Meaningful token economy design that truly embodies the essence of Polygon, with the exception of two points. Firstly, the running out of validator rewards, and secondly, the ongoing Layer2 wars regarding the smartest incentives hardcoded into token design. So its 4 stars from me as the 2023 game rules are changed - will cover it below.
The native token of the PoS chain - $MATIC:
- Pay for transaction fees
- Validators lock $MATIC to power nodes(security)
- Stakers are paid in $MATIC (Validators & delegators)
- Governance
Despite the fact that a pretty big %(1st pic.) was allocated to Team/Investors/Foundation, its already "proof-of-time" - nearly 91% is unlocked(2nd pic., fully vested by April 2025) and $MATIC became healthier. The inflationary model of $MATIC is no more a major issue compared to many other projects currently on the market.
However, the only concern is validator rewards and their role in tokenomics math.
- At present, staking $MATIC provides a healthy APR.
- However, Polygon will eventually run out of tokens to reward validators with. Their hope is that transaction fees alone will be sufficient to incentivize validators in the future.
We usually consider tokenomics in a vacuum regardless of market conditions or technological changes in the market, but this is not the case. When faced with new competitors who have significant advantages, such as new token incentives (Arbitrum, zkSync, whatever), there is the potential for a "vampire attack", as users migrate to other Layer2 solutions due to these incentives leaving behind the past leader.
Thus, I am uncertain how Polygon plans to compete with them in terms of token actions. However, they can still compete based on their revolutionary technology, top-tier partnerships, and real-world influence, which are topics for another review category.
Tokenomic Blog by Polygon where you can learn more: https://polygon.technology/matic-token Show Less
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