Polygon Labs Unveils the “Three Governance Pillars” Vision for Polygon 2.0

Polygon Labs recently announced a comprehensive reimagining of its ecosystem, including plans to launch a new native token called POL that will replace MATIC as part of the network upgrade.

Polygon is a layer-2 scalability solution for Ethereum. The network enables faster and cheaper transactions when compared with Ethereum mainnet; however, the price of MATIC has failed to sustain recent rallies and finds itself 1% down from the beginning of the year. During the same time period, Bitcoin (BTC) has increased by 86%.

The recent underperformance of the MATIC token has led Polygon Labs to find new solutions for the ecosystem. In its latest announcement, Polygon Labs unveiled “The Three Governance Pillars” to create a more scalable and efficient governance process for the Polygon blockchain.

Three Governance Pillars

As a part of its transition to Polygon 2.0, the Polygon Labs team detailed a three-pronged approach to community governance. Here’s how the team envision the governance to operate under the new iteration of the Polygon platform

Protocol Governance

Polygon is introducing a governance proposal enhancement that will be known as PIP (Polygon Improvement Proposal). PIP will work in a similar way to EIP, which is the equivalent community voting system deployed by Ethereum.

PIP will enable token holders to propose new upgrades to the Polygon protocol, as well as vote on proposals that have been made by other users. It provides a formal way to collaborate around blockchain development in a decentralized, democratic system of governance.

System Smart Contracts Governance

Polygon Labs has proposed the introduction of an Ecosystem Council, which is a community-governed body that will upgrade system smart contracts for the Polygon ecosystem. The idea is to ensure that EVM smart contracts deployed on Polygon remain upgradeable by nature, while also providing “secure, scalable, and explicit” decision-making processes.

The Ecosystem Council can be vetoed by a community voting mechanism to ensure that Polygon remains true to the decentralized nature of the project. A PIP proposal will soon be made to initiate the migration to this form of governance.

Community Treasury Governance

Polygon will introduce an ecosystem fund via a Community Treasury, which will provide financial support for promising initiatives that can help drive progress for the Polygon ecosystem.

The Community Treasury will use PIP proposals to determine the allocation of funds in a decentralized way. This represents the third pillar of governance that has been designed to streamline how the blockchain network operates.

POL: Polygon’s new native token

MATIC remains the 11th largest cryptocurrency by market capitalization, and the reported upgrades to the Polygon network could give the network a new lease of life. A key element of Polygon’s revitalization is the launch of a new native token, which will use the ticker symbol POL.

Polygon Labs describe POL as a “hyperproductive token”, as the network plans to launch a multichain protocol that uses POL for staking, rewards, and transaction fees on all connected blockchains.

Polygon Labs has yet to announce a launch date for the new MATIC token. However, it has stated that POL is designed to replace MATIC, which would become obsolete as part of the move to Polygon 2.0.

MATIC price movement

At the time of writing, MATIC is up 4.5% in the past week and up 26% in the past month. However, the token made a new yearly low at the $0.50 mark in June 2023.