What is Polygon 2.0 (POL)? From MATIC to POL

What is Polygon 2.0 (POL)?

Polygon 2.0 is an upgrade to the Polygon network, introduced to maintain its competitive edge in the Ethereum Layer 2 sector. This upgrade encompasses a series of updates, transforming Polygon into a value creation, programming, and transfer platform. Key features include utilizing Zero-Knowledge (ZK) L2 rollup technology for scalability, a new network architecture for interoperability, redefined tokenomics for the MATIC token, and a more decentralized governance system. The overarching aim is to establish a scalable blockchain ecosystem facilitating seamless interaction between applications and blockchains. The content below was extracted and adapted for more clarity from Polygon’s Blog.

History of Polygon (MATIC) and Polygon 2.0 (POL)

Polygon (MATIC)

Polygon, initially known as MATIC, emerged from the vision of a group of ambitious builders determined to bring about significant change in the blockchain world. These founders, from diverse backgrounds, combined their grit, tenacity, and belief in the power of collaboration to create a platform that would have a lasting impact. Founded in Mumbai in 2017, Matic Network quickly made its mark, launching on Binance in April 2019 and rolling out its Mainnet in June 2020. The network’s evolution saw a significant milestone in February 2021 when Matic rebranded to Polygon, reflecting its expanded scaling and infrastructure solutions. This transformation was not just in name, but also in vision, with the network merging with the zk-rollup platform Hermez Network in August 2021. As the journey continued, Polygon remained committed to its core beliefs: the power of open-source protocols, the importance of community, the potential of blockchain to change the world, and a steadfast commitment to Ethereum. This foundation and commitment set the stage for the following innovations, including the introduction of Polygon 2.0.

Polygon 2.0 (POL)

Polygon 2.0 was introduced by Polygon Labs on June 12, 2023, with a vision to build the “Value Layer of the Internet.” This vision was inspired by the Internet’s ability to democratize access to information, and Polygon 2.0 aimed to do the same for the global economy by democratizing access to value. The upgrade serves as a blueprint for a series of proposed changes reimagining various aspects of the Polygon network, from its protocol architecture to tokenomics and governance. The development and rollout of Polygon 2.0 were a collaborative effort involving over a year of discussions and contributions from developers, researchers, node operators, validators, and the broader communities of both Polygon and Ethereum. Some of these discussions and insights were shared on the community forum. The introduction of a formal governance process in the Polygon ecosystem emphasized the role of its community, which ultimately has the authority to accept and implement the Polygon 2.0 upgrade.

ZK-rollups are a type of layer 2 scaling solution that uses zero-knowledge proofs to aggregate multiple transactions into a single rollup. They significantly reduce the overall data that needs to be sent to the blockchain, verified, and stored by network nodes. For Polygon 2.0, implementing ZK-rollups is more than just an upgrade; it’s a strategic enhancement that positions the network at the forefront of the second-layer scaling solutions space. By utilizing ZK-rollups, Polygon 2.0 can achieve high scalability levels, processing thousands of transactions per second (TPS), which drastically reduces transaction fees and confirmation times. This efficiency makes it an attractive platform for various applications, especially those requiring quick transaction settlements such as decentralized exchanges, gaming platforms, and NFT marketplaces.

In the broader context of Polygon 2.0’s vision to become the “Value Layer of the Internet,” ZK-rollups contribute significantly to this goal. They allow for a seamless and efficient transfer of value across the network, ensuring that all transactions are fast, affordable, and private. This innovation is not just a step forward for the network but a leap towards a more scalable and secure digital economy.

Polygon 2.0 Architecture

Source: Polygon

Polygon 2.0, as proposed by Polygon Labs, is designed to provide unlimited scalability and unified liquidity, positioning itself as the “Value Layer of the Internet.” Addressing the long-standing scaling challenges faced by Web3, Polygon 2.0 offers an elastically scalable environment for accessing value, similar to how the Internet provides scalable access to information.

Source: Polygon

The architecture of Polygon 2.0 is formalized as a collection of protocol layers, each designed for a specific function.

Staking Layer

The Staking Layer in Polygon 2.0 is a Proof-of-Stake (PoS) based protocol that uses Polygon’s native token to provide decentralization to participating Polygon chains. This layer achieves decentralization through a common validator pool and an in-built restaking model. It is implemented on Ethereum using two types of smart contracts: the Validator Manager and the Chain Manager. The Validator Manager manages the common validator pool for all Polygon chains, maintaining a registry of validators, processing staking and unstaking requests, allowing validators to subscribe to multiple Polygon chains, and handling potential slashing events. The Chain Manager contracts manage validator sets for individual Polygon chains, defining the required level of decentralization and other optional requirements for validators.

Interop Layer

The Interop Layer is designed to facilitate secure and seamless cross-chain messaging within the Polygon ecosystem. It abstracts the complexity of cross-chain communication, making the entire Polygon network feel like a single chain to users. This layer offers shared access to native Ethereum assets, eliminating the need for users to mint synthetic versions of Ethereum tokens. It also supports near-instant and atomic cross-chain transactions, which are essential for the unified liquidity vision of Polygon 2.0. The Interop Layer builds upon the LxLy protocol, currently used by Polygon zkEVM rollup, and its concept of Message Queues. Every Polygon chain maintains a local queue of outbound messages in a predefined format, which is included in ZK proofs that the chain generates. An Aggregator component is introduced to improve cross-chain transactions further, making them near-instant and atomic.

Execution Layer

The Execution Layer allows any Polygon chain to produce sequenced batches of transactions or blocks. Most blockchain networks, such as Ethereum and Bitcoin, use this protocol layer in a similar format. The Execution Layer comprises multiple components, including P2P communication for nodes to discover each other and exchange messages, consensus mechanisms for validators to reach agreement on a single worldview, a mempool for collecting and syncing user-submitted transactions, a database for storing transaction history, and a witness generator for producing witness data required by the ZK prover.

Proving Layer

The Proving Layer in Polygon 2.0 is a high-performance, flexible Zero-Knowledge (ZK) proving protocol. It generates proofs for every Polygon chain’s internal and external transactions. The Proving Layer includes a common ZK prover, developed by Polygon’s ZK researchers as the successor of Plonky2, a recursive SNARK. This prover offers a clean interface designed to support various transaction types. Additionally, the Proving Layer has a state machine constructor, a framework for defining state machines. State machines can be implemented using this constructor or custom-built using languages like Rust. Polygon’s ZK teams offer two state machine implementations – zkEVM and MidenVM – and the community can build additional ones.

Polygon 2.0: from Polygon PoS to ZK L2

Polygon Labs has proposed transitioning the Polygon PoS system to a zkEVM validium, a decentralized L2 fortified by zero-knowledge (ZK) proofs. This move is a significant leap for the Polygon ecosystem, aiming to make it more secure and efficient. Over the past 18 months, Polygon has showcased its technical prowess by launching the industry’s fastest ZK proving system and the only mainnet EVM-equivalent zkEVM.

The core objective of this upgrade is to integrate advanced ZK technology into Polygon PoS, aligning it with the Polygon 2.0 vision. This aims to enhance security and interoperability without disrupting the user or developer experience. Validiums, compared to rollups, offer a more cost-effective solution with higher throughput, as they make transaction data available off-chain, reducing fees and increased scalability.

Post-upgrade, the roles of existing Polygon PoS validators will expand to ensure data availability and sequence transactions. The current consensus mechanism guarantees data availability, which will continue post-upgrade. Polygon PoS and Polygon zkEVM rollup, two public networks within the Polygon ecosystem, will utilize advanced zkEVM technology, catering to different application needs based on security, fees, and throughput.

Polygon 2.0: Three Pillars of Governance

The governance structure of Polygon is anchored on three distinct pillars, each one specifically designed to ensure the decentralized and efficient management of the Polygon 2.0 tech stack and its encompassing ecosystem.

PILLAR I: Protocol Governance

This pillar is dedicated to the core protocol’s governance. It encompasses the intricate rules, mechanisms, and structures determining the Polygon protocol’s operation, evolution, and adaptability. This pillar governs any decisions related to protocol modifications, upgrades, or changes. It ensures that the protocol remains robust, secure, and in tune with the ever-evolving needs of the decentralized ecosystem.

PILLAR II: System Smart Contracts Governance

System-level smart contracts are at the heart of the Polygon network, and this pillar governs them. These contracts are pivotal to the network’s operation, managing essential functions like token transfers, staking, and other system-centric operations. The governance under this pillar ensures the contracts’ seamless and secure operation, always aligning with the broader objectives of the network.

PILLAR III: Community Treasury Governance

The community treasury is a dedicated fund for the growth, development, and sustenance of the Polygon ecosystem. This pillar governs the allocation and utilization of these funds. It ensures that the resources are judiciously used, focusing on projects and initiatives that resonate with Polygon’s vision and promise tangible benefits to its community. The governance here is pivotal in ensuring transparency, accountability, and the strategic use of resources for the network’s long-term growth.

Polygon Chain Development Kit (CDK)

Polygon’s Chain Development Kit (CDK) is a groundbreaking open-source codebase designed for launching Zero-Knowledge (ZK) powered Layer 2 (L2) chains on Ethereum. This initiative is a significant part of Polygon 2.0’s vision, aiming to create a seamlessly interconnected web of ZK-powered L2s that can scale Ethereum on demand.

Overview of Polygon CDK

• Open Source and Modular: The CDK is open-source, offering modularity at its core. Developers can use it to launch ZK-powered Ethereum L2 chains or convert existing L1 chains to L2. This flexibility allows for the creation of chains tailored to specific needs.
• Interoperability and Unified Liquidity: All chains deployed using the CDK are interoperable, with automatic access to the unified liquidity of all Polygon chains and one-click access to Ethereum’s liquidity. This feature is crucial for seamless cross-chain transactions and liquidity sharing.
• Zero-Knowledge Proofs: The CDK leverages Polygon’s advanced ZK technology, ensuring cryptographic security and near-instant finality. This technology is key to maintaining high security and scalability across the network.

Advantages for Developers and Users

• Customizability: Developers can design networks according to their requirements, choosing from various components like rollup or validium mode, zkEVM, data availability solutions, and more.
• Seamless Ecosystem Integration: Chains using the CDK integrate into an ever-expanding ecosystem of ZK-powered L2s, sharing access to the liquidity of public networks like Polygon PoS and Polygon zkEVM.
• Future-Proof Technology: Chains built with the CDK automatically benefit from Polygon’s ongoing advancements in ZK technology, ensuring they remain at the forefront of blockchain innovation.

Polygon 2.0 Tokenomics

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Source: Polygon

Open source projects have historically faced challenges in aligning contributors, but introducing native tokens in blockchain protocols, like Ethereum’s, has transformed this landscape. Since 2020, MATIC has been the native token of the Polygon network. However, to elevate Polygon’s infrastructure and align it with its vision, a proposal for POL, a technical upgrade of MATIC, has been introduced. This next-generation token, POL, is designed to be a primary tool for the Polygon ecosystem’s growth, allowing holders to validate multiple chains and assume diverse roles within each chain.

Introducing POL brings numerous benefits, including enhanced security, scalability, and ecosystem support without causing friction for users or developers. The transition from MATIC to POL will be seamless, with token holders sending their MATIC to an upgrade contract to receive POL. This evolution in tokenomics aims to ensure blockchain protocols grow with the expanding challenges, with the Polygon community playing a crucial role in this transformation.

3rd Generation Token: Hyperproductivity and Flexibility

POL represents the third generation of native tokens, introducing the concept of “hyperproductive” tokens. Unlike previous generations, POL allows its holders to validate multiple chains simultaneously and assume various roles within each chain, enhancing the token’s utility and the ecosystem’s overall security and coordination. This flexibility is a game-changer, offering practically unlimited opportunities for token holders.

Major Benefits of POL: Security, Scalability and Ecosystem Support

POL brings several advantages to the Polygon ecosystem. It enhances ecosystem security by incentivizing a decentralized pool of Proof-of-Stake (PoS) validators. It supports infinite scalability, accommodating the exponential growth of the ecosystem without compromising security. POL also provides sustained ecosystem support through an in-protocol mechanism, ensuring continuous development and competitiveness. Importantly, it achieves all these without introducing friction for users or developers, maintaining an efficient user experience.

Multifold Utility and Incentives for Validators

POL’s utility is centered around validators. By staking POL, validators can join the network, contributing to its security and alignment with the ecosystem’s success. They become eligible to validate any Polygon chain, receiving protocol rewards, transaction fees, and potentially additional rewards from specific chains. This system not only incentivizes validators but also broadens the scope of validation, encompassing various roles on a single chain.

Seamless Upgrade and Migration Process

Transitioning from MATIC to POL is designed to be a straightforward process. Token holders will send their MATIC tokens to an upgrade contract and receive POL in return. This approach is intended to be seamless, giving token holders ample time for the transition, thereby ensuring a smooth evolution in Polygon’s tokenomics.

Future-proof Ecosystem

Polygon recognizes the evolving nature of the Web3 landscape and the need for a robust foundation to support its growth. To address this, the team is committed to refining the Polygon protocol and investing in research to integrate cutting-edge technologies. Financial backing through ecosystem grants will nurture promising projects and initiatives, driving innovation and adoption. To sustain these efforts, a proposal introduces a continuous POL token emission mechanism, ensuring the ecosystem remains well-funded and primed for future challenges and opportunities.

Polygon 2.0’s Main Features

Polygon 2.0 is a comprehensive upgrade to the existing Polygon ecosystem, aiming to address the challenges and requirements of the evolving Web3 landscape.

Staking Layer

Polygon 2.0 introduces a staking mechanism that manages a shared validator pool for all its chains. The Validator Manager Contract maintains a registry of validators, processes staking and unstaking requests, and handles potential slashing events. The Chain Manager Contract manages validator sets for individual chains, defining the required level of decentralization.

Interop and Execution Layer

The interop layer facilitates cross-chain messaging within the ecosystem, offering shared access to native Ethereum assets and supporting near-instant cross-chain transactions.

While the Execution layer enables any Polygon chain to produce sequenced batches of transactions or blocks. It encompasses various components, including P2P communication and consensus mechanisms.

Proving Layer

A high-performance Zero-Knowledge (ZK) proving protocol is introduced, generating proofs for all transactions for every chain. This includes a common ZK prover and a state machine constructor.

POL Token

The POL token allows for a one-to-one migration from the existing MATIC token. It has an initial supply of 10 billion with a yearly emission of 2%, distributed between validator staking rewards and a community treasury.

Update Polygon PoS Native Token to POL

A proposal to upgrade the native gas token on Polygon POS from MATIC to POL ensures backward compatibility. The upgrade will not alter any of the contracts on Polygon PoS, maintaining the native token’s properties.

Conclusion

Polygon 2.0 represents a transformative step in the evolution of the Polygon network, aiming to address the dynamic needs of the Web3 landscape. With its introduction, the network seeks to enhance scalability, security, and interoperability while preserving the user and developer experience. The transition from MATIC to POL tokenomics underscores the commitment to adapt and grow aligned with the broader blockchain ecosystem. As the landscape continues to evolve, Polygon 2.0 stands as a testament to the network’s vision and adaptability, positioning itself at the forefront of blockchain innovation.

The introduction of the Polygon Chain Development Kit (CDK) further empowers developers to launch ZK-powered L2 solutions, reinforcing Polygon’s commitment to a unified and scalable blockchain ecosystem. This CDK initiative is pivotal in unlocking new possibilities for blockchain interoperability and liquidity.

This article has been compiled with information sourced directly from the Polygon Blog. The content within this article, particularly the detailed explanations and descriptions, is based on information and insights provided by the official Polygon Blog. For further detailed reading and to access the original source material, readers are encouraged to visit the Polygon Blog. This approach ensures that the information presented is not only accurate but also aligns with the latest updates and insights provided by the Polygon team.