Polygon 2.0 (POL): Transitioning from MATIC to POL
Over the years of the Ethereum (ETH) blockchain's existence, numerous Layer 2 projects trying to address the network's cost and speed inefficiencies have been introduced. Among these projects, Polygon (POL) stands out as one of the most popular and influential.
The Polygon ecosystem is a set of mostly Layer 2 technologies that allow users to conduct Ethereum transactions in a more cost-effective and scalable way than using the blockchain's Layer 1 directly. Founded in 2017 as Matic Network (MATIC), the project rebranded to Polygon in early 2021 while still keeping the MATIC token as its native cryptocurrency.
In September 2024, the Polygon project completed a pivotal native token migration — from MATIC to the new POL crypto — as part of its Polygon 2.0 initiative. The transition to the new Polygon ecosystem token, POL, isn't just a name change: the new cryptocurrency brings functional and security improvements and extensions that will help the Polygon project in its quest to become the leading Ethereum-linked Layer 2 ecosystem.
Key Takeaways:
While Polygon has long been the leading Layer 2 project, newer and more advanced projects have resulted in the need for a major overhaul of the Polygon ecosystem.
Polygon 2.0 is smartly designed with next-level enhancements to enhance scalability and liquidity, solidifying its continued status as the leading Layer 2 project on the Ethereum blockchain.
The project's new native token, POL, is available on Bybit as a swap pair on the Spot market and as a USDT-based Perpetual futures contract.
From MATIC to POL
Polygon started out in 2017 as a proposed Layer 2 solution to address the cost and speed inefficiencies of Ethereum. The project was founded by a group of technology entrepreneurs and blockchain enthusiasts — Jaynti Kanani, Sandeep Nailwal, Anurag Arjun and Mihailo Bjelic. From 2017 to 2020 the project team was involved in developing and promoting its Layer solution, based on a proof of stake (PoS) sidechain anchored to Ethereum. The project conducted an initial coin offering (ICO) for its original native token, MATIC, in April 2019.
In May 2020, the Polygon sidechain (then named Matic Network) had its official mainnet launch. The MATIC token was originally issued on Ethereum as an ERC-20 asset, and could be bridged to Polygon PoS. It had three primary functions: transaction fee payments, governance and staking. The last function, however, was used exclusively via the Ethereum blockchain — i.e., MATIC could only be staked on Ethereum, and not directly on Polygon PoS. In essence, this limitation meant that MATIC would serve mainly as a gas fee token on Polygon, with some additional governance functionality.
In terms of its tokenomics, MATIC was designed as a supply-capped token. Its total and maximum supply were set at 10 billion.
Polygon's ecosystem of products and Layer 2 solutions grew following the PoS chain's introduction (more on that below). The network’s fragmentation, along with the limitations of MATIC's functionality, prompted active research and development by the project team.
In June 2023, the project announced plans for Polygon 2.0 — a new iteration of the platform that would improve its scalability, staking functionality, security and cross-platform interoperability. A month later, plans for the new POL token to replace MATIC were unveiled as well. POL is an integral part of the overall Polygon 2.0 vision, and is designed to drastically improve and expand MATIC's functionality.
The new token was issued on Ethereum in October 2023 with the intent to completely replace MATIC in the future. On Sep 4, 2024, Polygon officially transitioned to POL, with all of MATIC’s functions now carried out by the new token. Following the big switch, MATIC holders can still convert their tokens to POL on a 1:1 basis, using the migration portal provided by the project.
What Is Polygon 2.0?
Polygon 2.0 is the next generation of the Layer 2 Polygon network, which seeks to create unlimited scalability and unification of information exchange via its Value Layer.
Polygon 2.0 is a newly proposed protocol that combines all of Polygon's current protocols with zero-knowledge (ZK) technology to produce a Value Layer, which enables seamless use of the Polygon network and expands Ethereum to an internet scale.
Among the improvements introduced in Polygon 2.0 are enhanced decentralization in community governance, a token upgrade, multi-layered network architecture and a ZK ecosystem. These advancements will enable the network to securely support an unlimited number of chains, making user interaction with the entire Polygon ecosystem as smooth as interaction with a single chain.
The Journey From Polygon to Polygon 2.0
Founded as Matic Network in 2017, Polygon was created to act as a sidechain that helps scale Ethereum. The project later rebranded as Polygon (while retaining the MATIC token). Despite the rebranding and technological upgrades, such as the shift from plasma chains to ZK-rollups, Polygon remains a fragmented system that faces challenges in liquidity and user experience, due to the presence of multiple public chains like Polygon PoS and Polygon zkEVM alongside the Polygon Supernet app-specific chains.
To unify the ecosystem, Polygon 2.0 has been proposed as a way to merge its public chains with its Supernet chains. The plan encompasses improvements in key areas like tokenomics and protocol architecture. These enhancements will collaboratively facilitate cross-chain interactions, offering users the advantages of utilizing different chains while enjoying a seamless experience akin to a single chain.
Polygon Protocol Upgrades
Upgrades to Polygon will be done in stages, starting from the upgrade of the Polygon PoS chain. As of September 2024, the complete transition to Polygon 2.0 is still in progress, with most of the protocol upgrades in active development or test phases.
Polygon PoS Upgrade to zkEVM Validium
The project's main network, the Polygon PoS sidechain, will be upgraded to ZK Validium, a Layer 2 solution in which off-chain data availability is used to validate transactions more efficiently. Polygon's Validium will leverage ZK proofs for transaction validation. The architectural change from a sidechain to Validium should improve the platform's processing capacity and scalability. Testing of the zkEVM Validium chain was held from November 2023 to January 2024.
Polygon zkEVM Upgrade From Type 3 to Type 2
Besides the Polygon PoS chain, another major Layer 2 solution within the project's ecosystem is zkEVM, a ZK-based rollup platform designed to drastically improve the cost and scalability of Ethereum transactions. While Polygon PoS, a sidechain, has its own functional network that can process transactions independently from Ethereum, zkEVM relies heavily on the underlying Ethereum chain and is more integrated with it.
Currently, zkEVM operates as a Type-3 Ethereum virtual machine (EVM)–compatible platform that is almost EVM equivalent. The plan is to transition it to a Type 2 system, which offers higher compatibility with Ethereum and features full EVM equivalence.
Polygon CDK Upgrade
In Q3 2023, Polygon released the Polygon Chain Development Kit (CDK), a development framework for designing and launching customizable ZK-based Layer 2 chains. In early 2024, Polygon CDK was upgraded to support functionality that lets any EVM-compatible chain function as a ZK Layer 2 network. This upgrade also makes it possible for chains developed using the CDK to join the platform's Aggregation Layer (AggLayer), a critical part of the Polygon 2.0 architecture.
Polygon's AggLayer is envisioned to act as a protocol that unifies multiple blockchains, providing the same integrated user interface and creating a virtual single-chain-like experience. Networks in the AggLayer will benefit from cross-chain compatibility and optimized asset transfers between them.
Polygon Miden Upgrades
Polygon Miden is a ZK technology–based Layer 2 rollup solution based on the Miden Virtual Machine (MVM). Written in the Rust programming language, Miden VM offers certain advantages over EVM, such as enhanced throughput and privacy of transacting on Ethereum. It’ss designed specifically for developers who wish to integrate privacy into their decentralized apps (DApps).
The Polygon Miden platform's initial testnet was released in early 2024, with the Miden Alpha Testnet v2 launched in June 2024. This was quickly followed by the July 2024 release of the third version. As of the time of this writing in late September 2024, Polygon Miden is in its fourth Testnet state.
Merge Into Polygon 2.0
Polygon 2.0 architecture: When the zkEVM Validium L2 chain is complete, Polygon 2.0 will consist of four protocol layers: the Staking Layer, AggLayer, Execution Layer and Proving Layer.
The Staking Layer will allow POL to be staked directly on Polygon's ecosystem of chains. As noted earlier, Polygon's current staking function only works directly on the Ethereum chain, not on Polygon PoS itself.
The AggLayer will serve as an ecosystem of closely integrated Polygon chains, greatly simplifying cross-chain transaction data processing and interoperability.
The Execution Layer will help Polygon chains to produce sequenced batches of transaction blocks.
The Proving Layer will be responsible for generating ZK proofs for all the chains within the Polygon 2.0 ecosystem.
Polygon network's MATIC token upgrade: On Sep 4, 2024, the MATIC token was upgraded to POL, with all of its key functionalities — gas fee payments, staking and governance — now carried out by the new POL cryptocurrency.
Polygon 2.0 governance structure: To tie the whole of Polygon 2.0 together, the Polygon community will be given complete control over the entire Polygon ecosystem via a three-pillar governance system: Protocol Governance, System Smart Contract Governance and Community Treasury Governance. The compartmentalization created by the three pillars will make governance more efficient and scalable.
What Does Polygon 2.0 Aim to Achieve?
The Polygon 2.0 updates are designed to consolidate all of the current Polygon protocols for unlimited scalability and unified liquidity, while also offering the benefits available via Ethereum. Two main objectives will be accomplished: Users’ privacy and transaction costs will be improved by storing validated transactions on Layer 1 Ethereum and actual data on Layer 2 Polygon. In addition, multiple Polygon chains will be supported, with no limit on cross-chain interactions. This will give users a more robust experience that will still seem like using a single chain.
Key Features of Polygon 2.0
Each of the four layers of the new Polygon 2.0 ecosystem is responsible for a specific process.
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Source: Polygon.technology
Staking Layer: This proof of stake (PoS) layer utilizes a decentralized validator pool and an updated restaking model to support validation across multiple Polygon chains.
AggLayer (Previously Interop Layer): Facilitates cross-chain messaging so that users experience the benefits of functioning on a single chain while utilizing several chains, such as the capacity to transfer native Ethereum assets across chains.
Execution Layer: Allows supported chains to create sequenced transaction batches.
Proving Layer: Uses the ZK proving protocol to produce external and internal proofs of transactions for all chains.
Collectively, these core layers establish Polygon 2.0 as the Value Layer.
The POL Token
The POL token is now fully operational, and carries out the three main functions previously supported by MATIC (governance, gas fee payments and staking for the Polygon PoS chain). Holders of POL can participate in votes on the future direction of the protocol.
For the future, governance functionalities and the involvement of POL holders in on-platform decision-making will further expand to cover three key areas — protocol governance, smart contract details governance and community treasury allocations. POL will also be used as a unified gas fee payment asset across all chains under the Polygon Supernet structure.
POL Tokenomics
Unlike MATIC, which had a hard supply cap of 10 billion, POL has no maximum supply limitation. Its initial total supply was specified at 10 billion, exactly the same number as the supply of MATIC. However, as it includes an annual 2% emissions rate for a period of 10 years, its supply is expected to grow within this period. As of late September 2024, POL's total supply already stands at around 10.26 billion, while its circulating supply is approximately 7.27 billion.
The emissions will be split equally between validator rewards (to incentivize long-term staking, which will help secure and scale the Polygon network) and allocation for the community treasury (to spur innovation and research). The emissions are adjustable and can be changed via community governance.
Where to Buy POL
You can buy the POL token on Bybit’s Spot market, and as a Perpetual contract with USDT via Bybit’s Derivatives market. The Perp contract allows you to trade POL with up to 75x leverage.
Polygon (POL) Price Prediction
As of Sep 27, 2024, the POL token is trading at $0.4299 (66.6% lower than its all-time high of $1.29 on Mar 13, 2024, and 24.6% higher than its all-time low of $0.345 on Aug 5, 2024).
Long-term price forecasts for POL are generally bullish. PricePrediction expects the token to trade at $0.78 in 2025 and $5.33 in 2030, while DigitalCoinPrice predicts a maximum price of $1.08 in 2025 and $3.21 in 2030.
Is POL a Good Investment?
While several other L2 projects are undergoing similar expansion — such as the Optimism network's Superchain, which integrates all of its OP Mainnet with other L2s to enhance scalability — Polygon's transition is perhaps the most notable development in this space.
You might consider investing in the POL token based on Polygon's standing as one of the leaders in the Layer 2 arena. Additionally, the finalization of the move to Polygon 2.0 is also expected to boost the token's position in the future.
While investing in POL could be profitable, this is not financial advice. Always complete your own thorough, independent research before making investment decisions.
Closing Thoughts
The Polygon ecosystem has long been a leading Layer 2 project, but advancements introduced in other newer projects have resulted in the need for significant improvements. Polygon Labs, developers and other contributors have produced Polygon 2.0 in response to this need. When Polygon 2.0 is completely functional in its final state, its project will hope to lay claim to the title of undisputed leader among Ethereum Layer 2 environments.
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