A transformative proposal aimed at revamping Polygon’s tokenomics is making waves within its governance forum and social media channels. This initiative comes in response to investor concerns regarding the underwhelming performance of the POL token compared to the broader cryptocurrency market.
Authored by activist investor Venturefounder, the proposal outlines significant changes to Polygon’s supply model, specifically targeting the existing 2% annual inflation rate of POL. It advocates for the implementation of a buyback or burn program funded by the treasury to alleviate ongoing selling pressure on the token.
Venturefounder emphasized that these adjustments are intended to recalibrate POL’s supply dynamics to better reflect its current technological landscape and strategic objectives. The proposal aims to restore investor confidence and curb further declines in token value and network stagnation. “These changes are essential to align POL with the realities we face today,” he stated in a recent forum post.
Under the status quo, Polygon’s annual inflation of 2% contributes approximately 200 million new POL tokens to circulation each year. This influx, according to Venturefounder, has been a significant factor in the persistent downward price trend of POL. To address this, the proposal recommends either establishing a 0% inflation target for a fixed supply or gradually decreasing inflation by 0.5% each quarter until it reaches zero.
Pointing to the success of tokens like BNB, Avalanche (AVAX), and Ether (ETH), which have adopted deflationary or fixed-supply strategies, Venturefounder argues that POL could enhance its value proposition by following suit. The proposal builds on a manifesto that has generated considerable interest, amassing over 25,000 views on social media platform X. In that post, Venturefounder criticized POL’s 46% decline over the past year, referencing its current trading level below the lows seen during the 2022 bear market, a situation he deemed “inexcusable.”
“These excuses are NOT VALID,” he asserted. “It’s not the market; there’s something fundamentally wrong with POL, and it’s in a precarious position.”
Beyond addressing inflation, the manifesto outlines grievances regarding strategic decisions made by the Polygon team since 2022, including calls for improved transparency and more timely implementation of crucial infrastructure projects like AggLayer.
The proposal has garnered a generally favorable response from the Polygon community, with co-founder Brendan Farmer participating in discussions, while Polygon Labs CEO Marc Boiron also acknowledged the proposal on social media.
Despite ongoing debates in the community regarding the viability of funding validator rewards without inflation and the sustainability of buybacks, there is optimism about the implications for network security and overall token health. The forum is currently active with discussions on these topics.
Polygon’s challenges come at a time of intensifying competition from newer layer-2 ecosystems such as Arbitrum, Optimism, and Base. Once considered a leading Ethereum scaling solution known for its technical innovations like the zkEVM rollout, investor confidence has recently dwindled.
In 2024, Polygon began transitioning its native token from MATIC to POL, a part of a broader attempt to refine governance and incentivize community involvement. However, the introduction of a 2% annual emissions schedule aimed at supporting validator rewards and related ecosystem incentives has not mitigated the token’s struggles.
Nevertheless, Polygon maintains a robust developer community, particularly among those in Latin America, who continue to favor it alongside Ethereum for building decentralized applications. As reported recently, the tokenization of real-world assets (RWAs) also remains a focus for the platform, with projects like AlloyX seeking to harness its infrastructure for innovative solutions.
