The Polygon community is voting on a liquidity proposal that could enable its ecosystem to grow significantly. The plan aims to invest unused stablecoins in return-generating strategies, thus generating $91 million annually to fund DeFi developments.
Details of Liquidity Proposal
With Polygon’s latest Pre-PIP (Polygon Improvement Proposal), it is proposed to release the unused $1.3 billion stablecoin held on the PoS Bridge to support the DeFi ecosystem. This proposal, prepared by Allez Labs, Morpho Association, and Yearn, presents a huge opportunity for ecosystem development, generating an estimated $70–91 million annually.
Despite the targeted recommendation, the POL price is down 2% in the last 24 hours. However, the recent upward trend of the token shows that investor confidence may increase again if the vote is positive. POL, which has increased by 70% in the last month, continues to attract the attention of investors.
“This proposal is an important step for the efficient use of unused assets and the rapid growth of our ecosystem.” -President of the Polygon Protocol Council
The proposal envisages depositing stablecoins such as USDC, USDT and DAI into ERC-4626 vaults and managing the risk and maximizing return with the network’s Improvement Proposal (PIP) for each vault. For example, DAI reserves will be allocated to Maker’s sUSDS, while Morpho Vaults for USDC and USDT will be used as the yield-generating mechanism.
Yearn will manage the Ecosystem Incentive Program and ensure that the proceeds are directed to promoting DeFi projects and increasing liquidity. This approach can significantly increase DeFi activities on Polygon PoS and the upcoming AggLayer and create new areas of growth.
The proposal aims to transform idle assets into productive resources and achieve rapid expansion in the DeFi field by meeting the basic demand of the community. Risk management and auditing provided by Allez Labs and the Polygon Protocol Council strengthen the feasibility of the proposal.
Investor Reaction and Market Movements
Innovations in the ecosystem continue with tokenization efforts. Assetera has chosen Polygon to tokenize traditional assets, integrating assets such as NVIDIA shares and S&P 500 trackers into the platform. Additionally, thanks to the Courtyard project, Pokemon cards are also starting to be traded on the network.
Polygon’s scalable infrastructure keeps it a leader in the tokenization space, demonstrating its commitment to diversifying its ecosystem and providing new opportunities for users around the world. The benefit of the additional income to the Polygon ecosystem in the long term is undeniable and we should see its effects on the POL price, albeit with a delay.
Polygon’s $1.3 billion liquidity proposal is considered an important step in terms of ecosystem growth and supporting DeFi projects. If the community supports this proposal, it could have positive effects for both token prices and the overall ecosystem. Investors seem hopeful that if the proposal is accepted, the returns will contribute to the sustainable growth of the ecosystem.
Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that crypto currencies carry high volatility and therefore risk, and should carry out their transactions in line with their own research.
