July 30, 2022

An Update on Distribution of Staking Token Rewards

In 2019, as part of the Matic Network (now, Polygon) token distribution, 12% of the MATIC token’s total supply was allocated for staking rewards to be released over a five-year period. Now that two years have passed, a report is being shared on the progress seen in the Polygon PoS network so far and an update on further decentralization expected ahead.

The 1.2 billion MATIC in staking rewards helped jump-start the Polygon PoS network. In the early days, it further incentivized validators until the network began to generate significant revenue from transaction fees. It was also invaluable in attracting enough participants into the ecosystem to further decentralize it.

Below is an update to the community on a few items:

The actual Year 2 rewards paid out were inadvertently slightly higher than proposed at the time the token was initially distributed.
To make up for that, Year 3 rewards were recently reduced but resulted in an over-correction.
Year 3 rewards will be adjusted so as to address the exact amount of the overshoot in Year 2.

The table below reflects the updated distribution of staking rewards after the changes that are expected to be made within the next few days occur. The timelock transaction for the said change has been initiated, and it requires to wait for 48 hours to execute it.

In the three years since the staking reward system was put in place, Polygon PoS has experienced explosive growth in adoption with over 19,000 decentralized apps running on the network without the need for Polygon direct support. Polygon is now home to some of the biggest Web3 projects such as Aave, Uniswap, OpenSea and well-known enterprises, including Meta, Stripe and Adobe. Underpinning it all is an ecosystem of validators who ensure the chain's stability by verifying the authenticity and validity of transactions.

While the number of validator nodes is capped at 100, anyone can take part in securing the network by delegating. There are now a total of 15,476 and counting delegators which choose validators to stake on their behalf. More than 2.6 billion MATIC, worth over $2.5 billion, is currently (as of July 30, 2022) locked up in the Polygon Validator ecosystem. More than 593 million MATIC of total rewards has been distributed among validators, or over $560 million. You can visit the Polygon validator dashboard for more insights.

In March, DraftKings joined the ecosystem marking the latest example of a major publicly-traded firm that has taken an active role in blockchain governance. Nodes operated by companies related to Polygon’s initial development team now account for less than half of a percent of the total MATIC tokens staked, reflecting the decentralization of decision making and control of the network that continues to increase.

Decentralization, a hallmark of blockchain technology, has always been part of the initial development team’s animating philosophy and its roadmap for the Polygon PoS network. In October, Polygon DAO was created with a $1 million pledge and a mission to develop processes and conduct research to act as a community-led ecosystem growth facilitator. The Polygon Governance Team was formed late last year to further increase the decentralization of the Polygon ecosystem by use of off-chain and on-chain governance frameworks.

The validator community is currently also engaged in discussions around a formalized mechanism for the replacement of underperforming validators, which would put the Polygon PoS network one step closer to becoming fully permissionless. We expect to see even more progress towards decentralization of the Polygon PoS network will be made over the next 12 to 18 months.

Join the governance conversation on our forum and tune in to our blog for the latest on the Polygon ecosystem.

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