Polygon just published a very important update of its tokenomics. A very important group of founders and researchers have published the latest proposal: POL, a new native token.
In this article, you will learn how the POL token works and what it intends to do in Polygon. Let’s first explain what is this token about.
What is the POL Token?
Polygon is a Layer 2 scaling solution for Ethereum. It is designed to improve the scalability, security, and usability of Ethereum. So, this new token aims to be the new one of the Polygon network.
The switch to POL is still in the proposal stage, and it is not yet clear when it will be implemented. However, if the proposal is approved, MATIC tokens will be swapped 1:1 for POL tokens. If this proposal is approved, this new token will be used to pay transaction fees, participate in governance, and stake for rewards. MATIC, on the other hand, is only used to pay transaction fees.
1/ Today, the next technical proposal of Polygon 2.0 is unveiled:
POL, the upgraded token of the Polygon protocol! 💫
POL is the next generation native token, designed to secure, align and grow the Polygon ecosystem.
Watch the video to get an idea how cool it is, then 🧵 pic.twitter.com/Gn7KcHpWEY
— Polygon (Labs) (@0xPolygonLabs) July 13, 2023
A lot of the impact of this change is for validators. They can now easily work on transactions on the main PoS chain or zkEVM with the same token.
POL Use Cases
- Governance Voting: This new token aims to be the tool where Polygon’s community can decide on on-chain voting. For example, changes to the block reward, the gas price, and the validator selection criteria.
- POL token holders will be able to stake their tokens on validators in order to earn rewards. Users will get rewards in POL tokens. Also, the amount of rewards will be proportional to the amount of POL tokens staked.
- This new token will be used to pay for network fees on the Polygon network. These fees will be used to cover the costs of running the network. For example: Block rewards and validator rewards.
Advantages & Disadvantages of POL
There are several advantages to using this new token over others:
- More scalable: This new token is a Layer 2 solution, which means that it operates on top of Ethereum. This allows this new token to take advantage of the security and decentralization of Ethereum. It also provides scalability.
- More secure: This new token uses a Proof-of-Stake consensus mechanism. Proof-of-Stake is a more secure consensus mechanism than Proof-of-Work. This is the consensus mechanism that Bitcoin and Ethereum launched.
- More user-friendly: This new token aims to be the center of the Polygon network. This way, it is easier to use.
Here is a table summarizing the key differences between this new token and MATIC:
|Utility||Transaction fees, governance, staking.||Transaction fees.|
|Emission rate||100 million POL per year.||197.8 billion MATIC per year.|
|Max supply||1 billion POL.||10 billion MATIC.|
So, the Polygon team is proposing to switch to this new token because they believe that it will make the network more scalable and efficient.
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