Polygon Begins Token Swap, in Move to Allow More Issuance

The migration from Polygon's MATIC token to POL will also bring in some tokenomics changes with a new emission rate of 2% annually.

Layer-2 blockchain network Polygon (MATIC) began a planned token swap on Wednesday, switching out its older MATIC token for the new POL token in a move designed to allow for more flexibility on issuance of new supply.

The swap is set to start at 4 a.m. ET (8 a.m. UTC), according to a countdown timer on Polygon's website. The planned switch was originally disclosed more than a year ago, in July 2023.

While the planned switchover is being closely monitored, since the MATIC token is widely held across crypto investor portfolios, the changeover is expected to happen automatically for most users, without any action on their part.

The migration is part of a planned revamp laid out last year in Polygon's “2.0” roadmap, which aims to make POL the native token of its main chain – known as the Polygon PoS chain – and eventually other chains in the ecosystem.

According to Polygon, in the initial phase of the migration, “POL replaces MATIC as the native gas and staking token for the Polygon PoS network. In subsequent phases, POL will serve a crucial role in the AggLayer.” The AggLayer is another element of the roadmap, essentially a system for aggregating affiliated blockchains built using Polygon technology.

There are proposals for POL to support broader roles in the Polygon staking hub – to be released in 2025 – including block generation, zero-knowledge proof generation and participation in Data Availability Committees (DACs).

“This community-driven upgrade comes at a crucial moment when every aspect of Polygon is changing,” a blog post read.

The migration from POL to MATIC will also bring in some tokenomics changes. Polygon said the token will have a new emission rate of 2% annually, where part of the supply goes to validators on Polygon PoS for rewards, and the other part to the community treasury, “a self-sustainable ecosystem fund that can support the above activities.”

“The biggest reason why the upgrade was needed from a technical perspective, is that the MATIC upgrade keys were burned very intentionally years ago. Which basically means that we can't make changes to that token,” said Marc Boiron, CEO of Polygon Labs, in an interview with CoinDesk. “So one of the things that we wanted was to introduce emissions that way. We could use it for the community, we could use it for growth. It was literally impossible to do that otherwise.”

Boiron reiterated that introducing emissions is supposed to help the Polygon community ecosystem by introducing a grants program as part of the community treasury, allowing them “some form of control by the community over the funds so that you can grow the ecosystem.”

“And then the second one is a means for, effectively, validators to receive emissions,” Boiron added. “Effectively, if you think of these new chains that pop up, what's going to happen is that with time, they're going to want to decentralize. And so instead of just having a centralized sequencer, they're going to need to incentivize people to actually run a decentralized group or a decentralized prover. And if they don't have a token, or if they don't want to launch a token yet, how do they do that? Well, effectively, what this does is that a portion of that POL emissions can actually be used to decentralize their network, and then POL holders will then receive fees from that network.”