.42%-scalable protocol. The transactions, though clandestine, were made discernible by on-chain evidence.

DraftKings' Performance as a Validator

Regrettably, DraftKings did not fulfill its responsibilities as a validator. Even with financial and technical support from Polygon, including some special privileges far above the standard norm, the company was dismissed from the network last month. These privileges included taking 100% commission from delegators, a stark contrast to the typical 5%-10% rate.

Polygon's Announcement of the Collaboration

Polygon publicized the partnership as an important adoption milestone at the start of 2022. The firm highlighted it as the first instance of a significant publicly-traded company actively participating in blockchain governance.

Polygon's Deal with DraftKings: The Hidden Costs

It's not unusual for Web3 companies to financially incentivize established brands, celebrities, and influencers to promote their crypto protocols. However, characterizing such transactions as mainstream adoption is an overstatement and undermines the inherent values of crypto.

Implications for Polygon's Ecosystem

Polygon's special arrangements often come with hidden costs. DraftKings' earnings adversely impacted the entire Polygon ecosystem. With the network issuing a finite amount of MATIC rewards to stakers annually, DraftKings' newly delegated tokens from the Foundation, making up at least 80% of the total, led to a dilution in rewards for other stakers.

Repercussions of Polygon's Practices

Polygon's undisclosed allocation to DraftKings, coupled with the validator's dependence on Polygon, contradicted the blockchain company's portrayal of equality among validators.

While it's unclear whether Polygon erred in subsidizing DraftKings' use of the network, the problem lies in the false image that major brands are willingly using and choosing crypto. This misrepresentation could end up costing the industry more resources in the long run.

What's Next for Crypto?

If usage is artificially induced, the true needs and preferences of people and companies regarding crypto may remain obscured. As such, the crypto industry should strive for transparency and authentic engagements to truly understand what its users desire and need.

Edited by Jonathan Stoker