What is Polygon?

Polygon (POL) is a blockchain platform that enhances scalability, security, and transaction speed on the Ethereum network. It originally launched as Matic Network (MATIC) and focused on Layer 2 scaling solutions, offering tools like sidechains and rollups to make Ethereum transactions more efficient.

On September 4, 2024, Polygon officially upgraded from MATIC to POL, marking a significant evolution of the platform. This upgrade expanded the token's utility and solidified its role as the native gas and staking token for the Polygon network. POL now powers every transaction on Polygon and is central to the network's security and staking mechanisms​.

The upgrade reflects Polygon's vision of becoming an aggregated blockchain network, supporting a wider range of decentralized applications and use cases. POL is designed to provide enhanced interoperability, scalability, and security, aligning with the platform's ongoing efforts to improve blockchain technology and connectivity​.

What is the POL token?

The Polygon (POL) token serves several key functions within the Polygon ecosystem. As of September 2024, there are approximately 7.1 billion POL tokens in circulation, with a market capitalization of around $2.62 billion.

The POL token in the Polygon ecosystem is used for several purposes. It primarily secures the network through a proof-of-stake mechanism, where validators stake POL tokens to participate in network operations. POL is also used for transaction fees on the Polygon network, granting access to decentralized applications on the network and playing a role in distributing rewards and utility income to participants.

Risk Statement

Before trading any crypto assets it is important to understand the risks. This overview is a starting point for you to perform your own research prior to investing in a crypto asset.

No securities regulatory authority or regulator in Canada has evaluated or endorsed the Crypto Contracts or any of the crypto assets made available through the platform.

Wealthsimple has performed an assessment of whether POL can be supported by Wealthsimple’s platform, including whether POL is a security and/or a derivative and is being offered in compliance with securities and derivatives laws.

We evaluated POL based on publicly available information, including (but not limited to):

• The creation, governance, usage and design of POL, including the source code, security and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that first created POL;
• The supply, demand, maturity, utility and liquidity of POL;
• Material technical risks associated with POL, including any code defects, security breaches and other threats concerning POL and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them;
• Legal and regulatory risks associated with POL, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of POL; and
• Statements made by regulators or securities regulatory authorities in Canada and other jurisdictions regarding whether POL, or generally about whether the type of crypto asset, is a security and/or a derivative.

Wealthsimple monitors ongoing developments related to crypto assets available on its platform for significant changes that may affect Wealthsimple’s original assessment of those assets, including Wealthsimple’s assessment of the application of securities and derivatives laws. Any significant changes relating to POL may result in changes to this Crypto Asset Statement and/or Wealthsimple’s ability to support POL.

Like all other crypto assets, there are some general risks to investing in POL. These include short history risk, volatility risk, liquidity risk, demand risk, forking risk, cryptography risk, regulatory risk, concentration risk, electronic trading risk and cyber security risk. Please review the Wealthsimple Crypto Product Risk Disclosure for additional discussion of general risks associated with the crypto assets made available through the platform.

Additional Risks / Information

POL (formally MATIC) has elevated regulatory risk. The United States Securities and Exchange Commission (SEC) has alleged that POL is a security under U.S. federal securities laws in one or more enforcement proceedings pending before U.S. courts against crypto trading platforms. None of Polygon Labs are parties to this proceeding, and the U.S. courts have not determined that POL is a security. In the event that a U.S. court determines that POL is a security or there are other material developments affecting the treatment of POL under securities laws, Wealthsimple may cease to support POL and/or the market for POL may be adversely affected.

We emphasize that this Crypto Asset Statement is not exhaustive of all risks associated with trading POL. Investors should perform their own assessment to determine the appropriate level of risk for their personal circumstances.

Wealthsimple is offering Crypto Contracts in reliance on a prospectus exemption contained in the exemptive relief decision Re Wealthsimple Investments Inc. dated December XX, 2022 (the Decision).

The statutory rights of action for damages and rescission in section 130.1 of the Securities Act (Ontario), and, if applicable, similar statutory rights under securities legislation of other jurisdictions of Canada, do not apply in respect of this Crypto Asset Statement to the extent a Crypto Contract is distributed under the prospectus relief in the Decision.

Last updated: September 15, 2024