The founders and researchers of Polygon, a popular layer 2 scaling solution, have proposed upgrading the network’s native token, MATIC, to POL. The token upgrade aims to create a unified token for all Polygon-based networks, including the main Polygon blockchain, the Polygon zkEVM network, and various supernets. The announcement of the proposal caused a surge in MATIC’s price, which climbed as much as 2.6% to $0.747 within minutes.
According to Polygon, the proposed upgrade would allow network validators to support the operation of multiple chains using a single token. The process of transitioning from MATIC to POL is expected to be straightforward, involving the transfer of MATIC to an upgrade smart contract, which will automatically return an equivalent amount of POL.
To ensure a smooth transition, token holders will be given ample time, with a proposed window of four years or more, if the community supports the upgrade. POL would serve as the token for gas fees on various Polygon chains, and holders would utilize POL for voting on governance proposals for decentralized applications built on Polygon and receiving rewards distributed in POL.
According to Polygon Labs, the technical proposal for the token upgrade positions POL as a hyperproductive third-generation native asset. The project envisions POL as a key tool for coordinating and incentivizing the entire Polygon ecosystem. POL will have an initial supply of 10 billion tokens dedicated to migrating MATIC to POL, with a yearly emission rate of 2% allocated for validator incentives and the community treasury.
The network foresees significant growth potential for POL and predicts a 10-year scenario in which its price could average around $5. Embracing the upgrade could lead to the adoption of up to 25 public chains and over 3,000 supernets within the Polygon ecosystem.
This token upgrade is expected to benefit the Polygon ecosystem, enhancing security, scalability, and support. Also, the proposal aims to reduce friction within the network by eliminating the need for users and developers to hold, stake, or consume different native tokens for network usage.
Polygon addressed any speculation that the recent regulatory challenges faced by MATIC influenced the upgrade proposal. While the U.S. Securities and Exchange Commission (SEC) classified MATIC as a security in its legal actions against Binance and Coinbase, Polygon Labs disputes this classification. It is worth noting that some U.S.-based firms have delisted MATIC in response to the SEC’s classification.
The proposal to upgrade from MATIC to POL represents Polygon’s strategic move to streamline and enhance its ecosystem, facilitating better functionality and furthering its mission to drive the adoption of blockchain technology.