Despite recent unfounded skepticism on their product roadmap, an internal team restructuring, and underperformance relative to $ETH, we believe that $MATIC remains one of the most undervalued tokens and best high-risk-reward bets in the current environment. Key upcoming developments such as the AggLayer and the $POL migration further reinforce the original thesis laid out in our report on Nov 28th, 2023 introducing Polygon 2.0. We argue that Polygon remains the most dominant project with a highly liquid token to capitalize on the ZK narrative.

Technological Edge and Strategic Realignment

There is evidence in the past that shows Polygon is not a team that’s willing to take shortcuts when it comes to product development. In 2021 Polygon embarked on a mission to become a ZK powerhouse, acquiring Hermez for $250M and Mir Protocol for $400M.

We believe that the most recent restructuring is a drop in the ocean; despite laying off 60 employees (~19% of the team), the remaining members will be getting a pay rise. It demonstrates that leadership is constantly looking to optimize operations, but more importantly, focused on retaining and attracting the best and brightest. A players don’t want C players on their team so we find the recent layoffs extremely encouraging from that point of view. This mirrors $META’s strategic shift 10 months ago, which was perceived as a negative event from the outside but ultimately turned out to be a blessing in disguise which allowed them to triple earnings per employee in less than a year.

The introduction of the AggLayer showcases the technological advancements being achieved, serving as a precedent for how rollups can achieve interoperability in a world where shared sequencing is just a long-term idea. Even if Optimism pursues its own solution with the Superchain and Arbitrum does the same with Orbits, the AggLayer is not constrained to the Polygon ecosystem. Instead, it is a solution to aggregate liquidity across heterogeneous chains, only forcing them to follow a shared ZK proving standard.