Polygon (MATIC) and Hermez (HEZ) are merging, a union that sees the absorption of one by the other. Polygon has more than 350 projects in its ecosystem. The former MATIC project is thus increasing its weight in the cryptosphere through this merger, which allows it to offer a new scalability solution based on ZK-Rollups technology, for Ethereum (ETH).
Polygon and Hermez: a merged relationship
Polygon acquires Hermez Network for $250 million. The 2 projects merge their native token MATIC and HEZ. Hermez will be absorbed into the Polygon ecosystem, giving birth to “Polygon Hermez”. And the merger is not only technical, it is also organizational and human. The 26 members of the Hermez team will now join the Polygon team.
The cryptosphere has seen other protocol mergers such as that of the 2 projects on Ethereum, Keep and NuCypher in June 2021, a merger within a decentralized autonomous organization (DAO), under the KeaNu project. However, the 2 protocols have kept their respective brands and tokens, unlike this merger between Polygon and Hermez, which therefore represents a first in the way it is done, as Polygon co-founder Mihailo Bjelic states:
“This is (to our knowledge) the first ever complete merger of blockchain networks, where one network completely absorbs the other, including its tokens.”
An initial agreement regarding this merger was reached on August 4, 2021, when Hermez announced that it was entering into “discussions for a potential merger with a public network.” This agreement was then about the exchange ratio of the tokens. This was to be set based on their price at 11:00 UTC+1, the same day the agreement was reached.
The ratio revealed on August 13, 2021 is 3.5 MATIC to 1 HEZ. The conversion will be done via the exchange contract that will be “soon” published by the 2 projects.
Marriage with Hermez: ZK-Rollups in Polygon
Polygon already offered 3 Ethereum-based scaling solutions: the Polygon Commit Chain, Polygon’s main blockchain using proof-of-participation, the Polygon SDK, an Ethereum-compatible blockchain development kit, and the Polygon Avail, a versatile and scalable data availability solution for autonomous chains and sidechains.
Polygon Hermez, which is now the 4th solution offered by Polygon, is a scaling solution for Ethereum Layer 2 based on ZK-Rollups. These allow to aggregate transactions on a network like Hermez and to publish their proof of validity on Ethereum. The transactions are therefore executed outside Ethereum. This process unburdens the network and lowers transaction costs.
Polygon continues to invest to ensure its development. It is putting $250 million on the table to swallow Hermez, the protocol had also already put its hand in the wallet to acquire the million users.