Polygon Protocol Burns 100 Million POL Tokens Two Weeks Ago
Sandeep Nailwal, founder of the Polygon Foundation, stated that two weeks ago, the Polygon protocol permanently burned 100 million POL tokens using fees generated by the network, accounting for approximately 1% of the total token supply.
The number of POL tokens planned for the next phase of destruction has reached 22 million, about 0.2% of the total supply, which also comes from the fee accumulation collector rather than the foundation's treasury.
Previously, the fee collector held approximately 121 million POL tokens, and after burning 10 million, about 21 million remain. The community can trigger additional burns quarterly, and the network will enter a deflationary state starting January 2026 due to accumulated base fees.
Nailwal mentioned that the impact of the Polygon Open Money Stack (OMS) on POL has not been fully disclosed, with relevant details to be announced soon. Last week, the annualized transaction volume processed by OMS exceeded $1 billion for the second consecutive week.
The burn is achieved by transferring to a dead address, permanently removing the tokens without changing the total supply displayed by the ERC-20 contract, but reducing the circulating supply. The POL price has recently fluctuated around $0.10, without a significant immediate increase due to the burn.
The event is driven by network usage and fees, with the flow of funds shifting from fee accumulation to supply reduction, benefiting users holding POL and participating in staking, while facing pressure from the net supply increase due to a continuous 2% annual issuance.
Polygon is shifting its business focus towards payment and stablecoin activities, including PayPal's PYUSD, with ongoing usage providing a source of fees for future burns.
Source: Public Information
ABAB AI Insight
Sandeep Nailwal has been promoting the expansion of Polygon (formerly Matic) from sidechains to a broader payment and stablecoin infrastructure since its inception. The migration from MATIC to POL is expected to be completed in 2024, transitioning the token economy from pure issuance to fee-driven burns. Historical milestones include the announcement of network deflation in early 2026, the deployment of permissionless burn contracts, and their launch after being signed by the Security Council.
In terms of capital flow, the network accumulates base fees in the collector before converting them to burns, directly transforming resources from transaction fees into supply reduction. The motivation is to enhance the scarcity of POL as a gas and staking token, while leveraging the OMS payment stack to increase usage, creating a flywheel of "more usage → more fees → more burns."
Similar cases include Ethereum's EIP-1559 base fee burn mechanism, as well as references to L2s like Arbitrum and NEAR in revenue comparisons (Nailwal claims Polygon's revenue in 2026 will be about $24.5 million, higher than its competitors). Currently, Polygon is in a control phase of transitioning from an expansion network to a payment company, relying on actual usage rather than mere narrative to drive deflation.
Essentially, this represents a shift in technical alternatives and pricing power: fees transition from simple revenue or issuance balance to permanent supply reduction. The mechanism relies on permissionless community triggers and a quarterly mechanism to reduce centralization dependence, but the 2% annual issuance still requires sustained fees to achieve net deflation. The usage and scale of OMS will determine whether the supply curve truly shifts towards scarcity.
ABAB News · Cognitive Law
Fees burn tokens, usage determines supply
One-time burn is an event, continuous burning is a mechanism
Deflation relies on fees, not narratives