A famous crypto adage says that bear markets are for building, and Polygon Labs has certainly seized this opportunity.
This Ethereum layer-2 solution already counts tens of thousands of DApps, over 1.5 million weekly users, and over 2.3 million daily transactions, which makes it the third most popular blockchain in terms of transactions and users (source: Dune Analytics).
However, the team behind it does not intend to rest on its laurels. Competing blockchains like Arbitrum, Optimism, Tron, and Base are steadily encroaching on Polygon’s market share, not to mention that the greater goals of web3 progress are yet to be reached.
In this situation, Polygon’s new ambition of becoming the “value layer of the Internet” looks like a promising direction. It includes a new blockchain based on zero-knowledge technology, new governance structure, and a new token.
zkEVM: Leading the Technical Revolution
Zero-knowledge rollups (zk-rollups in short) are among the hottest trends in web3. While not a novel concept, they have played a key role in several projects released this year, such as zk-sync or StarkNet.
To put it simply, zero-knowledge proof is a cryptographic technique that enables a prover to demonstrate knowledge of a specific piece of information without divulging that information.
Zk-rollups serve as a scaling solution for blockchains, which bundles millions of transactions into one batch stored off-chain, periodically posting zk-proved batches to the main chain.
Polygon entered the race in March by launching zkEVM, an Ethereum Virtual Machine equivalent that leverages zk-rollups to execute smart contracts more swiftly and cost-effectively, all while maintaining compatibility with Ethereum.
Since its release, zkEVM has recorded over $136 million in deposits and more than $46 million in TVL (total value locked), according to Dune Analytics.
Polygon 2.0: A Grand Vision
Asit turned out, the zkEVM launch was just the beginning of Polygon’s transformation.
In June, the company published its vision of “Polygon 2.0” – a network of ZK-powered layer-2 chains interconnected through a cross-chain protocol. This concept fundamentally reimagines different facets of the Polygon ecosystem, spanning governance, consensus mechanisms, and tokenomics.
Governance Transformation
One of the key aspects of Polygon 2.0 is governance.
The blockchain has been often criticized for its excessive centralization, seen as a major impediment to its growth. The new blueprint details the system of Improvement Proposals, the likes of which are already used by major blockchains, such as Bitcoin or Ethereum.
The new Polygon Improvement Proposals (PIPs) are set to encourage public discussion and decision-making. An ecosystem council and a community treasury are also in the pipeline.
Zk-Proofing Polygon PoS
As one of the most popular smart contract platforms, the old Polygon chain is seen by the company as a magnet that will drive business to its future multi-chain environment.
The chain now operates as a Proof-of-Stake (PoS) network secured by its validators. Adding zk-rollups would enhance security by also leveraging Ethereum to cryptographically verify batches of transactions. However, since Ethereum transactions are notoriously costly, Polygon developed its own variant of zk-rollups, named validium. In this approach, only lightweight validity proofs are posted on-chain, while transaction data remains off-chain, resulting in reduced fees and heightened scalability.
Following the upgrade, Polygon PoS and Polygon zkEVM will continue to operate as two public networks within the Polygon ecosystem. The former, based on validium, offers enhanced scalability, while the latter, relying on zk-rollups, prioritizes security.
Introducing a New Token: $POL
Polygon 2.0 also foresees a new token $POL that will replace $MATIC as the native coin for paying transaction fees across the Polygon ecosystem. Validators will be able to stake $POL across multiple Polygon chains.
The tokenomics will change. $MATIC's entire 10 billion coin supply was issued at the chain's inception in 2019 and gradually released until reaching full vesting last year. The new token, $POL, will be exchanged one-to-one against $MATIC, meaning that its initial supply will also be 10 billion coins. However, $POL will introduce an annual emission of 2%, equally divided between validator staking rewards and a community treasury. While this inflation may dilute the value of $MATIC, it is expected that the additional activity stemming from Polygon 2.0 will compensate for this effect.
For Polygon, the ultimate transformation goal is to create a "Value Layer of the Internet". With the new technical upgrades, a decentralized identity solution revealed last year, and a number of high-profile partnerships (the last one with Google Cloud made headlines), the company may be onto something.
Written by D.Center
