Polygon

Introducing POL as Polygon’s 2.0 Next-Generation Token

Mirella Guglielmi

Published

August 29, 2024

Key points:

• New token: POL is a new native PoS token that will encompass all MATIC core functionalities
• MATIC token: Legacy functions for MATIC and will maintain full backward compatibility
• Staked tokens will automatically be converted from MATIC into POL
• Initial supply of 10 billion POL
• Upon completing the original MATIC validator rewards schedule in 2025, a new yearly emission of 2% POL kicks in
  • 1% for validator rewards
  • 1% for the Community Treasury

Polygon Ecosystem Token: POL

MATIC, the native cryptocurrency of the Polygon PoS network, is being transitioned to the POL token to power the new Polygon 2.0 ecosystem. MATIC currently handles transaction fees, smart contract interactions and staking; all functionalities will be migrated into POL, turning it into the next-generation token which drives the vast zero-knowledge-based L2 chains landscape that Polygon aims to foster.

The shift from MATIC to POL is part of the bold vision for Polygon 2.0; as the new native token, POL is designed to enhance scalability and functionality, power the network’s growth, and ensure better interoperability across all interconnected L2 chains.

As POL replaces MATIC as the native token for gas fees and staking, all MATIC holders should take notice of the transition primarily to assess if they need to take action and understand the required steps. Staying engaged ensures you can make the most of the opportunities that POL introduces within the network.

POL Utilities

The POL token is vital to the Polygon network and offers several important functions:

• Security via staking: Users can stake POL within the network and contribute to its security
• Rewards: Staking rewards are distributed via POL emissions
• Community ownership: POL allows for community ownership and engagement
• Governance: POL provides governance rights, enabling holders to participate in decision-making and influence the ecosystem’s growth.

Migration From MATIC to POL

After many months of dedicated discussions, hard work and code audits that started back in 2023, and a successful rollout on the Amoy testnet earlier in July 2024, POL is ready to become the new native token, set to elevate the Polygon ecosystem to the next level.

Built on ERC20 standard with additional and unique features, POL will power the future Staking Layer, a unique multi-chain coordinator protocol designed to coordinate and secure an unlimited number of users, dApps and chains on Polygon, providing a breakthrough in terms of ecosystem scalability and easy access to web3 infrastructure. The newly introduced Community Treasury will support and spearhead ongoing development on that front. You can read more about it on PIP-18.

Note: The Polygon team is committed to ensuring that all MATIC holders can eventually swap their tokens for POL, locked tokens or vesting contracts holders included; therefore, migration is planned to last over a long period – around 4 years, with flexibility.

POL Staking

The Polygon team has announced that the official migration from MATIC to POL as the native token to the ecosystem will take place on September 4th, 2024.

This upgrade represents a significant advancement for the revamped Polygon protocol architecture, also known as Polygon 2.0.

Below, we outline the essential details and actions users and stakers may need to take:

• MATIC holders on Polygon Proof-of-Stake: No action is required, as POL will replace MATIC as the native gas automatically. Your MATIC will be upgraded to POL without any effort on your part.
• MATIC stakers on Ethereum: No action is required, as POL will replace MATIC as the staking token automatically. Your MATIC will be upgraded to POL without any effort on your part, as stipulated by PIP-42.
• MATIC holders on Ethereum or Polygon zkEVM: Manual migration is required.
  • Tech-savvy folks who understand how to correctly use the migration function on the migration contract, you can access it here.
  • If you’re not technically inclined, you can use a DEX for an easier, more user-friendly process. They might come with their own additional fees.
  • Many dApps might have incorporated the migration contract into their own platforms, providing users an easy-to-navigate UI for the token conversion.
• MATIC holders on Centralized Exchanges: Users will need to review guidelines and instructions provided by their own platform.
• For other circumstances, please check here for more detailed guidance.

Disclaimer : The Polygon team calls attention to the fact that interacting with the migration contract is only advised for advanced users, as the improper use of said contract can result in permanent loss of funds. The Polygon team urge users to not send MATIC directly to the migration smart contract address.

Key points for MATIC Stakers:

• All new staking and unstaking requests will utilize POL as default moving forward
• Staking rewards will be issued in POL from September 4th onwards
• No alteration on staking functions: Reward rates, unbonding periods and staking UI all remain unchanged
• Staked MATIC tokens and unclaimed rewards will be automatically converted into POL
• The migration contract will maintain legacy functions for MATIC; therefore, upon withdrawal, users retain capability to withdraw MATIC

Note: If users prefer not to have their staked MATIC automatically converted into staked POL, they must unstake their MATIC on Ethereum by September 1st, considering there is a 48-hour withdrawal period. We recommend timely action for a successful withdrawal.

POL Supply & Rewards

The initial supply of 10 billion POL is entirely allocated for the token migration and matches the original supply of MATIC. Post-migration, the token distribution will mirror that of MATIC, guaranteeing it is widely distributed from the outset and ensuring a seamless, complete migration.

POL yearly emission introduces a new rate of 2% allocated equally between staking rewards and a community treasury.

The POL validator rewards schedule will first align with the genesis MATIC Validator Rewards Schedule established in 2020, as outlined here in PIP-26. The current MATIC rewards schedule is set to last until June 2025 – MATIC will continue to be paid out in gradually decreasing amounts to fulfill the network’s original commitments.

After completion, validator rewards will transition to Polygon 2.0’s new schedule, introducing a 1% annual compounding POL emissions.

The remaining 1% of POL emissions will support the ecosystem’s growth through the Community Treasury fund, whose main goal is to foster development and innovation within the protocol.

Both incentives will adhere to a fixed 1% rate each for the first 10 years; the community can decrease the rate via governance but it cannot ever be increased beyond 1%. You can read more about the emissions strategy here.

Conclusion

Here at Figment, we are excited to continue supporting Polygon throughout its new horizons and look forward to the benefits it will bring to its broad community and chain operators. We will remain active as a performant validator going forward and are committed to Polygon in the next stage of its journey. We shall offer all the necessary support to our stakers, remain available for any questions you may have, and assist you every step of the way.