Polygon has proposed the creation of a new token to continue building the value layer of the Internet.
The current financial system has been transforming ever since the birth of Bitcoin. In addition to introducing new terminologies and tools that we were not familiar with, Bitcoin and blockchain technology have given rise to a new digital and decentralized financial system that is not governed or limited by traditional financial institutions and that also allows people to take control over their funds again. However, Bitcoin is not perfect and has some limitations.
According to Polygon Labs developers, the main problem with Bitcoin is that, despite being the most successful cryptocurrency in terms of capitalization and a key piece in the Bitcoin protocol, it is an “unproductive” asset because it does not provide incentives or special functions to its holders beyond its price. In the case of Ethereum, Polygon Labs pointed out that the cryptocurrency of the network created by Vitalik Buterin is a productive digital asset because it rewards its holders for the work they do as validators of the blockchain network. However, Polygon Labs seeks to enhance all this with the development of POL.
The new token that propose the creators of Polygon Network will be a “hyper-productive” third-generation token which will allow holders to stake to become validators on Polygon’s multiple blockchains and receive rewards for doing so. POL will also integrate additional features that will help unlock new opportunities for its holders and help build the Internet of Things value layer.
POL is part of Polygon 2.0
The POL token is part of the changes that Polygon Network developers are proposing to build the new V2 version of the network, which was presented in mid-June.
In recent weeks, developers have been presenting a series of documents explaining how the blockchain's functions and capabilities will be expanded to optimize the development of Web3, to secure digital ownership, and to democratize access to the global economy through the Internet.
In addition to offering greater incentives to its holders, the development of POL also includes improvements to the security, efficiency, and scalability of the Polygon Network. On the other hand, through this third-generation token, the developers of Polygon Labs want to offer better opportunities to the community that is part of the project, encouraging decentralization and community ownership. “Polygon is intended to be governed by its community,” the network developers wrote in a blog post, highlighting decentralization as one of its fundamental principles.
The multiple utility of Polygon's new token
POL holders will be able to become validators on multiple blockchains, meaning they can validate as many blockchains as they want, including Polygon PoS, zkEVM Validium, and supernets, Polygon Labs developers said.
Likewise, each blockchain will be able to offer validators multiple useful work roles, such as accepting transactions, generating new blocks, generating zero-knowledge proofs, among others, and reward them differently for each of them. In this way, the main utility of the new token proposed by Polygon revolves around staking and validators.
What will happen to MATIC?
Currently, the MATIC token is the main asset of the Polygon ecosystem. However, POL is designed to replace every existing unit of MATIC on a 1:1 basis. The blockchain developers clarified that MATIC and POL tokens will not coexist in the Polygon ecosystem.
Regarding validator rewards, the network developers indicated that the staking protocol will continuously issue a predefined amount of POL tokens that will be distributed among active validators as rewards, replacing the MATIC token rewards that Polygon validators currently receive.
Polygon Labs has created a POL whitepaper to explain in depth everything related to this new token. On the other hand, the network developers will present a Polygon Improvement Proposal (PIP) in the coming days to reveal the technical details of POL smart contracts and the network token migration.
Continue reading: zkEVM Validium, Polygon's new L2 secured by ZK technology
