Updates in POL Tokenomics triggered by the Polygon CDK shift

Polygon Improvement Proposals Proposal Ideas
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Hey everyone,

While reviewing the POL token whitepaper published in July 2023, it appears that several changes have occurred since then, primarily due to the network’s shift towards a web of ZK-enabled networks using Polygon CDK. I’d like to highlight some key aspects that could impact the suggested model and assumptions in the whitepaper:

  1. The model should consider the announced migration of Polygon POS to a zkevm Validium chain with a decentralized sequencer and data availability layer. This will introduce a different transaction fee model for zkevm, challenging the current assumptions.
  2. Polygon has decided to deprecate the Supernets program, affecting the assumption of earnings growth for private (Supernets) chains in the POL model.
  3. Infrastructure operators of zkevm will incur additional costs, including cloud computing costs for generating proofs, L1 cost of proof verification, and the cost of data availability.
  4. Adjust the POL total supply due to burned MATIC tokens, as mentioned here.

Beyond these considerations, my primary concern is the POS validator community’s request for the continuation of the rewards program, given that the planned POL 1% incentive is smaller than the current one. This raises the question of whether the fixed 1% reward will be sufficient to support the projected 5-25 different public chains in the POL model.

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Personally, I believe a 2% annual inflation may not necessarily be too large. But anyway, I would suggest exploring additional tokenomic mechanics, such as automatically adjustable inflation rates or an additional burn mechanism, to make the system more dynamic. However, implementing any of these solutions requires further research, modeling, and simulations to determine the best way to structure POL.

We’ve tried testing some of these concepts on the cadCAD repo shared in the whitepaper, but it requires more in-depth exploration to incorporate all the changes. I would love to hear your thoughts on this and please let me know if anyone is interested in collaborating further on this topic.

Cheers!

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