what does this crypto migration mean for you? Experts weigh in

What are the potential risks and rewards of holding POL instead of MATIC, and how do experts envision the token’s future role in Polygon’s 2.0 roadmap?

It becomes MATIC POL

Polygon (POL), the Ethereum (ETH) scaling network, officially made a significant shift in its ecosystem on September 4, switching from its well-known MATIC token to a new native token called POL.

🧵 POL Upgrade | Everything You Need to Know 🧵

Users who have MATIC on Ethereum can upgrade today via the Polygon Portal UI: https://t.co/Ibs1ONels1

There is no deadline for users to upgrade. All MATIC on Polygon PoS and staked MATIC on Ethereum will be automatically upgraded on September 4th. picture.twitter.com/qKnyYFrlqH

— Polygon | Aggregated (@0xPolygon) August 27, 2024

According to the announcement, the POL token will replace MATIC as the native gas and staking token on Polygon’s main proof-of-stake chain. It will also play a key role in Polygon’s larger 2.0 roadmap, which aims to build a more efficient and scalable blockchain network.

For MATIC owners, this transition raises several questions: What does this mean for the future of their assets? How will it impact Polygon’s overall performance? And what can we expect as the network continues to evolve?

Come along for a deeper understanding of what POL is, why this update is happening, and what it means for the future of Polygon and its users.

Understanding migration

The transition from MATIC to POL is a community-driven upgrade that aims to reshape the future of Polygon. POL is being introduced as the Polygon ecosystem transforms into what is being called an “aggregate network” through a new technology layer known as AggLayer.

This upgrade is part of Polygon’s vision to unify liquidity and information across the various chains within its ecosystem, helping it become a more robust and interconnected blockchain network.

So what exactly is POL? Simply put, it’s a new utility token designed to do more than just replace MATIC. While it will continue to be used for core functions like gas fees and staking on the Polygon network, its future potential is much broader.

POL is what Polygon calls a “hyper-productivity” token, meaning it’s built to serve multiple roles across the entire Polygon ecosystem. For example, it can help secure not just one chain, but an entire blockchain network, as Polygon moves toward advanced technologies like zero-knowledge aggregations.

Initially, POL will work just like MATIC did — supporting transactions on Polygon’s PoS network. Validators and users who secure the network will start using POL instead of MATIC. This transition will be seamless thanks to backward compatibility.

This means that applications, validators, and users will not experience any downtime during the upgrade. Everything will work as it always has, but with the added benefits of POL.

What’s particularly interesting about POL is its future utility, which will be shaped by the community. Polygon’s roadmap envisions POL playing a central role in the network’s staking core, and it’s expected to launch in 2025.

This could expand the use of POL far beyond just staking and gas fees, and possibly give it greater influence over the governance and security of the broader collective network.

One of the most significant changes to POL is in the token economics, i.e. how the token supply is managed.

For the next 10 years, POL’s annual emission rate will be 2%, 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.

Will it be a smooth transition or are there challenges ahead?

For most MATIC holders, the transition to POL is designed to be a seamless and automatic process. If your MATIC is stored on the Polygon PoS chain, you don’t need to worry about making any transactions; your tokens will automatically be converted to POL at a 1:1 ratio.

However, things are a bit different for those holding MATIC on the Ethereum network. In this case, users will need to manually move their tokens to POL via the Polygon Portal Interface that Polygon provides specifically for this purpose.

For users holding MATIC on the Polygon zkEVM (layer 2) network or centralized exchanges, additional steps may be required to complete the migration.

In these cases, you may need to send your MATIC tokens back to the Ethereum network before converting them to POL. Polygon has set up a relay contract to assist users with this process, but this method is geared towards more advanced users who are comfortable with technical operations.

There is no need for any approval as the process does not require permission, but only those with the right technical knowledge are advised to try this option.

It’s also possible that your exchange will complete the migration automatically without you having to do anything on their behalf, but this will vary from exchange to exchange, so make sure you check for the latest updates.

If you are storing your MATIC in hardware wallets, the process may require manual intervention. While Polygon has not yet published specific instructions for this, users with cold storage wallets should stay tuned for further guidance on how to proceed.

As for the timeline, there is currently no set deadline for MATIC holders on Ethereum or zkEVM to convert their tokens to POL. However, Polygon noted that the community could vote to set a deadline in the future, so it’s important to keep an eye out for any upcoming announcements or changes.

Public reaction and price action

Since the announcement of the switch from MATIC to POL, the price of POL has been on a downward trend.

As of September 12, POL is trading around $0.38, reflecting a 10.7% decline in the past month. Its market cap is currently $1.25 billion.

However, there is one detail worth noting: POL has a circulating supply of around 6.7 billion tokens, while its total supply is around 10.25 billion tokens. This discrepancy is due to the ongoing migration from MATIC to POL, which is not fully reflected in CoinMarketCap’s data.

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

Meanwhile, respected crypto analyst Ali Martinez shared insights into POL’s potential future price action. He noted that POL appears to be forming a descending triangle pattern, a common technical indicator for a downtrend.

Martinez emphasized the importance of the $0.34 support level, suggesting that if POL holds this line, it could rise to $0.94. On the other hand, if the support is broken, a correction to $0.19 is possible.

What do the experts think?

To better understand the implications of Polygon’s transition from MATIC to POL, crypto.news reached out to three industry experts: Changelly Head of Research Daria Morgen, Botanica School Founder Tim Zinin, and Trustee Plus CEO Vadym Grusha.

The immediate impact will likely be minimal, with more meaningful changes emerging over time, Morgen said.

In the short term, everything will remain stable. The migration is designed to be backward compatible and ensures that all existing applications continue to operate without interruption… As the network evolves, POL will play a key role in improving both transaction speed and security.

Zinin shared similar views but noted the long-term potential of POL to transform Polygon’s security model.

We may experience a few bumps in the short term, but once POL is fully integrated it will streamline transactions and make the network more efficient… POL doesn’t just secure one blockchain; it locks multiple chains within Polygon’s interconnected network. And when ZK technology comes into the mix, you add another layer of protection that makes the system even harder to compromise.

But the move to POL isn’t just about better security and speed; it’s also a big step toward decentralization. POL offers a community-controlled treasury where users have a say in how funds are allocated. Morgen sees this as a powerful tool:

The introduction of the community treasury means Polygon users now have more control. They can decide how their funds are spent, which will likely encourage more creators and validators to join the ecosystem and create a more engaged and active community over time.

Grusha was similarly excited about the potential of community-oriented management.

What we see here is a self-sustaining model. With this new treasury, the community will have a real say in deciding the future of Polygon. Decentralization will not only bring in more participants, but will also allow them to make meaningful contributions to the growth of the project.

Grusha believes that this structure, combined with Polygon’s Polygon 2.0 vision, could lead to one of the most innovative and user-centric ecosystems in the crypto space. However, Zinin was cautious about one aspect of POL’s token economy: its new emission model.

With MATIC, we had a limited supply, making it a solid long-term investment. However, POL comes with ongoing emissions that can create inflationary pressure. While this is necessary to reward validators and secure the network, it also opens the door to potential manipulation. This is something investors should watch carefully.

On the other hand, when looking at investor interest, experts agree that POL has a strong potential to attract both retail and institutional players.

The road ahead

The transition from MATIC to POL marks an exciting new phase for Polygon, especially at a time when competition in the Tier 2 space is fierce.

However, the price action of the POL token has been volatile since the announcement and as with any developing market, it is important to trade with caution. Always remember the golden rule: Never invest more than you can afford to lose.