Polygon Accused of Suspicious Flows Involving Its Staking Program

Polygon, a prominent Ethereum-based layer-2 scalability network, has been accused of mismanaging its token allocation and sending large amounts of tokens to Binance.

ChainArgos, a blockchain intelligence firm, recently made these allegations on X. The team behind ChainArgos claimed that they had found evidence of irregularities and discrepancies in Polygon’s token distribution. 

According to ChainArgos, Polygon did not follow its publicly announced token allocation plan, which specified how many tokens would be allocated to different categories such as launchpad sale, staking, foundation and team.

Polygon Staking and Launchpad Programs

Per an official documentation, Polygon has designated 12% of the 10 billion MATIC total supply to support staking rewards during the initial five-year period.

This means 1.2 billion MATIC tokens have been earmarked to serve as incentives for network validators and delegators.

Polygon’s launchpad program enables new projects to leverage the Polygon ecosystem and community for token launches and fundraising. The Polygon team has collaborated with Binance to host launchpad sales for selected projects.

Launchpad sales operate through a lottery system, requiring users to hold a specific amount of BNB and MATIC tokens to participate. The token allocation also has a specific amount for the launched program.

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Alleged Misappropriation

However, in its latest disclosure, ChainArgos claimed it had analyzed the token flows from Polygon’s vesting contract which was designated to handle the token unlocking. It also analyzed the foundation contract, responsible for allocation.

However, ChainArgos found that the vesting contract had uneven and irregular outflows, and the foundation contract had more outflows than expected.

One of the most suspicious findings was that Polygon’s staking contract, which was supposed to receive 800 million tokens from the foundation contract, only received 400 million tokens. 

ChainArgos Alleges Involvement of Binance

Notably, the other 400 million tokens were allegedly sent to an address labeled as Binance 33 on the leading Ethereum blockchain explorer, Etherscan.

ChainArgos also traced the outflows from Binance 33 and found that it had sent 300 million tokens to another address, which also received 467 million tokens from Polygon’s marketing and ecosystem wallet. 

This address then transferred 767 million tokens to wallets belonging to Binance exchange. The ChainArgos team claimed this pattern of outflows suggested that Polygon and Binance were collaborating to sell these tokens on the market.

According to ChainArgos’ estimation, the value of these tokens was around one billion dollars, based on the price range of $1 to $2 per MATIC.

The firm also shared charts and screenshots of its analysis on X, asking Polygon to explain its token allocation and flows.

Polygon has not yet responded to ChainArgos’ allegations, nor has Binance commented on its involvement.

Polygon’s token, MATIC, has been one of the best performing cryptocurrencies in the past year, crossing the $1 price last month. However, it has failed to reclaim the high of $1.56 attained last February.