Polygon Acquires Layer 2 Blockchain Hermez for $250 Million


Key Takeaways

  • Polygon is spending $250 million to accumulate all HEZ tokens and rebrand the Hermez Layer 2 to Polygon Hermez.
  • Polygon Hermez might be a real Layer 2 Ethereum answer, with low charges and low latency.
  • As a part of the deal, HEZ holders will be capable to trade their HEZ tokens with MATIC tokens via a migration contract.

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Polygon is buying Hermez Community within the first merger and acquisition deal involving two initiatives with tokens.

Hermez To Change into Polygon Hermez

Previously often known as Matic community, Polygon has lately acquired Hermez Community, a ZK-Rollups-based Ethereum Layer 2 scaling answer. The acquisition options the primary token merger in crypto historical past, as Hermez’s HEZ might be built-in into Polygon’s MATIC token.

Polygon is an Ethereum suitable blockchain whose goal has been to alleviate a few of the site visitors from Ethereum whereas lowering charges drastically. This design determination has introduced numerous consideration to Polygon, with many DeFi initiatives migrating to Polygon. Yield farming, usually seen as too costly on Ethereum resulting from excessive gasoline charges, has additionally seen a renaissance on the scaling answer.

Hermez’s Layer 2 answer relies on zero-knowledge rollups, usually abbreviated to ZK-Rollups. This expertise permits it to course of transactions sooner and for nearly no charges whereas nonetheless leveraging the principle Ethereum chain’s safety. The merger will see the mission named “Polygon Hermez,” and Hermez’s 26 staff be a part of Polygon.

It is a historic occasion for crypto as by no means earlier than had a mission acquired one other mission with a token and merged each. Any longer, MATIC might be used to pay for transactions on Hermez. HEZ holders will be capable to trade their tokens at a 3.5MATIC/1HEZ ratio.

Round 250 million MATIC tokens will compensate HEZ holders, representing round 12.5% of Polygon’s treasury. With Hermez, Polygon acquires what’s most conventionally considered a Layer 2 answer, one constructed on high of Ethereum reasonably than in parallel just like the Polygon Commit Chain, a proof-of-stake blockchain.

Critics have famous that the acquisition can look like Polygon shopping for themselves a real Layer 2 answer reasonably than constructing it themselves. Alternatively, Polygon has introduced it’s doubling down on its ZK-centric technique by committing an extra $1 billion from its treasury to growing the expertise.

Disclaimer: The creator held ETH and several other different cryptocurrencies on the time of writing.

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