Hermez is a zk-rollup-based Layer 2 solution. In the history of cryptocurrency, this will be the first token merger. Important Points to Remember
- Polygon plans to spend $250 million to buy all HEZ tokens and rebrand Hermez Layer 2 as Polygon Hermez.
- With low fees and latency, Polygon Hermez will be a real Layer 2 Ethereum solution.
- Holders of HEZ tokens will be able to exchange them for MATIC tokens via a migration contract as part of the agreement.
- In the first merger and acquisition involving two token-based projects, Polygon is acquiring Hermez Network. Hermez Polygon Hermez is a character in the game Polygon Hermez.
Polygon has bought Hermez Network, a ZK-Rollups-based Ethereum Layer 2 scaling solution, which was previously known as Matic Network. Hermez's HEZ will be incorporated into Polygon's MATIC token, making this the first token merger in crypto history.
Polygon is an Ethereum compatible blockchain whose goal is to relieve some of Ethereum's traffic while substantially lowering fees. Polygon has received a lot of attention as a result of this design decision, with numerous DeFi projects switching to Polygon. Yield farming, which was once thought to be prohibitively expensive on Ethereum due to high gas prices, has experienced a resurgence on the scaling solution.
Zero-knowledge rollups, or ZK-Rollups, are the foundation of Hermez's Layer 2 approach. This technology enables it to process transactions faster and with nearly no costs while retaining the security of the Ethereum main chain. The project will be known as "Polygon Hermez," and Hermez's 26 staff will join Polygon.
This is a watershed moment in crypto since it is the first time a project has acquired another project with a token and integrated the two. MATIC will be utilized to pay for transactions on Hermez from now on. Holders of HEZ will be able to swap their tokens at a rate of 3.5MATIC/1HEZ.
Around 250 million MATIC tokens, or about 12.5 percent of Polygon's treasury, will be distributed to HEZ investors as compensation. Polygon now has what is commonly referred to as a Layer 2 solution, one built on top of Ethereum rather than in parallel like the Polygon Commit Chain, a proof-of-stake blockchain.
Critics have pointed out that the deal makes it appear as though Polygon is purchasing a true Layer 2 solution rather than developing one. Polygon, on the other hand, has declared that it is doubling down on its ZK-centric approach by allocating another $1 billion from its treasury to the technology's development.
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