What is Polygon crypto?
Summary
Polygon is an ecosystem of blockchain technology connected to Ethereum. Polygon Chain is a separate network for apps and transfers; POL pays its fees and supports staking. Older material may call the asset MATIC.
- Polygon Chain runs transactions separately from Ethereum, with a bridge between them.
- POL is the asset used for Polygon Chain fees and staking; MATIC is the former name.
- Virtune Polygon ETP holds POL as collateral but its holder cannot use POL on the network.
Why use Polygon Chain?
Polygon includes networks and technology for apps handling digital assets. On Polygon Chain1, for example, a person can send a digital dollar asset without every step executing directly on Ethereum. The app has a separate network for frequent transfers while retaining a route to Ethereum.
Polygon Chain, previously called Polygon PoS, is not simply another address on Ethereum. It runs its own transactions. A bridge can lock an asset on Ethereum2 and represent it on Polygon Chain. That connection can help an app use assets from Ethereum, but choosing the right network and relying on a bridge introduce their own risks. Ethereum's explainer covers the network on the other side.
Arbitrum is a clearer example of an Ethereum layer 2 that posts its results and data to Ethereum. Polygon's wider ecosystem includes scaling technology often described as layer 2. Whether Polygon is a layer 2 therefore depends on which Polygon network is meant; Polygon Chain is a separate proof-of-stake chain connected to Ethereum rather than a transaction executed on Ethereum itself.
POL, MATIC and network use
POL pays fees and supports staking on Polygon Chain. Older wallets or price charts may instead say MATIC. MATIC can be migrated to POL one for one3, which is why both names may appear in older material. Virtune Polygon ETP follows POL.
A transfer of another token on Polygon Chain still needs POL for the network fee. This explains POL's role in app activity, though it does not determine POL's market price.
POL directly or through an ETP
Direct POL can pay fees and be used in network functions. Virtune Polygon ETP gives POL price exposure through a security, without the holder arranging a crypto wallet. It is physically backed with POL held as collateral4. The investor owns the ETP, not POL that can be spent or staked.
The product is listed on Nasdaq Stockholm.
Costs when buying Virtune Polygon ETP
| Cost | Charged by | When |
|---|---|---|
| Brokerage commission | Broker | On every purchase and sale |
| Difference between bid and ask price | Market | On every trade |
| Management fee, 1.95% per year | Issuer | Ongoing, from the product's value |
| Currency conversion | Broker, if applicable | If the product trades in another currency |
Risks to understand
POL's price can change sharply. Bridges and apps can have technical risks beyond those of the underlying network. Direct holders manage their own wallet or custody choices; an ETP adds issuer, custody and exchange-trading risks. Physical backing does not prevent a price loss. Crypto-assets can lose substantial value5.
Related product
Sources
- Polygon Labs: Polygon Chain
- Polygon Support: How does bridging work?
- Polygon Labs: POL
- Virtune Investor Relations: Collateralization Methodology
- EBA, EIOPA and ESMA (the European Supervisory Authorities): EU financial regulators warn consumers on the risks of crypto-assets
