Polygon Transitions from MATIC to POL Token: Enhancing Flexibility and Ecosystem Growth

Polygon’s Transition from MATIC to POL Token: A New Era of Flexibility

Polygon, the prominent layer-2 network built on the Ethereum blockchain, is set to implement a significant upgrade on Wednesday, which involves the replacement of its long-standing MATIC token with a new POL token. This transition is expected to enhance the network’s flexibility regarding the issuance of new token supply. Given the widespread adoption of the MATIC token, this planned change is likely to attract considerable attention, especially since it ranks as the 13th largest cryptocurrency by market capitalization in the CoinDesk 20 index, valued at approximately $3.8 billion. For many users, the migration process will occur automatically, easing the transition.

This token swap is part of a comprehensive overhaul outlined last year in Polygon’s “Polygon 2.0” roadmap. The initiative aims to establish POL as the native token for its primary chain, the Polygon PoS (Proof of Stake) network, and will eventually extend to other chains within Polygon’s ecosystem.

As per Polygon’s announcement, in the initial phase of the migration, “POL will replace MATIC as the native gas and staking token for the Polygon PoS network.” Following this phase, POL is set to play a crucial role in the AggLayer, a pivotal component of the roadmap designed to aggregate various affiliated blockchains that utilize Polygon’s technology.

Moreover, the Polygon community has proposed that “POL will support broader roles in the Polygon staking hub, which is scheduled for release in 2025.” These roles include tasks such as block generation, zero-knowledge proof generation, and participation in Data Availability Committees (DACs).

Tokenomics Changes and Emission Rates

The migration from MATIC to POL will also introduce notable changes to the tokenomics. Polygon has indicated that the new token will feature an annual emission rate of 2%, with a portion of the total supply allocated to validators on the Polygon PoS for rewards, while the remainder will be directed to the community treasury. This treasury is envisioned as a self-sustaining ecosystem fund aimed at fostering community-driven activities.

Marc Boiron, CEO of Polygon Labs, elaborated on the necessity of the upgrade from a technical standpoint, stating, “The primary reason for this upgrade is that the MATIC upgrade keys were intentionally burned years ago. This effectively means that we can’t make any modifications to that token.” He emphasized that the introduction of emissions through POL is essential for community growth and engagement, enabling the Polygon ecosystem to flourish.

Boiron further explained, “By introducing emissions, we aim to facilitate a grants program as part of the community treasury, granting the community some level of control over the funds to foster ecosystem growth.” He also highlighted the importance of incentivizing decentralization within new chains that emerge, stating, “As these chains evolve, they will seek to decentralize. Rather than relying solely on a centralized sequencer, they will need to encourage participation from a decentralized group or prover. With the POL emissions, these new networks can leverage tokens to promote decentralization, allowing POL holders to benefit from fees generated by the network.”

Read more: Polygon Sets September Date for Migration to POL Token from MATIC