The MATIC token is a native token on the Polygon blockchain used to make payments for network transactions.
Network participants can also stake MATIC tokens to participate as validators and earn staking rewards by helping to maintain the network.
The initial supply and launch schedule can be noted below and multiple vesting schedules are in place, depending on the purpose and destination of the tokens.
MATIC Supply Information
- Circulating Supply- 8.73B MATIC
- Total Supply — 10B MATIC
- Initial Supply — 10B MATIC
- Market Capitalization (February 2023) — $7.7B USD
- Fully-Diluted Valuation- $8.5M USD
MATIC Token Distribution
Launch, Initial Token Allocation, and Funding
The MATIC token’s launch was via a private sale and initial exchange offering (IEO).
Found company Polygon Labs raised $48 million on a $125 million Reg. D offering. Investors took the $48 million in the form of a Simple Agreement for Future Tokens (SAFT). The $48 million was raised in three separate rounds of $4.5 million, $36 million, and $7.1 million.
Below is the initial distribution of the total of 10 billion MATIC tokens:
- Private sale: 3.80%
- Binance Launchpad sale (IEO): 19%
- Team: 16%
- Advisors: 4%
- Network operations: 12%
- Foundation: 21.86%
- Ecosystem funds: 23.33%
MATIC Allocation, Source: CoinGecko
The supply curve of emissions hitting the open market over time can be seen below. Approximately 93% of all tokens have already been unlocked as of Q1 2023. The last 800 million tokens will be unlocked by Q2 2025.
Liquid Supply Curve, Source: Messari
With its suite of scaling technologies to support the Ethereum network scale to over a billion users, Polygon’s total addressable market is similar to that of Ethereum. As user adoption of the main public Ethereum blockchain grows, the need for Polygon’s scaling solutions increases for both public and enterprise use.
Validators must also be adequately compensated to ensure network security. Polygon validators are rewarded with MATIC incentives, but these are largely depleted (circulating supply is 97% totally diluted). This is part of the impetus for the foundation to issue revised tokenomics later this year and we anticipate an incentive dilution.
Current Token Distribution
As of 2023, there are 575,000+ MATIC token holders, which has been steadily increasing since Matic’s inception in 2017. Below are the top-10 MATIC addresses on the Ethereum network. The top-six, in order, are the MATIC staking contract, MATIC plasma bridge, Ecosystem fund (discussed in Network Effects), the Foundation, a Binance wallet, and a vesting contract.
Top 10 Richest Polygon (MATIC) Addresses, Source: CoinCarp
EIP-1559 and Token Burns
MATIC tokens are burned via the same EIP-1559 model in Ethereum. For greater detail about EIP-1559’s mechanics and rollout of EIP-1559, see here. EIP-1559 replaces the first-price auction, in which the highest bidder would win, with a base fee for transactions. Users can also pay a priority fee to miners to speed up their transactions’ processing. This base fee is now burned instead of paid to miners. This means that over time, there will be less supply of MATIC in circulation, making the MATIC token more deflationary than otherwise.
In terms of how the tokens are burned, the MATIC tokens are first burnt on Polygon and then completed on Ethereum. Users can follow these instructions to initiate the token burn.
As of Q1 2023, the total amount of MATIC burned is ~5.7 million MATIC at a rate of 0.27% of the total MATIC supply per year. The EIP-1559 upgrade for Polygon was released in January 2022 and adds deflationary forces to MATIC economics.
The upgrade’s purpose was to replace the gas fee calculation mechanism to make it easier for users to estimate transaction fees, while also burning MATIC tokens. The upgrade also offers better fee visibility.
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