Ethereum scaling project Polygon acquired Hermez Network for a deal worth $ 250 million; this represents about 12.5% of Polygon’s treasury and 2.5% of MATIC’s total supply.
The two projects will merge, that is, Hermez’s offerings will merged into Polygon under the new name Polygon Hermez. They also combine their own tokens – MATIC and HEZ. In addition, as part of the deal, 26 Hermez employees will also join the Polygon team.
Mihailo Bjelich noted that this is the first ever full-scale merger of blockchain networks in which one network completely absorbs another, including its token.
The deal was possible because HEZ is still a pretty early stage token.
Earlier this year, two Ethereum projects, Keep and NuCypher, also merged their protocols; but kept their brands independent from each other and did not merge their tokens.
Initial agreement between Polygon and Hermez
Networks reached an initial agreement as early as 4 August. In which they decided on the peg or swap ratio of their tokens based on their prices as of August 4th. The final solution is 3.5 MATIC : 1 HEZ.
Consequently, HEZ token holders will be able to exchange them for multiple MATIC tokens. At the same time; it is noted that the largest holders of Hermez tokens were aware of this peg, and they all agreed with it.
Investment in scaling solutions
Polygon has unlocked $ 1 billion worth of tokens to invest in blockchain scaling solutions based on ZK-rollups; is a type of scaling technology that helps execute network transactions. This will be used in the case of Hermez as well, so that the proof of the validity of the transactions will be published on Ethereum. In turn, this reduces the load on the Ethereum blockchain, and moreover, makes transactions cheaper.
Polygon, offers several Ethereum solutions, these are: Polygon Commit Chain, Polygon SDK, Polygon Avail. Hermez will be the fourth solution.
Hermez will focus on developing zkEVM technology to provide scalability for embedded smart contracts in ZK-Rollup.
The co-founder of Polygon emphasized: “We see solutions based on ZK roll-ups and swaps as the only strategic resource for blockchain scaling and infrastructure development. We have a clear goal of becoming a leading company in this area in the coming years”.
Thus, Polygon and Hermez want to create a more inclusive financial system that is secure, decentralized and permissionless on top of Ethereum.
Note that there are over 350 projects in the Polygon ecosystem, and the Hermez merger will allow them to increase the scalability of their applications.
We would also like to note that at the end of July, the Polygon project launched its own studio, which will develop games on the blockchain and solutions for the issuance of collectible tokens (NFT).