Polygon Acquires Hermez, Performing the First Ever Token Merger
Polygon is buying a Layer-2 scaling company for $250M and, for a crypto first, merging tokens.
On Friday August 13, it was announced that Polygon is buying Hermez Network for $250M and absorbing their team. For the first time in a crypto network acquisition, Polygon’s token (MATIC) is merging with Hermez’s token (HEZ), and both will trade under the MATIC symbol. Prior to the purchase, Polygon received the buy-in of large token holders (akin to shareholders) accounting for 90% of the network. At the time this article was published , MATIC had a market cap of $9.12B.
Hermez is an Ethereum Layer-2 scaling solution. This essentially means it sits on top of the Ethereum network and allows for much higher throughput in the system than Ethereum can currently offer on its own. Additionally, Hermez offers lower fees for each transaction.
The acquisition is part of a strategic direction for Polygon. They’ve recently committed $1 Billion towards something called ZK-Rollups. ZK-Rollups are a way of bundling transactions together into a single transaction, in this case on the Hermez network, then publishing the bundled transaction on the Ethereum network to reduce the load on Ethereum.
TLDR: Polygon is buying a Layer-2 scaling company for $250M and, for a crypto first, merging tokens.