Polygon 2.0 POL Contracts Go Live on Goerli Testnet, Setting the Stage for ‘Scaling Ethereum to the Size of the Internet’

 Key takeaways

• Polygon announces that new POL token has been launched on Goerli Testnet, shares three key governance proposals relating to the future mainnet launch
• POL is designed to replace MATIC as the native token of the Polygon ecosystem, and details of the transition have been proposed in PIP-17, PIP-19 and PIP-25
• MATIC has underperformed the rest of the market in 2023 but the CoinCodex algorithm expects significant upside now that a 1:1, MATIC:POL transition has been revealed

POL goes live on Goerli, three key governance proposals detail the transition from MATIC to POL on mainnet

Polygon (MATIC) has launched a series of important governance proposals relating to the blockchain’s transition from using MATIC as its native token, to using POL as its “next-generation” crypto asset. These proposals follow the deployment of the POL token contract on Goerli testnet, which was completed on 4th October.

PIP-17, PIP-19, and PIP-25 are the key governance proposals relating to the network’s transition to POL on Polygon Mainnet.

Today, as a result of community consultations, POL contracts will be live on Goerli testnet.

A major step towards bringing Polygon 2.0 to life.

Based on the community’s feedback during the PIP governance process, PIP-24: Change EIP-1559 Policy & PIP-25: Adjust POL Total Supply,… pic.twitter.com/li8OF0o3jC

— Polygon Devs ? DevX Global Tour (@0xPolygonDevs) October 4, 2023

PIP-17

PIP-17 proposes to mint 10 billion POL tokens, representing a 1:1 migration from MATIC. The proposal states that POL will be used to better facilitate the transfer of value across Polygon 2.0’s network of layer-2 blockchains that support zkEVM — Polygon’s new zero knowledge-based virtual machine.

POL has been designed to meet the needs of Polygon 2.0’s multichain ZK ecosystem, and so it will be used for staking, community ownership and governance should the proposal be passed.

PIP-19

PIP-19, meanwhile, calls for the additional utility of making POL the native token for gas fees on the Polygon blockchain, replacing a core element of MATIC’s current functionality. To ensure a smooth transition, the proposal aims to convert all MATIC locked in Plasma Bridge to POL, fulfil all withdrawal requests from the Polygon blockchain by converting MATIC tokens into POL, and credit all deposits into the Polygon blockchain by converting them into POL.

PIP-19 also states that network validators will continue being rewarded in MATIC tokens until a future governance proposal is produced. The future proposal will posit a network upgrade that can smoothly facilitate the transition from MATIC to POL rewards on the protocol level. Until then, MATIC would remain operational as an ERC-20 token on the Ethereum network.

PIP-25

PIP-25 proposes to double the number of POL tokens minted during the mainnet contract launch, from 10 billion to 20 billion, with a view to sending the additional tokens directly to the MATIC burn address. This would ensure that all MATIC-equivalent tokens are removed from circulation after 1:1 conversions have taken place via PIP-17 and PIP-19, while still retaining a 1:1 ratio with POL’s remaining 10 billion token supply.

Summary

A common thread between the recent governance proposals is that Polygon aims to make the process of transitioning from MATIC to POL as smooth as possible. By all measures, POL will be a direct replacement for MATIC, mirroring its tokenomics structure and utility directly, except with the added benefit of being better suited to Polygon 2.0’s zkEVM ecosystem.

Polygon’s emphasis on a community-driven governance structure is also well aligned with Polygon 2.0’s three governance pillars.

Algorithm predicts new all-time high for MATIC in 2024 despite underperformance during 2023

MATIC is currently 25.84% down YTD, and 63.96% down from its December high. The token has been in a consistent downtrend on higher time frames despite a bullish year for the crypto markets in which the total crypto market cap (TCAP) has climbed 41%.

The underperformance of the MATIC token has been uncharacteristic of Polygon in recent years. Between its launch in 2019 and the 2021 bull market, MATIC skyrocketed into the top 15 crypto assets when measuring market cap based on it being one of the earliest scalability solutions for Ethereum.

Since then, the launch of Optimism (OP) and Arbitrum (ARB) in 2022 and 2023 respectively may have shifted demand to other layer-2 tokens. Regardless, MATIC has found strong support at a key trend line that stretches back to March 2021, resting at roughly $0.50 for the past seven weeks.

The CoinCodex price prediction algorithm expects MATIC to bounce from here. Within 6 months, the algorithm predicts a 574% increase from the current price level before a significant retrace — a move that would take MATIC to a new all-time high.
 

6-month price prediction for MATIC, via CoinCodex

Bottom line: Polygon 2.0 could be generating bullish momentum for MATIC despite the introduction of POL

Polygon’s recent governance proposals have revealed that the new POL token, which is intended to fully replace MATIC, will be introduced using identical tokenomics to its predecessor. POL will also be phased in gradually, with Polygon aiming to ensure that the transition is smooth with “backwards compatibility” being a key consideration.

Polygon 2.0 represents a major overhaul of the Polygon ecosystem, including a brand-new virtual machine that uses zero knowledge tech at its foundation. zkEVM will enable developers to launch EVM-compatible dApps on Polygon that can scale in line with the blockchain’s transaction processing capabilities, and the new POL token is specially designed to aid in the process of creating a multi-chain Polygon 2.0.

The developments within the Polygon ecosystem have led to bullish sentiment among investors. While there was some uncertainty around the future of MATIC after POL was announced, the 1:1 transition and identical tokenomics may instigate more demand for MATIC at the current price level. As things stand, the CoinCodex price prediction algorithm expects new all-time highs for MATIC within 6 months.