On September 4, Polygon Labs made another step toward Polygon 2.0 with the transition to the new POL token. What necessitated it and what is new? The ChangeHero team will explain this in this guide.
Key Takeaways
- Polygon 2.0 is the next iteration of this interoperability protocol on Ethereum. It would include a seamless multi-layer architecture to make Ethereum ready to become the value layer of the Internet;
- To make the native token compatible with the planned changes, Polygon is changing it from MATIC to a new one, Polygon Ecosystem Token (POL);
- The MATIC to POL token conversion happened and the conversion started on September 4, 2024. Since then, both tokens coexist but POL is expected to eventually replace MATIC.
What does the Polygon 2.0 upgrade entail?
Polygon network is a Layer 2 (L2) of Ethereum: in other words, a protocol to help process transactions with Ethereum-based assets. It takes computation and validation off the main chain, processes it with its own capabilities, and submits proof of transaction validity to layer one. L2s can employ various scaling methods like sharding or rollups, handling transactions at a fraction of the time and cost it would take on Ethereum itself. Polygon works as a network that unites different scaling solutions and protocols on Ethereum.
In 2023, Polygon developers started working on the so-called AggLayer: a solution for uniform cryptographic security and composability with unified liquidity that does not compromise the sovereignty of individual chains. Its goal is to make the Polygon ecosystem work like a single chain without considerable friction and appropriate scaling capabilities.
In the previous iteration of Polygon, the MATIC token, which remained the same as when it was called Matic Network, sufficed. However, to enable a vision of an aggregated layer of blockchains and, later, such layer of the internet, it had to be updated.
MATIC to POL migration
The MATIC to POL token transition was announced as a part of the Polygon 2.0 upgrade in mid-2023, so to anyone invested in this, it is hardly news at this point. Nevertheless, to clue in those who have only recently learned about it, let’s recap why this step was included in the process.
In the POL whitepaper, it is described as a “third-generation” “hyperproductive token”. The first generation refers to Bitcoin and BTC, “unproductive tokens”, holding which does not inherently yield any rewards. The second generation is Ethereum, particularly its Proof-of-Stake iteration, a “productive asset” that rewards users for useful work performed to secure the chain. What makes the POL token stand apart from them?
In addition to the benefits of productive tokens, hyperproductive ones like POL let validators secure multiple chains and let chains assign multiple roles to validators. They will be able to tap into extra rewards by collecting transaction fees and emissions from more than one chain at once. POL rewards all kinds of useful work: validation, zk-proof generation, data availability committee participation, etc.
From a practical point of view, you would need to get POL to use major Polygon products, stake on Polygon PoS, or if you simply want it in your investment portfolio in the light of the update. This is especially important to consider for MATIC token holders because POL is meant to be its replacement. You can buy Polygon Ecosystem Token directly or convert MATIC on the Polygon Portal (always double-check if you are using the official site).
Do you need to do anything? How to prepare for Polygon 2.0
Is Polygon 2.0 going to be a hard fork? What do the users and MATIC holders need to do? First things first, no urgent action is required but you may want to check whether you need to take any action at all.
MATIC holders are encouraged to convert their tokens to POL. If your MATIC is on Polygon zkEVM or any other chain, withdraw it to Ethereum first. From Ethereum, convert it through the Polygon Portal.
If you held MATIC on the Polygon POS chain, it was converted automatically but if it displays as MATIC in your wallet, you need to update the ticker. For example, on MetaMask, it is a manual action in the token wallet settings.
MATIC on centralized exchanges was converted where supported, making POL trading available from day one. Due to changes made to staking on Polygon, all staked MATIC were converted automatically, including the tokens in liquid staking protocols.
Blockchain developers may need to check whether their deployed smart contracts support POL and adjust them accordingly. At the very least, Polygon 2.0 developers expect them to deprecate the old denomination.
For the time being, there is no deadline for MATIC to POL conversion. However, eventually, it is expected to come to an end. The initial plans for the Polygon Ecosystem token give it four years but the community has the power to put a proposal to stop it at any time.
Polygon Ecosystem Token Price Analysis
What is the POL token price shaping up to be after the upgrade? How did it affect the MATIC token price? Are the two tokens going to compete?
Even a month after the upgrade, MATIC and POL remain almost 1:1 correlated in price but a look at the market capitalization reveals the clear leader. The market cap of the new Polygon Ecosystem Token (orange) has grown to $2.78B, while the total supply of the MATIC token today is evaluated to be a little under $1B (blue).
The Polygon 2.0 is bound to change things up for the Polygon Ecosystem Token price, too. The new tokenomics include a yearly inflation of 2% until 2029 to support the expanding Polygon ecosystem. As a result, a degree of supply dilution in the native token is to be expected. One can only hope the Polygon chain growth rate and significant adoption help outpace it.
How to get the Polygon Ecosystem Token with ChangeHero?
Heads up: the Polygon Ecosystem Token is replacing MATIC on ChangeHero, too! You can get POL tokens by swapping other cryptocurrencies, as always, at the best current rate.
- Choose the currencies on the home page, amounts, and the type of exchange. Provide your POL wallet address in the next step and check the details;
- Double-check the provided information, read and accept the Terms of Use and Privacy Policy;
- Send the cryptocurrency for the swap in a single transaction. In a Fixed Rate transaction, you have 15 minutes before it expires;
- Sit back and relax. Now we are doing all the work: checking the incoming transaction and making the exchange as soon as it arrives;
- As soon as the exchange has been processed, your POL is on its way to your wallet. And so, the transaction is finished!
Don’t worry if anything out of the ordinary happens: drop the support team a line any time, any day in the chat on the website or through the email: [email protected].
Conclusion
Polygon Labs has always said that Polygon will be in development as long as the chains it connects develop. Polygon 2.0 as a whole and the Polygon Ecosystem Token in particular are a natural step toward making Web3 an everyday reality.
What do you think about the future of Polygon 2.0? Join the conversation on Telegram, X, Reddit, and Facebook, and subscribe so you do not miss any news! For more knowledge about the crypto world, take a tour of our blog.
Frequently Asked Questions
Is Polygon 2.0 live?
A part of the Polygon 2.0 upgrade, MATIC to POL conversion, went live a little over a month ago. The whole plan includes more stages and changes, so the road to Polygon 2.0 continues.
What is the upgrade for MATIC in 2024?
This year, Polygon switched from MATIC to POL as the Polygon ecosystem token. POL will assume the utility of its predecessor while adding extra, and the MATIC token is expected to be gradually phased out.
What is a POL token?
POL is the Polygon Ecosystem Token, a new native token of the network. Gas fees, staking, and transfers across the Polygon ecosystem use it instead of MATIC starting September 2024.
Are MATIC and POL the same?
MATIC and POL use different smart contracts, so they are different tokens. MATIC is being phased out by POL.
Do I need to convert MATIC to POL?
You may want to convert MATIC to POL if you intend to use the Polygon network or stake on it. You can keep the MATIC tokens and convert them at any time but the old token no longer has utility.
What will be the price of POL?
Due to the conversion rate of MATIC to POL being 1:1, they are very closely correlated in price. POL shares most of the tokenomics (initial supply and utility) with MATIC but will introduce some inflationary pressure.
Where can I buy POL tokens?
You can buy Polygon Ecosystem Token (POL) on ChangeHero by swapping 200+ cryptocurrencies, no account or KYC is needed.
Disclaimer
This article is not a piece of financial or investment advice. No price prediction is guaranteed to provide exact information on the future price.
When dealing with cryptocurrencies, remember that they are extremely volatile and thus, a high-risk investment. Always make sure to stay informed and be aware of those risks. Consider investing in cryptocurrencies only after careful consideration and analysis of your own research and at your own risk.
