Author: Jae, PANews
In the long history of Ethereum scaling, Polygon was once remembered as a "sidechain." Now, it is quietly shedding its old shell, attempting to be reborn.
Recently, Polygon co-founder Sandeep Nailwal declared 2026 as the "year of rebirth" for POL. In the week following his post, the price of the POL token surged by over 30%.
With Polygon's acquisition of Coinme and Sequence and the disclosure of its technology roadmap, it aims to evolve from an Ethereum scaling solution into a "payment and tokenization foundation" for the global market.
Spending over $250 million on a major acquisition, bridging the last mile of cash on-chain technology.
Polygon has begun to adopt a highly aggressive strategy, directly penetrating the financial gateways of the physical world.
On January 13, Polygon Labs announced the completion of its acquisition of two crypto companies, Coinme and Sequence, for a total transaction value exceeding $250 million. Coinme focuses on the exchange of cash for crypto assets and operates a network of crypto ATMs in the United States; Sequence provides on-chain infrastructure services, including products such as crypto wallets.
Polygon Labs CEO Marc Boiron and Sandeep Nailwal stated that this acquisition is an important part of their stablecoin and payments strategy, aiming to strengthen Polygon's presence in the infrastructure sector. This move also marks Polygon's expansion from "smart contracts" to "physical infrastructure."
It's worth noting that Coinme was one of the first licensed Bitcoin ATM operators in the United States. This deal not only acquired its ATM network covering 49 states and tens of thousands of retail locations (such as large supermarkets like Kroger), but more importantly, it acquired a complete set of licenses essential for payment institutions in the United States—Money Transfer Licenses (MTLs).
The underlying logic of this acquisition lies in establishing a physical network for depositing and withdrawing funds. For ordinary users who do not have traditional bank accounts or access to CEXs (centralized exchanges), Polygon provides a channel through Coinme's ATMs to directly convert cash into on-chain assets (such as stablecoins or POL) at supermarket checkouts.
This is a shortcut to "on-chain cash," but also a significant compliance barrier. Acquiring an entity that has been operating for over a decade with a mature compliance framework will provide Polygon with an extremely high entry threshold. Although Coinme still faces some regulatory challenges (such as the refund order from Washington State's DFI), for Polygon, this remains the optimal solution for unlocking liquidity in the physical world.
In short, this large-scale acquisition is not just about buying equipment, but also about buying access, licenses, and trust.
Sandeep Nailwal stated frankly that this move will put Polygon Labs in direct competition with Stripe. Over the past year, Stripe has also acquired stablecoin and crypto wallet startups and developed its own public blockchain for payment scenarios to build a complete technology stack from payment processing to user asset storage.
Overall, in this new round of stablecoin arms race, Polygon Labs is attempting to gain a foothold on the same starting line as traditional fintech giants through acquisitions.
A performance surge from 5,000 to 100,000 TPS
The battle for stablecoin payments cannot be won without strong technical support.
According to Sandeep Nailwal's TPS (transactions per second) roadmap, Polygon aims to elevate the execution efficiency of blockchain to the level of the traditional internet.
Polygon's recent Madhugiri hard fork upgrade has yielded initial results, increasing on-chain TPS by 40% to 1,400 TPS.
The team's first-phase plan is to reach 5,000 TPS within 6 months. The goal of this phase is to solve the congestion problem that PoS chains currently face during peak transaction periods, enabling Polygon to handle the throughput demands of global retail payments.
The more aggressive second-phase upgrade plan aims to boost the entire ecosystem's TPS to 100,000 within 12 to 24 months, meaning Polygon is poised to handle Visa-level transaction density.
Achieving this goal depends on two major technological leaps:
Rio upgrade: Introduces stateless verification and recursive proof, reducing transaction finality from minutes to about 5 seconds and eliminating chain reorganization risk;
AggLayer: Through ZK proof aggregation, it enables seamless sharing of liquidity across multiple chains, ensuring that 100,000 TPS is not a load on a single chain, but rather a distributed synergy of the entire Polygon network.
It could be said that Polygon is not transforming a chain, but building a federation.
Payment services penetrate retail scenarios, integrating three major Fintech giants.
Once the deposit and withdrawal channels and throughput capacity are both in place, payment will naturally follow.
Polygon is positioning itself as the technological foundation of a global payments network through deep partnerships with fintech giants.
Revolut's full integration: As Europe's largest digital bank with 65 million users, Revolut has integrated Polygon into its main infrastructure for crypto payments, staking, and trading. Revolut users can directly conduct low-cost stablecoin transfers and POL token staking through the Polygon network. As of the end of 2025, Revolut users' trading volume on Polygon has been steadily increasing, with its cumulative trading volume approaching $900 million.
Flutterwave's Settlement Bridge: African payments giant Flutterwave has also chosen Polygon as its default public blockchain for cross-border payments, focusing on stablecoin settlements. Given the high traditional remittance costs in Africa, Polygon's low fees and fast settlements provide a better option for local driver payments and trade on platforms like Uber.
Mastercard's identity solution: Mastercard uses Polygon to power the "Mastercard Crypto Credential" identity solution, introducing verified usernames to its self-custodied wallets. This significantly reduces the barrier to entry and the risk of address identification during transfers, while also improving the payment experience.
Polygon is also significantly penetrating everyday consumer scenarios. Dune data shows that by the end of 2025, the number of small-amount payment transactions (between $10 and $100) on Polygon will approach 900,000, a record high, representing an increase of over 30% compared to November.
Leon Waidmann, head of research at Onchain, emphasized that this transaction range highly overlaps with everyday credit card spending, indicating that Polygon is gradually becoming a major channel for payment gateways and PayFi (payment finance).
BlackRock invests $500 million in tokenization business targeting the institutional market.
If payment is Polygon's entry point for user traffic, then tokenization is the foundation of its institutional-grade infrastructure.
In the field of RWA (Real-World Asset) distribution, Polygon has become the testing ground and preferred platform for top global asset management institutions. Its low interaction costs and seamless compatibility with the Ethereum ecosystem give Polygon a significant advantage in the on-chain migration of traditional financial assets.
In October 2025, BlackRock, the world's largest asset management firm, deployed approximately $500 million in assets on the Polygon network through its BUIDL tokenized fund.
This move represents the highest level of assurance regarding the security of the Polygon 2.0 architecture. With the large-scale inflow of institutional funds, Polygon's TVL (Total Value Locked) and liquidity depth may be further enhanced.
AlloyX's Real Yield Token (RYT) launched on Polygon is a prime example of the integration of traditional finance and DeFi. This fund invests in short-term, low-risk instruments such as US Treasury bonds, and its unique feature is its support for a looping strategy. Investors can use RYT as collateral to borrow funds in DeFi protocols and then reinvest it in the fund to amplify returns.
NRW.BANK's issuance of digital bonds on Polygon represents a significant breakthrough for it in Europe's regulated capital markets. These bonds operate under Germany's Electronic Securities Act (eWpG), demonstrating that Polygon can issue not only conventional crypto tokens but also support compliant assets with stringent regulatory requirements.
POL exhibits strong deflationary characteristics, and token value capture has restarted.
Returning to the underlying asset itself, the shift from MATIC to POL is not merely a change in token symbols, but rather a reconstruction of economic logic.
Since the beginning of 2026, Polygon has generated over $1.7 million in transaction fees and burned over 12.5 million POL tokens (approximately $1.5 million).
Castle Labs points out that the main reason for the surge in fees is that Polymarket launched a 15-minute prediction market fee feature, which directly brought Polygon more than $100,000 in daily revenue.
Previously, the Polygon PoS network set a historical record: 3 million POL were destroyed in a single day, equivalent to approximately 0.03% of the total supply. This was not accidental, but a natural result of the ecosystem entering a high-frequency usage phase.
According to the EIP-1559 mechanism, when block utilization remains above 50% for an extended period, gas fees will enter a rapid upward trend. Currently, Polygon's daily burning volume has stabilized at around 1 million POL, with an annualized burning rate of approximately 3.5%, more than double its annualized staking yield (approximately 1.5%). This means that through on-chain activity alone, the circulating supply of POL is being "physically removed" at a considerable rate.
This high-density value capture may support what Sandeep Nailwal calls "token rebirth".
The moat coexists with four kinds of risks
Although Polygon's current situation seems very promising, it still faces four major challenges:
- The double-edged sword of regulatory policy: While the acquisition of Coinme brought Polygon a license, it also exposed it directly to the regulatory oversight of various US states. If Coinme's past compliance issues escalate, it could impact POL's planned "rebirth" in 2026.
- The fragmented technical architecture presents challenges: Polygon 2.0 comprises multiple complex modules, including PoS, zkEVM, AggLayer, and Miden. While this multi-component architecture offers greater functionality, maintaining such a large ecosystem with diverse technical approaches presents significant engineering challenges and security risks. In particular, a vulnerability in AggLayer's cross-chain interactions could trigger a systemic disaster.
- Intense competition in the public blockchain market:
- The rise of Base: Backed by Coinbase, Base has achieved extremely high user growth and is eroding Polygon's market share in areas such as social networking and payments.
- The pressure from high-performance public chains: High-performance L1 blockchains such as Solana still have a leading advantage in transaction speed and developer experience, while Polygon's goal of 100,000 TPS still needs time to be validated.
- Financial sustainability concerns: Token Terminal data shows that Polygon suffered a net loss of over $26 million in the past year, with its transaction fee revenue failing to cover validator costs. This reliance on ecosystem incentives means it remains in a "burning money for market share" phase. Even if Polygon returns to profitability by 2026, the sustainability of its revenue generation remains to be seen.
Clearly, Polygon is no longer content with being a "plugin" for Ethereum, and its transformation path deserves careful consideration: breaking through performance bottlenecks through technological scaling, lowering the entry threshold through investment and mergers and acquisitions, obtaining credit endorsement through top institutions, and finally strengthening user stickiness through high-frequency scenarios.
2026, designated as the "Year of Rebirth," will be marked not only by fluctuations in the POL token price but also by Polygon's profound resonance with the global financial pulse as infrastructure. For investors, tracking the technological implementation progress of Polygon 2.0, the inflow and turnover of funds, and its financial performance will be key to determining whether Polygon can successfully rise from the ashes.
