Polygon Advocates For MATIC’s Upgrade To Unlock Multipurpose Functionality

Jimmy Aki
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Polygon has proposed to enhance its $MATIC token, transforming it into a versatile token capable of validating multiple chains.

The proposed technical upgrade is currently awaiting approval from the Polygon community.

If approved, the upgrade will involve renaming $MATIC to $POL to align with its new role as a multipurpose token.

Polygon Focuses on Interoperability

The expansion of the blockchain ecosystem has revealed a crucial obstacle – the lack of interoperability among different chains, which hinders the realization of its full potential.

To address this, Polygon, a prominent player in developing Ethereum’s Layer-2 solutions, recently proposed to upgrade its renowned $MATIC token as part of the Polygon 2.0 roadmap.

The aim is to transform $MATIC into a versatile token capable of validating multiple blockchain networks, enabling it to meet the evolving demands of the digital era.

However, this innovative proposal to rename the $MATIC token as $POL is subject to approval from the Polygon community.

$POL is being introduced as a third-generation native asset, representing a significant advancement in token functionality. 

According to the announcement, the utility of $POL will encompass all Polygon protocols, including Polygon Validium, zkEVM, and Supernets.

This new concept introduces hyper-productivity, allowing validators to validate multiple chains while chains can assign different roles and corresponding rewards to validators.

These roles include sequencer/validators, aggregators for the interop layer, data availability cluster operators, decentralized provers, and roles associated with governance.

This strategic shift represents an ambitious step toward enhancing the scalability of protocol participants, thereby bolstering the security of numerous Polygon chains.

With the envisioned upgrade, $POL staking could unlock three validator incentive streams, which include protocol rewards, transaction fees, and additional rewards.

To incentivize validators in this multichain ecosystem, there is a proposed emission of 1% for 10 years, after which it will gradually decrease to zero. 

However, the community can extend this tapering period beyond the initial 10 years to prevent a security funding crisis similar to what Bitcoin experienced.

Furthermore, a community growth fund has an additional 1% proposed emission allocation. 

This fund ensures that the Polygon ecosystem remains competitive against new infrastructure tokens launched in the crypto space. 

This is a bid to leverage the unspent treasury of the ecosystem. 

The approach establishes a fair playing field for all existing and emerging protocols. This is because no protocol can sustainably allocate more than 1% of its total supply annually for growth without negatively impacting its tokenomics.

These developments form the foundation of Polygon 2.0, positioning it as the value layer of the internet. 

However, if the community mutually agrees to embrace $POL, $MATIC token holders will experience a token upgrade to $POL at a 1:1 ratio.

Polygon Reveals Polygon 2.0 Architecture

Polygon Labs’ engineering teams presented a proposed architecture for Polygon 2.0 on June 29.

The architecture of Polygon 2.0 consists of multiple protocol layers designed to work together effectively.

The protocol aims to offer unlimited scalability and unified liquidity, aligning with the vision of Polygon as the Value Layer of the Internet.

Polygon 2.0 is a network that comprises zero-knowledge (ZK)-powered Layer 2 chains and is interconnected through a novel cross-chain coordination protocol.

This expanded role encompasses generating zero-knowledge proofs and participating in data availability committees to usher in a new era of versatile blockchain performance.

The network can support many chains, enabling secure and instantaneous cross-chain interactions without requiring additional security or trust assumptions.

While new chains can be continuously added to meet the demand for blockspace, the approach leads to fragmented liquidity and a subpar user experience.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.