From MATIC to POL: what does this crypto migration mean for you? Experts weigh in

As a seasoned cryptocurrency analyst with years of experience navigating market fluctuations, I find the transition from MATIC to POL in Polygon particularly intriguing. The potential for improved transaction speed and security is undeniable, but the long-term implications are what truly pique my interest.

As a seasoned analyst, I’ve been pondering over the implications of choosing Polygon Network’s native token (POL) over Matic in my investment portfolio. Here are some potential risks and rewards to consider:

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MATIC becomes POL

On September 4th, the Ethereum scaling network known as Polygon (POL) announced a significant change within its system by transitioning from the widely used MATIC token to a newly minted native token named POL.

As per the recent announcement, the POL token is set to take over MATIC‘s role as both the native gas and staking token on the main proof-of-stake chain of Polygon. Moreover, POL will be instrumental in the implementation of Polygon 2.0, a larger roadmap designed to create a more streamlined and scalable blockchain network.

For those who own Matic tokens, this transition poses several queries: What are the implications for the future of their investments? How might it influence Polygon’s general progression? And what changes could we anticipate as the network undergoes further development?

As a researcher delving further, I aim to unravel the essence of POL, the rationale behind its recent update, and foresee its implications for the future of Polygon and its community members.

Understanding the migration

The migration from MATIC to POL is a community-driven upgrade that aims to reshape Polygon’s future. POL is being introduced as the Polygon ecosystem evolves into what’s called an “aggregated network” through a new technology layer known as the AggLayer.

This update aligns with Polygon’s goal of merging liquidity and data from multiple chains within their system, fostering expansion into a stronger and more interwoven blockchain network.

To put it simply, POL refers to a fresh utility token that serves a purpose beyond merely replacing MATIC. Although it will continue to perform fundamental tasks such as paying gas fees and staking within the Polygon network, its possible applications extend far beyond these functions in the future.

In simpler terms, POL is a versatile token used throughout the Polygon ecosystem, serving various functions. For instance, it might be utilized to ensure security not only for a single blockchain but also for an entire network of blockchains as Polygon embraces advanced technologies like zero-knowledge rollups.

At first, the role of POL will be similar to that of MATIC within Polygon’s Proof-of-Stake (PoS) network. Instead of using MATIC for transactions and securing the network, validators and users will now utilize POL. This transition is expected to be seamless due to backward compatibility.

During the upgrade, there will be no interruptions for applications, validators, or users, ensuring a smooth operation as usual. However, these systems will also enjoy the additional advantages that POL offers.

What makes POL unique is that its future usefulness will be determined by the community who uses it. Polygon’s plans for POL include a significant role within their network’s staking center, which they anticipate launching in 2025.

This might broaden the application of POL, not only for staking and transaction fees, but potentially increasing its impact on decision-making within the system as a whole, as well as enhancing its role in the overall network’s protection.

One of the key changes with POL lies in its tokenomics, or how the supply of tokens is managed.

Over the next 10 years, POL will have a 2% annual emission rate, meaning new POL tokens will be created to support the network. Half of these tokens will go to validators as rewards for securing the network, while the other half will go to a community treasury. This treasury will fund development projects within the Polygon ecosystem, supporting builders and innovators.

Smooth transition or challenges ahead?

As an analyst, I’d like to share that for those of us holding MATIC, the transition to POL is designed to be seamless and effortless. If your MATIC tokens are already residing on the Polygon Proof-of-Stake (PoS) chain, there’s no need for any action on your part – your tokens will automatically undergo a 1:1 conversion into POL.

For users with MATIC tokens on the Ethereum network, things work a little differently. Instead of having the tokens automatically transferred to POL, they’ll need to manually migrate them via the Polygon Portal Interface – a tool that Polygon has set up expressly for this purpose.

Users with MATIC tokens on the Polygon zkEVM (layer 2) network or centralized exchanges might need extra actions to finalize the migration process.

In some instances, you may need to move your MATIC tokens from the Polygon network back to Ethereum before you can change them into POL. Polygon has developed a migration contract to aid users in this task, but this approach is primarily for experienced users who are adept at handling technical procedures.

Without requiring any prior approvals, this approach is open for anyone to use. However, due to its technical nature, it’s advisable that only individuals who possess the necessary technical skills should pursue this option.

There’s a chance that the platform might handle the migration process for you without needing any action from you. However, keep in mind that this may not apply to all platforms, so it’s essential to verify the most recent information about their procedures.

Using a hardware wallet to safeguard your Matic may necessitate some hands-on action. Since Polygon hasn’t provided detailed steps yet, it’s crucial that users of offline wallets remain vigilant and keep themselves informed about any new instructions or guidelines for handling the process effectively.

Currently, there’s no fixed date for MATIC token holders on Ethereum and zkEVM to swap their tokens into POL. However, Polygon has hinted that the community might decide on a deadline later, so it’s advisable to stay updated about any future announcements or updates.

Community reaction and price action

Ever since it was revealed that MATIC would be replaced by POL, there’s been a noticeable drop in the value of POL.

Currently on September 12th, the price of POL is approximately $0.38, marking a decrease of about 10.7% over the last four weeks. The total market value of this asset now amounts to roughly $1.25 billion.

An important point to consider: The number of POL tokens currently in circulation is roughly 6.7 billion, but its total supply is about 10.25 billion. This difference arises because a significant transition from MATIC to POL is ongoing and hasn’t yet been fully updated on CoinMarketCap’s records.

A user on X pointed this out, suggesting that POL’s circulating supply should be updated to reflect the total 10.25 billion tokens, which would place its market cap at around $3.8 billion. This incomplete migration is one of the reasons why POL has slipped down the market cap rankings, sitting at 30 as of Sep. 10.

Currently, crypto expert Ali Martinez is offering his thoughts on the possible price fluctuations of POL. He points out that it appears to be developing a descending triangle pattern, often associated with bearish market trends.

According to Martinez, the $0.34 level is crucial for POL. If POL manages to maintain this level, it might surge up to $0.94. However, if this support gives way, a possible drop to $0.19 may occur.

What do experts think?

In order to gain a deeper insight into the consequences of Polygon’s shift from MATIC to POL, crypto.news consulted three industry specialists: Daria Morgen, who serves as Head of Research at Changelly, Tim Zinin, the founder of Botanica School, and Vadym Grusha, CEO of Trustee Plus.

As per Morgen’s explanation, the initial effect might not be significant, but substantial changes are expected to unfold gradually over time. She hinted at this point.

In the immediate future, I anticipate a state of stability. The design of this migration ensures it’s backward-compatible, meaning all current applications will carry on operating smoothly without any hiccups.

In a different phrasing, Zinin echoed some of the same opinions, yet emphasized the long-term possibility that POL might revolutionize Polygon’s security framework.

Initially, there might be a few hiccups as POL gets fully implemented, but afterwards it will greatly simplify transactions and enhance the overall efficiency of our network. Importantly, POL doesn’t merely secure one blockchain; it bolsters security across multiple interconnected chains within the Polygon network. Moreover, incorporating Zero-Knowledge technology further fortifies the system, making it even more resistant to potential breaches.

As a crypto investor, I’m not just excited about the shift to POL for its enhanced security and speed; it’s also a significant step towards decentralized governance. What sets POL apart is its community-controlled treasury, which empowers users like me to have a say in how funds are distributed. This tool, as I see it, is a game-changer.

As a crypto investor in Polygon, I’m thrilled about the new community treasury system. Now, we, the users, have greater control over how funds are allocated. This increased autonomy empowers us to make decisions on how these resources are utilized. I believe this will attract more builders and validators to our ecosystem due to the enhanced sense of ownership and involvement. Over time, I envision a more active and engaged community as a result.

Grusha was similarly enthusiastic about the potential for community-driven governance.

Here, we’re looking at a system that can maintain itself independently. With the introduction of this fresh treasury, the community will gain significant influence in determining Polygon’s future direction. This decentralized governance structure not only invites more individuals to join, but also equips them with the power to make substantial impacts on the project’s development.

Grusha is convinced that by integrating this structure with Polygon’s plan for Polygon 2.0, we might be looking at one of the most cutting-edge and community-oriented crypto environments. On the other hand, Zinin has raised concerns regarding a specific aspect of POL‘s token economics: the revised emission model.

Investing in MATIC offered a limited supply, making it an attractive long-term choice. On the other hand, POL has ongoing emissions that could lead to inflation. Although these emissions are essential for rewarding network validators and maintaining security, they might also present opportunities for manipulation. Therefore, investors should keep a close eye on any potential misuse of this feature.

In terms of investor appeal, there’s a general consensus among experts that POL is quite promising, capable of drawing the attention of both individual (retail) and professional (institutional) investors.

The road ahead

Transitioning from MATIC to POL signifies a thrilling stage for Polygon, given the escalating competition within the layer 2 sector is intensifying.

Nevertheless, the fluctuations in the value of the POL token have been significant following the announcement, which underscores the importance of trading prudently in a developing market. It’s vital to recall the fundamental investment guideline: never risk more money than you are prepared to part with.

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2024-09-12 11:29