Polygon rolled out a major upgrade incorporating Ethereum’s London hard fork. This upgrade will limit the supply of MATIC and make the tokens potentially more valuable, with the Ethereum Improvement Protocol 1559 (EIP 1599) now on the mainnet.
The EIP-1559 upgrade, introducing a partial network fee burning mechanism, went live on the layer-two scaling network- Polygon. The upgrade happened at block 23,850,000 on January 18 2021. The EIP-1559 was first tested on the Mumbai testnet in December 2021, and offers “better fee visibility,” according to the Polygon team.
Polygon MATIC becoming deflationary will positively affect the Polygon investors because the token will become more valuable over time.
More About the London Hard Fork
Ethereum underwent a technical upgrade on August 5, 2021, known as Ethereum Improvement Protocol 1559 or EIP-1559, it has also been dubbed as the ‘London Hard Fork’.
The EIP-1559 upgrade is only a small part of Ethereum’s overall network overhaul, which is expected to be completed by early 2022. Ethereum will switch from a proof-of-work to a proof-of-stake system due to this.
Here’s What Changes With the EIP-1559 Upgrade
The upgrade aims to introduce the fee-burning mechanism to Polygon, destroying MATIC tokens making the token supply deflationary once fee burning commences meaning it will become more valuable over time. In addition, the upgrade will improve cost estimates by doing away with the first-price auction method of calculating network fees, but it does not lower gas prices.
Perhaps the most exciting benefit of the upgrade is that the supply of MATIC is likely to become deflationary, with 0.27% of the total supply being burnt every year. The token’s deflationary nature in the future could aid supply shock narratives fueling a macro bullish narrative, as there is a fixed supply of 10 billion tokens with 6.8 billion currently in circulation.
The Polygon team said, “Deflationary pressure will benefit both validators and delegators because the base fee increases automatically if the block is full, the changes will result in fewer spam transactions and lead to less network congestion.”
By making the gas prices more predictable and the network more efficient, the upgrade will have a positive effect on the token HODLers, validators, developers, and DApp users.
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