Polygon, a layer-2 network built on top of the Ethereum blockchain, is scheduled to go live on Wednesday with an upgrade that will replace its long-used MATIC token with the new POL token. This change will provide greater flexibility in the issuance of new supply.

The change is due at 4 a.m. ET (8 a.m. UTC). The planned transition was announced a year ago, in July 2023. It is stated that the transition is being followed closely as it is held by a large portfolio of crypto investors.

MATIC is the largest cryptocurrency by market cap, worth approximately $3.8 billion. For many users, the migration will occur automatically and they will not need to take any action.

The transition is being made as part of Polygon’s plans outlined in last year’s “2.0” roadmap. POL will be designated as the native token of the Polygon PoS chain, Polygon’s main chain, and other chains in the ecosystem.

According to Polygon, in the first phase of the transition, “POL will replace MATIC as the native gas and staking token for the Polygon PoS network. In the next stages, POL will play a critical role in AggLayer.” AggLayer is a system that brings together related blockchains built using Polygon technology.

POL is proposed to support broader roles within the Polygon staking hub. This center, planned to be published in 2025, includes functions such as block production, zero-knowledge proof generation, and participation in Data Accessibility Committees (DACs).

According to Polygon’s blog post, “This community-supported upgrade comes at a critical time as every aspect of Polygon is changing.” POL’s migration from MATIC will also bring some tokenomic changes.

Polygon stated that the token will have a 2% annual emission rate and that part of the supply will go as rewards to validators on Polygon PoS, while the other part will go to the community treasury, “a self-sufficient ecosystem fund that can support the above activities.”

Polygon Labs CEO Marc Boiron said in an interview with CoinDesk, “The biggest reason why the upgrade is technically necessary is that the MATIC upgrade keys were deliberately burned years ago. This means we cannot make changes to that token,” he said.

“That’s why we wanted to introduce emissions. We can use it for community, we can use it for growth. It was impossible to do it otherwise.”

Boiron said the emissions are intended to help the Polygon community ecosystem by offering a grant program as part of the community treasury, giving the community “a form of control over the funds.”

He also said, “With the emergence of new chains, they will want to decentralize over time. So instead of a centralized sequencer, they will need to incentivize people to run a decentralized group or a decentralized prover,” he said.

“If they don’t have a token or don’t want to launch one yet, how do they do it? This enables some of the POL emissions to be used to decentralize their networks, and POL holders receive fees from this network.”