Polygon Announces Major Token Upgrade: A Comprehensive Look at the Upcoming Upgrade

In a significant development for the blockchain ecosystem, Polygon has announced a major upgrade to its native token. Set for September 4, 2024, this upgrade will see the transition from MATIC to POL, marking a pivotal moment in Polygon’s evolution toward an aggregated blockchain network.

The MATIC-to-POL upgrade is the culmination of extensive community deliberation and governance processes. It began with the proposal of PIP-17 last year, which outlined a new direction for Polygon as an aggregated blockchain network. The community recognized that this vision required an upgraded token with expanded utility, leading to the creation of POL.

SAVE THE DATE: MATIC → POL

After community consensus, the long-awaited upgrade is set for September 4th

• Initial phase: POL replaces MATIC as the native gas and staking token for Polygon PoS

• Subsequent phases: POL will serve a crucial role in the AggLayer

More details🧵 pic.twitter.com/SyxsFAlOeZ

— Polygon Foundation (@0xPolygonFdn) July 18, 2024

At its core, POL is designed as a hyperproductive token capable of providing valuable services across the entire Polygon network, including the forthcoming AggLayer. This upgrade aligns with Polygon’s long-term strategy of creating a network of interconnected, scalable blockchains.

What to Expect with the Upcoming Polygon Upgrade

In the initial phase, POL will assume the role of the native gas and staking token on the Polygon Proof-of-Stake (PoS) network. This means that from September 4th, every transaction on Polygon PoS will use POL for gas fees. Additionally, validators on the network will stake POL to earn protocol rewards and transaction fees, as stipulated in PIP-42.

The upgrade process varies depending on where MATIC tokens are currently held. For MATIC holders on Polygon PoS, the transition will be seamless and automatic, requiring no action from users. However, MATIC holders on Ethereum, Polygon zkEVM, or centralized exchanges may need to take specific steps to upgrade their tokens.

On Ethereum, a migration contract has been deployed to facilitate the upgrade process. This contract allows holders to upgrade MATIC to POL permissionlessly. For those less comfortable with direct contract interactions, decentralized exchange (DEX) aggregators like 1inch, Kyber, or CowSwap are expected to offer user-friendly migration options.

MATIC holders on Polygon zkEVM face a slightly more complex process. They can either bridge their MATIC tokens to Ethereum and then use the migration contract, or utilize zkEVM-based DEXs or aggregators to swap MATIC for POL directly on the zkEVM network.

For DeFi protocols and decentralized applications (dApps) on Polygon PoS, the upgrade brings several considerations. While liquidity pools will automatically upgrade from MATIC to POL, developers may need to update price oracles to ensure accurate data feeds. Frontend interfaces should also be updated to reflect the change from MATIC to POL.

The upgrade also impacts smart contracts holding MATIC. On Polygon PoS, MATIC held in smart contracts will automatically upgrade to POL. However, for smart contracts on Ethereum or zkEVM, manual interaction with the migration contract will be necessary to upgrade the tokens.

Liquid staking providers face unique challenges. While the unified stake reserve will be denominated in POL after September 4th, providers should prepare for an upgrade that allows staking and unstaking of both MATIC and POL within the same Liquid Staking Token (LST).

Oracles play a crucial role in the DeFi ecosystem, and they too must adapt to the upgrade. Oracle providers are encouraged to list POL price feeds to ensure the continuity of accurate data during and after the transition.

Wallet providers and RPC providers have their own set of tasks. They need to update the symbol of the native gas token from MATIC to POL on the Polygon PoS chain. This update is essential for correctly displaying and interacting with the POL token across the network.

For MATIC stakers and delegators on Ethereum securing the Polygon PoS network, the upgrade process is designed to be automatic. All staked MATIC will be upgraded to POL on September 4th, with staking rewards continuing uninterrupted. However, those who do not wish their staked MATIC to upgrade must unstake before September 1st, accounting for the 48-hour withdrawal period.

Looking Ahead

Looking beyond the immediate upgrade, Polygon has ambitious plans for POL. In 2025, a new staking hub is slated for release, where POL will support broader roles including block generation, zero-knowledge proof generation, and participation in Data Availability Committees (DACs).

The MATIC to POL upgrade represents more than just a token swap. It’s a fundamental shift in Polygon’s architecture, designed to support its vision of an aggregated blockchain network. This upgrade enhances the token’s utility, potentially attracting new users and investors to the Polygon ecosystem.

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