Polygon, the second-largest Layer-2 network built on the Ethereum blockchain, is initiating a major upgrade today. The longstanding MATIC token will transition to POL tokens.

This move aims to enhance the network's flexibility in issuing new supplies. MATIC has a strong market presence, boasting a market capitalization of $3.6 billion. Moreover, it ranks as the 28th largest crypto asset. Hence, this migration will directly impact a large number of crypto investors.

Automatic and Manual Migration

Specifically, those holding MATIC on the Polygon Proof of Stake (PoS) chain need not take any action; their tokens will automatically convert to POL.

Conversely, those on the Ethereum network and Polygon's zkEVM layer-2 network might need to manually migrate their tokens through the Polygon Portal Interface or by bridging to Ethereum. There is yet to be a set deadline for MATIC holders on these platforms to convert their tokens to POL.

However, Polygon has hinted that it might impose a deadline in the future. This change is vital to a broader strategy detailed in the " Polygon 2.0 " roadmap, which positions POL as the core token across its principal and subsidiary chains.

"POL is a hyperproductive token that can provide valuable services to any chain in the Polygon network, including the AggLayer itself," Polygon explained.

Key Functions and Future Plans

According to Polygon officials, POL will serve critical functions across the network. Initially, it will become the native gas and staking token of the Polygon PoS network.

The AggLayer is a central element of the roadmap, aiming to unify various blockchain platforms utilizing Polygon's technology. In the future, POL is slated to support an array of functions within the Polygon staking hub, which is scheduled to launch in 2025.

These functions include block generation, zero-knowledge proof generation, and Data Availability Committees (DACs) participation.

Changes in Tokenomics

The shift to POL also changes tokenomics, with a new emission rate of 2% annually. This rate aims to reward validators on the Polygon PoS chain and replenish the community treasury, thus supporting the network's sustainability and growth.

Market Impact

Despite these optimistic developments, the value of MATIC has been declining. It is currently trading at $0.3897, a 5% drop over the last 24 hours. This migration to POL represents a significant transition for the Polygon ecosystem and community.