What is the POL (Polygon)?

Modified on Tue, 23 Sep at 6:46 PM

The POL token, formerly known as MATIC, is a utility token built on the Ethereum blockchain. It was originally introduced as an ERC-20 standard token but underwent a significant upgrade in September 2024. This upgrade transformed POL into a “Hyperproductive Token,” enabling it to perform a broader range of functions beyond its initial role as a gas token for transactions on the Polygon network.

As a utility token, POL is now used for various purposes within the Polygon ecosystem, including staking to secure the network and facilitating other decentralized applications. This evolution reflects the growing capabilities and versatility of the Polygon platform.

How Polygon Works

Polygon’s Proof-of-Stake system incorporates Heimdall, a unique mechanism enabling the withdrawal of collateral assets. Heimdall safeguards the system’s integrity by detecting and preventing fraudulent activities, such as the deliberate dissemination of false information to manipulate the blockchain.

To enhance scalability, Polygon leverages Plasma and the Polygon SDK as a collaborative framework. This approach has attracted significant interest from blockchain projects seeking to expand their networks. Plasma empowers the blockchain to accommodate an unlimited number of Decentralized Applications (DApps) and Decentralized Finance (DeFi) protocols, overcoming the limitations inherent in traditional Proof-of-Work systems.

Polygon 2.0

According to the white paper, the transition from MATIC to POL is a key element of the broader Polygon ecosystem upgrade, known as “Polygon 2.0,” which launched on June 12, 2024. This upgrade leverages a Layer-2 blockchain powered by zero-knowledge (ZK) rollups and cross-chain capabilities, aimed at enhancing security, scalability, and liquidity.

Polygon 2.0 is the result of a collaborative effort involving Polygon Labs, developers, researchers, application creators, node operators, validators, and both the Polygon and Ethereum communities, facilitated through discussions on community forums.

The upgrade process is designed to be gradual and sequential. A key component of Polygon 2.0’s evolution is the transition from MATIC to POL, which plays a pivotal role in the Protocol Architecture. This architecture defines how different protocol layers interact, comprising four key layers: the Staking Layer, Aggregation Layer, Execution Layer, and Proving Layer. The Proving Layer supports the Aggregation Layer, which is set to become crucial for managing network connections in the future.

The Aggregation Layer enables efficient communication across different networks within the Polygon ecosystem, ensuring smoother and more secure interactions. By simplifying cross-network communication, it helps unify the Polygon network, making it operate as a seamless, single entity.

Polygon Team

Jaynti Kanani: Prior to co-founding Polygon (Formerly Matic Network), Jaynti Kanani worked as a blockchain engineer. During the CryptoKitties boom, he recognized Ethereum’s scalability challenges and shared these insights with Sandeep Nailwal and Anurag Arjun. Together, they co-founded Matic in early 2018.
Sandeep Nailwal: A software engineer, Sandeep Nailwal launched ScopeWeaver in 2015, India’s largest professional services marketplace built on blockchain infrastructure. He has worked with industry giants like Welspun, Asia’s largest textile company, and served as a consultant for Deloitte.
Anurag Arjun: With extensive experience in software product management since 2006, Anurag Arjun has held key roles in leading Indian companies. In 2008, he worked as a Product Manager at Dexter Consultancy, and in 2013, he joined IRIS Business Services as Associate Vice President of Product Management, where he improved product UX and performance.
Mihailo Bjelic: Another co-founder of Polygon, Mihailo Bjelic holds a degree in Information Systems Engineering from the University of Belgrade. He is a prominent figure within the Ethereum community and a close collaborator with Ethereum researchers.

The Function of the POL

POL is Polygon’s native token used to interact with tens of thousands of dApps on the Polygon blockchain and to secure the network through staking.

Gas Token: POL is primarily used to pay for fees generated by transactions or applications built on Polygon PoS. It also incentivizes validators to process and verify transactions, ensuring the network’s functionality and security.
Security Token: Polygon PoS uses a Proof-of-Stake mechanism secured by staked POL. Holding POL helps secure Polygon PoS and earns rewards. Validators are disincentivized for malicious behavior, maintaining network integrity.
Governance Token: Validators play a key role in Polygon PoS, using Polygon Improvement Proposals (PIPs) and participating in a decentralized manner to ensure the network operates according to community consensus.
Community Fuel: POL tokens drive sustainable growth through an emission model, where a portion of token emissions funds community-driven projects to support ongoing Polygon development.
Hyperproductive Tokens: POL tokens are highly efficient, allowing validators to secure multiple chains and play multiple roles on the Polygon network, enhancing security, scalability, and overall efficiency.

Token Supply and Token Distribution

The original POL token, formerly known as MATIC, was designed with a maximum supply of 10 billion POL, which was gradually released monthly until December 2022.

The initial distribution of MATIC tokens was as follows:

Private Sale: 3.80% of the total supply
Initial Exchange Offering (IEO): 19%
Development Team: 16%
Advisory Team: 4%
Network Operations: 12%
Foundation: 21.86%
Ecosystem: 23.33%

However, with the 1:1 upgrade from MATIC to POL over four years, an additional 200 million tokens were added annually, representing a 2% annual increase for 10 years to accommodate growth. This additional supply is divided into two categories:

Validators Rewards: 1% annually to incentivize and retain validators on the network.
Ecosystem Support: 1% annually to provide ongoing support for the development and growth of the Polygon ecosystem.

Interesting information about POL

According to Coinmarketcap data on 4 November 2024, the POL token had a market capitalization of US$2,279,315,202, approximately 76,916,049,715 Thai Baht.

At the time of writing, the POL token was trading at around US$0.2979, or approximately 10.05 Thai Baht per POL. The POL token has reached an all-time high of US$1.29, or approximately 43.38 Thai Baht, on 14 March 2024.

References