Introduction
Bitcoin (BTC) innovated cryptocurrency, while Ethereum (ETH) was one of the first to demonstrate what it could become. Vitalik Buterin introduced Ethereum in a 2013 white paper as a cryptocurrency supporting smart contracts, launching the project in 2015 after an initial coin offering (ICO). While Bitcoin is a virtual store of value used as a means of exchange, Ethereum’s smart contracts give it practical applications. These decentralised applications (dapps) include decentralised finance (DeFi), non-fungible token (NFT) marketplaces, and play-to-earn (P2E) gaming (or GameFi). Developers can add new functionality to Ethereum’s network through its programmable blockchain, so the ecosystem constantly grows more robust.
While Ethereum can do a lot, its long transaction processing times may render some functionality impractical or cost-prohibitive. The community has explored multiple solutions to Ethereum’s scaling problem, including Polygon (MATIC), an Ethereum scaling solution created by a quartet of software engineers in October 2017 as the Matic Network. It offloads some of Ethereum’s computational load onto its own network, allowing for faster, cheaper transactions. Polygon offers several Ethereum scaling solutions, including Polygon CDK and zkEVM.
The network’s native cryptocurrency was originally called MATIC before shifting to POL in September 2024. More on this below.
Polygon’s team created it to help Ethereum scale, but Ethereum doesn’t rely on Polygon as its only scalability solution. Both tokens have unique blockchains and tokenomics, as well. Below is a closer look at the unique relationship between these tokens.
Key Differences Between ETH and POL
Ethereum Overview
Vitalik Buterin was an early Bitcoin supporter but felt its underlying blockchain technology could do much more than facilitate payments and store digital value. He wrote a 2014 white paper illustrating his vision for an open-ended protocol that supports multiple applications and improves computational efficiency. Buterin raised the funds needed for the project through an ICO, and ETH launched in 2015.
Ethereum is now an open-source software platform enabling the creation of smart contracts and dapps without centralised control or third-party interference. It’s widely recognised as one of the most-used blockchain platforms between DeFi, GameFi, ERC-20 tokens, and NFTs.
Ethereum has evolved since its launch, with ‘The Merge’ representing its most significant upgrade, transitioning from a Proof of Work (PoW) consensus mechanism to Proof of Stake (PoS) on 15 September 2022. This helped to reduce Ethereum’s energy consumption by an estimated 99.95% and reduced ETH issuance. The Merge did not immediately improve transaction speeds or lower fees, but it set the stage for future upgrades to address these concerns.
After The Merge, a significant update to the Ethereum network —the Dencun upgrade — was implemented in March 2023, introducing key improvements to enhance Ethereum’s scalability and efficiency. One of the most notable changes was the introduction of ‘blobs’, which reduced transaction costs by optimising data storage for Layer-2 solutions.
Previously, Layer-2 networks competed with regular users for space on the main network, driving up fees. Dencun addressed this by enabling more efficient data storage, ultimately lowering transaction costs. Additionally, the update enabled balance withdrawals on the Beacon Chain within the staking contract, improving the flexibility of Ethereum staking. These changes laid the groundwork for future scalability improvements and set the stage for subsequent upgrades like Pectra, scheduled for 2025, which aims to further optimise Ethereum’s performance and cost-efficiency.
Check out ETH’s current value and recent price trends.
Polygon Overview
Polygon, managed by a private company called Polygon Labs, is a decentralised Ethereum scaling platform enabling developers to build scalable, secure, and intuitive dapps and blockchains with low transaction fees averaging US$0.015. MATIC began as an ERC-20 token on Ethereum’s blockchain. The Matic Network rebranded to Polygon in 2021.
Polygon’s co-founders were well-known Ethereum developers before launching Polygon with projects like Plasma MVP (Minimum Viable Plasma), the WalletConnect protocol, and the Dagger event notification engine. Polygon PoS serves as an EVM-compatible sidechain, aiming to scale Ethereum with higher throughput and lower costs. Its ecosystem also consists of the Polygon zkEVM — an Ethereum Layer-2 network using Zero-Knowledge technology; Polygon CDK — a modular, open-source blockchain for developers to launch ZK-powered L2 chains; and the recent Polygon AggLayer, a cross-chain interoperability protocol.
POL or MATIC?
Polygon initiated a significant change in its token ecosystem, transitioning from its original MATIC token to a new token called POL. This change is part of a broader upgrade, known as Polygon 2.0, which aims to enhance the network’s capabilities and efficiency.
The key differences between MATIC and POL tokens are:
1. Purpose:
— MATIC: The original token used for gas fees, staking, and governance on the Polygon network.
— POL: The new token designed to serve as the network’s gas and staking token in the upgraded Polygon 2.0 ecosystem.
2. Functionality:
— MATIC: Limited to the original Polygon network.
— POL: Offers multichain support, improved governance mechanisms, and broader staking opportunities.
3. Technology:
— POL is part of the Polygon 2.0 initiative, which introduces AggLayer, allowing anyone to launch a Layer-2 blockchain powered by Zero-Knowledge (ZK) proofs and quickly connect it to other chains.
The reason for having two tokens is because Polygon is in a transition phase, and the migration from MATIC to POL is not instantaneous, but a gradual process. This approach allows for a smooth transition so that users and developers have time to adapt to the new token and ecosystem without abrupt disruptions. The gradual shift also ensures that existing applications and services built on Polygon continue to function while the upgrade is implemented.
It’s important to note that, while this transition is ongoing, both MATIC and POL tokens coexist. However, the ultimate goal is for POL to eventually replace MATIC as the primary token of the Polygon ecosystem. This article compares POL to ETH.
Check out POL’s current value and recent price trends.
Ecosystem Comparison: ETH and POL
Ethereum and Polygon’s Consensus Mechanisms
Ethereum adopted a PoS consensus mechanism during The Merge, where special nodes, called ‘validators’, stake ETH into a smart contract on Ethereum’s network. The validator is responsible for verifying new blocks and occasionally creating new ones. The network divides time into ‘slots’ (12-second intervals) and ‘epochs’ (32 slots), randomly choosing a validator to propose a block and a committee to verify every slot. If a validator attempts to defraud the network, some or all of their staked ETH can be destroyed through ‘slashing’. ETH holders, called ‘delegators’, may stake ETH to one or more validators to share any rewards earned.
Polygon’s PoS consensus mechanism works similarly, except delegators only have around 100 active validators to choose from, instead of Ethereum’s estimated 1,070,000, which has caused some to accuse Polygon of centralisation since so few validators are active on the network. Polygon validators have variable commission rates, so delegators should research before choosing where to place their tokens.
ETH and POL Scalability
Ethereum’s network averages about 15 transactions per second (tps), according to Chainspect, which is faster than Bitcoin’s real-time tps of three (at the time of writing). Polygon is substantially faster, averaging 42 tps in real-time, delivering on its goal of helping to scale Ethereum. However, competing protocols like Solana (SOL) process hundreds or even thousands of tps.
Tokenomics Comparison
Ethereum Use Cases
ETH is the native cryptocurrency of Ethereum’s ecosystem and is used for staking, gas fees, and interacting with the network’s dapps and NFT marketplaces; ETH holders can also purchase ERC-20 tokens. Furthermore, ETH is a secure value store that traders can buy or sell on trustworthy platforms like Crypto.com. Ethereum is amongst the most well-known cryptocurrencies, giving it high liquidity when swapped for fiat or other tokens.
Polygon Use Cases
POL became the native cryptocurrency of Polygon’s ecosystem on 4 September 2024, replacing MATIC. It is used for gas fees, staking, and buying NFTs and dapps on Polygon’s network, and POL holders can swap it for fiat or other cryptocurrencies on trustworthy exchanges like Crypto.com.
Key Pricing Moments
Crypto is a volatile asset class, and most established tokens have price histories with multiple peaks and valleys. ETH and POL are no exception. Below is a brief timeline for each token:
ETH — Key Price Events
| 2014 | ETH launches with an ICO minting. |
|---|---|
| 2016 | ETH’s price falls from about $20 to $6 after the DAO Hack. The first decentralised autonomous organisation (DAO) was launched on Ethereum’s network, but the code was vulnerable. It was hacked for about $60 million in ETH. |
| 2018 | ETH reaches a new all-time high (ATH) of nearly $1,400 by the middle of January 2018 due to the popularity of launching altcoins on Ethereum’s network through an ICO. This event is sometimes called the ‘ICO Boom’. |
| 2021 | ETH reaches another new ATH of $4,800 in November 2021 as NFTs gain widespread popularity in a crypto bull market. |
| 2024 | ETH sees a surge in price in November 2024 following Donald Trump’s victory in the 2024 US Presidential election, where some expect Trump to pursue generally pro-crypto policies. |
| 2014 | 2016 |
|---|---|
| ETH launches with an ICO minting. | ETH’s price falls from about $20 to $6 after the DAO Hack. The first decentralised autonomous organisation (DAO) was launched on Ethereum’s network, but the code was vulnerable. It was hacked for about $60 million in ETH. |
| 2014 | 2018 |
| ETH launches with an ICO minting. | ETH reaches a new all-time high (ATH) of nearly $1,400 by the middle of January 2018 due to the popularity of launching altcoins on Ethereum’s network through an ICO. This event is sometimes called the ‘ICO Boom’. |
| 2014 | 2021 |
| ETH launches with an ICO minting. | ETH reaches another new ATH of $4,800 in November 2021 as NFTs gain widespread popularity in a crypto bull market. |
| 2014 | 2024 |
| ETH launches with an ICO minting. | ETH sees a surge in price in November 2024 following Donald Trump’s victory in the 2024 US Presidential election, where some expect Trump to pursue generally pro-crypto policies. |
POL — Key Price Events
| April 2019 | MATIC relaunches with an ICO valued at $0.0026. |
|---|---|
| 26 December 2021 | MATIC reaches its ATH of $2.92 following Polygon Labs’s acquisition of the Mir Protocol for 250 million MATIC during a crypto bull market. |
| 10 May 2022 | MATIC reaches $0.787 (a 25% increase) after Polygon Labs announces a partnership with Meta to create exclusive NFTs for Facebook and Instagram. |
| 1 February 2024 | Polygon Labs cuts about 20% of its workforce, causing a MATIC price decline that reverses before the end of the day. |
| June 2024 | To incentivise developers to work on Polygon’s network, $640 million in community grants is approved. The programme builds on initiatives that Polygon Labs had previously funded, but MATIC’s price declines from $0.7135 on 3 June to $0.5133 by 1 July. |
| April 2019 | 26 December 2021 |
|---|---|
| MATIC relaunches with an ICO valued at $0.0026. | MATIC reaches its ATH of $2.92 following Polygon Labs’s acquisition of the Mir Protocol for 250 million MATIC during a crypto bull market. |
| April 2019 | 10 May 2022 |
| MATIC relaunches with an ICO valued at $0.0026. | MATIC reaches $0.787 (a 25% increase) after Polygon Labs announces a partnership with Meta to create exclusive NFTs for Facebook and Instagram. |
| April 2019 | 1 February 2024 |
| MATIC relaunches with an ICO valued at $0.0026. | Polygon Labs cuts about 20% of its workforce, causing a MATIC price decline that reverses before the end of the day. |
| April 2019 | June 2024 |
| MATIC relaunches with an ICO valued at $0.0026. | To incentivise developers to work on Polygon’s network, $640 million in community grants is approved. The programme builds on initiatives that Polygon Labs had previously funded, but MATIC’s price declines from $0.7135 on 3 June to $0.5133 by 1 July. |
Performance and Market Metrics
ETH has a market capitalisation of approximately $301 billion as of this writing. Ethereum has no maximum supply and a circulating supply of 120.43 million ETH, making it an inflationary token. However, the robust Ethereum ecosystem keeps demand strong. One ETH is worth around $2,750 at the time of writing.
POL has a market cap of about $2.41 billion as of this writing, and a total supply of 10.37 billion POL. It has a circulating supply of 8.58 billion and a recent price range between $0.25–$0.40.
Developments and Roadmaps: ETH and POL
Ethereum’s Roadmap
Ethereum’s roadmap is ambitious, encompassing faster transaction processing, extra security, a superior user experience, and future-proofing. One of the developments includes the Pectra upgrade, which was launched on the Holesky testnet in late February.
Ethereum’s Community
Community support often provides hints into a cryptocurrency’s demand. Tracking a token’s social media engagement may indicate enthusiasm. Ethereum has 3.7 million X followers and 3.7 million Reddit followers as of this writing, which entails a large, passionate community.
Polygon’s Roadmap
Polygon’s roadmap centres around the AggLayer: a decentralised protocol consisting of a common bridge and a ZK mechanism providing a cryptographic guarantee of safety for seamless interoperability. The AggLayer combines the best attributes of single-layer and multichain blockchain protocols. Some AggLayer features were already released as of this writing, while others are years away from implementation. AggLayer updates have no specific time frame for release.
Polygon’s Community
Polygon has two million X followers and 63,000 Reddit followers as of this writing, indicating a large yet relatively passive fan base. This might be because many see Polygon as an add-on to Ethereum rather than an independent project.
Conclusion
Choosing between ETH and POL presents a false dichotomy, as Polygon is an Ethereum scaling solution, and although it has a separate ecosystem, it is interconnected with Ethereum.
Developers might gravitate towards either token since Ethereum provides a larger potential audience, while Polygon is better than Ethereum’s Layer-1 in scalability. Crypto speculators may prefer either, since both Ethereum and Polygon are working on their respective developments to improve their networks.
Always research a digital currency’s tokenomics, development team, price history, and roadmap before considering a purchase.
Due Diligence and Do Your Own Research
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