Polygon’s zkEVM, acquired for $250 million in 2021 after rebranding from Hermez, is reportedly incurring annual losses exceeding $1 million. This is according to researcher Lorenz Lehmann. The Ethereum sidechain has announced plans to phase out the zkEVM by 2026, marking the end of its zero-knowledge scaling efforts. Instead, Polygon will pivot its focus to Proof-of-Stake (PoS) and AggLayer. CEO Sandeep Nailwal will lead the charge.
This strategic shift underscores Polygon’s commitment to long-term sustainability. It leverages its robust treasury and ongoing innovations to solidify its position in the blockchain ecosystem.
Polygon zkEVM: Challenges and the Decision to Phase Out
Despite its ambitious launch, Polygon’s zkEVM has faced significant challenges. Lehmann noted the chain has never been upgraded to utilize blobs. This feature is essential for reducing transaction costs on Ethereum. As a result, the zkEVM operates at a financial loss, burning through more than $1 million annually.
Polygon has decided to sunset the zkEVM by 2026. It will redirect resources toward projects with greater scalability and economic viability. This decision aligns with the organization’s broader vision of fostering a trustless Internet of Blockchains through AggLayer and enhancing the capabilities of its PoS chain.
Sandeep Nailwal Takes the Helm as CEO
In a pivotal move, Sandeep Nailwal, co-founder of Polygon, has stepped into the role of CEO of the Polygon Foundation. Previously focused on institutional governance, Nailwal emphasized the need for clear direction and execution during this transformative period.
“I’ve always stayed away from moving into the CEO role because I’ve been focused on building PF as an institutionally governed foundation. But right now, Polygon needs clear direction and focused execution, and that means stepping up.”
– Sandeep Nailwal, CEO and Co-founder of Polygon Foundation
With a healthy treasury and hundreds of millions in cash reserves, Polygon is well-positioned to execute its long-term strategy. Nailwal outlined two key areas of focus:
- Polygon PoS: Expanding its role in stablecoin payments and real-world assets (RWA).
- AggLayer: Advancing its mission to create a seamless, trustless interoperability layer for blockchains.
Polygon PoS: Scaling for the Future
The Polygon PoS chain is set to undergo significant upgrades as part of its Gigagas roadmap . The first milestone is already live in testnet. It aims to push network capacity beyond 1,000 transactions per second (TPS) by early July.
Nailwal revealed that Polygon PoS plans to achieve zero reorgs , 1-second finality , and over 5,000 TPS in a devnet environment. By September or October, these upgrades are expected to position Polygon PoS among the most performant blockchains globally.
Looking further ahead, Polygon has a clear path to scale to 100,000+ TPS over the next few years. These enhancements not only improve the protocol’s economic viability. They also increase the value proposition for POL stakers , the native token of Polygon’s ecosystem.
AggLayer: Building the Internet of Blockchains
Polygon’s AggLayer continues to play a crucial role in its strategy. The upcoming AggLayer v0.3, set to launch on June 30, introduces improved features. It excludes fast interoperability, which is expected to be completed by the end of Q3.
The AggLayer Breakout program will continue to spin off projects, driving innovation. It delivers substantial airdrops to POL stakers. According to Nailwal, Polygon remains committed to building blockchain networks. Zero-knowledge (ZK) technology serves as a cornerstone for achieving internet-level scalability.
Polygon Zisk: The Next Chapter in ZK Research
Despite phasing out the zkEVM, Polygon remains deeply invested in zero-knowledge research. The company unveiled its next project, Polygon Zisk, led by Jordi Baylina, a prominent figure in the ZK space.
Polygon plans to spin off more ZK research initiatives in a neutral manner, contributing to the broader blockchain ecosystem. This approach reflects the company’s belief in ZK as a critical tool for advancing blockchain scalability and interoperability.
Market Reactions and Future Outlook
Polygon’s recent developments come amid renewed interest from large market makers. They have returned to create markets in POL following the SEC’s decision to drop investigations and lawsuits related to MATIC as a security.
Nailwal also announced educational campaigns to ensure widespread awareness of the transition from MATIC to POL. He highlights the token’s evolving role within the ecosystem.
However, challenges remain. Nailwal acknowledged that POL’s price performance has been lackluster as Ethereum Layer-2 solutions like Base and Arbitrum gain traction. This is in terms of total value locked (TVL). Despite this, Polygon remains optimistic about its ability to innovate and compete in the rapidly evolving blockchain landscape.
Final Thoughts
Polygon’s decision to phase out the zkEVM and refocus on PoS and AggLayer reflects a pragmatic approach to addressing current challenges. It positions itself for future growth. With Sandeep Nailwal at the helm, the company is poised to execute its ambitious roadmap. Polygon is leveraging its strong financial position and technical expertise.
As Polygon continues to innovate, its efforts to scale PoS, enhance AggLayer, and advance ZK research could redefine its role in the blockchain ecosystem. The coming months will be critical in determining whether these strategic shifts translate into sustained success for the platform and its community.
