Potential Risks and Rewards of Holding POL Instead of MATIC

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

MATIC becomes POL

On Sep. 4, Polygon (POL), the Ethereum (ETH) scaling network, officially transitioned from the MATIC token to a new native token called POL. This change aims to enhance the network’s efficiency and scalability as part of Polygon’s 2.0 roadmap. For MATIC holders, this migration brings several questions about the future of their holdings and the overall impact on Polygon’s performance.

Understanding the Migration

The migration from MATIC to POL is a community-driven upgrade aimed at reshaping Polygon’s ecosystem. POL is introduced as the Polygon network evolves into an “aggregated network” through a new technology layer called the AggLayer. This upgrade is part of Polygon’s vision to unify liquidity and information across various chains within its ecosystem.

POL is designed to be a “hyperproductive” token, set to take on multiple roles across the Polygon ecosystem. Initially, POL will function similarly to MATIC, powering transactions on Polygon’s PoS network. Validators and users will start using POL instead of MATIC, ensuring a smooth transition thanks to backward compatibility.

One of the key changes with POL is its tokenomics. Over the next 10 years, POL will have a 2% annual emission rate, with half of these tokens going to validators as rewards and the other half to a community treasury. This treasury will fund development projects within the Polygon ecosystem.

Smooth Transition or Challenges Ahead?

For most MATIC holders, the switch to POL will be automatic. However, those holding MATIC on the Ethereum network will need to manually migrate their tokens to POL through the Polygon Portal Interface. Users holding MATIC on the Polygon zkEVM or on centralized exchanges may need to take additional steps to complete the migration.

For those using hardware wallets, manual intervention may be required. While Polygon has yet to release specific instructions for this, users should stay updated for further guidance. There is no set deadline for MATIC holders on Ethereum or zkEVM to convert their tokens to POL, but the community may vote on establishing a deadline in the future.

Community Reaction and Price Action

Since the announcement of the migration, the price of POL has seen a downward trend. As of Sep. 12, POL is trading around $0.38, reflecting a 10.7% drop over the past month. The market cap stands at $1.25 billion, with a circulating supply of around 6.7 billion tokens and a total supply of approximately 10.25 billion tokens. This discrepancy is due to the ongoing migration from MATIC to POL.

“Shouldn’t $POL’s circulating supply be updated to 10.25B? $POL tokens aren’t time-gated behind some vesting contract, they are simply in the migrator contract waiting to be swapped 1:1 from $MATIC.”

Ali Martinez, a respected crypto analyst, noted that POL seems to be forming a descending triangle pattern, a common technical indicator for a bearish trend. He suggested that if POL holds the $0.34 support level, it could rebound to $0.94. However, if the support breaks, a correction down to $0.19 could be possible.

What Do Experts Think?

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

According to Morgen, the immediate impact will likely be minimal, with more meaningful changes emerging over time. She mentioned that POL will play a key role in boosting transaction speed and security as the network develops. Zinin highlighted the long-term potential of POL, which could transform Polygon’s security model.

Grusha emphasized the potential for community-driven governance, stating that the introduction of a community treasury will give Polygon users more control over fund allocation. This could encourage more builders and validators to join the ecosystem, creating a more engaged and active community.

“The introduction of a community treasury means Polygon users now have more control. They’ll be able to decide how funds are used, which will likely encourage more builders and validators to join the ecosystem.”

Zinin expressed caution about POL’s new emission model, which introduces ongoing emissions that could create inflationary pressure. However, the experts agree that POL has strong potential to attract both retail and institutional investors.

The migration from MATIC to POL marks an important phase for Polygon, especially as competition in the layer 2 space intensifies. However, the price action of the POL token has been volatile, and it’s essential to trade cautiously. Always remember the golden rule: never invest more than you can afford to lose.

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