Polygon Foundation CEO Touts 'Benefits' of Holding POL as Active Addresses Slide

The CEO of the Polygon Foundation, Sandeep Nailwal, has detailed new mechanisms for Polygon's native token POL, including deflationary burns and staking rewards tied to network usage. The announcement follows a recent decline in active addresses, though daily transaction fee revenue has increased significantly. Nailwal emphasized in a tweet that Polygon's success directly benefits POL holders, reinforcing the token's role in the ecosystem.

Polygon's active address count has dropped from a high of 2.9 million in mid-December to around 489,000 as of January 2026, according to Growthepie data. In contrast, daily revenue has risen to about $200,000, up from $13,000 in early December. Despite these mixed on-chain metrics, Nailwal highlighted the deflationary burn model, noting that 100% of base transaction fees are burned. He cited a daily average of 1.5 million tokens burned, implying an annual deflation rate of 5%.

POL's price dropped by 6.7% in the 24 hours following Nailwal's announcement. Analysts such as Ryan Lee of Bitget attributed this to normal market volatility and a strategic pause rather than a rejection of Polygon's long-term roadmap. Lee stated that enhanced utility and staking mechanisms strengthen POL's fundamentals and support long-term growth.

Why Did This Happen?

Nailwal's message focused on three primary value accrual streams for POL holders: transaction fees, staking rewards, and future interoperability fees from Agglayer. These mechanisms align with the CEO's broader vision for Polygon's growth. The deflationary model has been a key focus, with a notable one-day burn of 3 million POL tokens reported recently. This model, if sustained, could make POL "the most deflationary token in the industry".

The timing of the announcement coincided with Polygon's broader strategic initiatives, including the launch of the Open Money Stack. This initiative, unveiled in collaboration with Polygon Labs CEO Marc Boiron, aims to build a modular framework for cross-chain transactions between fiat and cryptocurrencies.

How Did Markets React?

Despite the recent price drop, POL's price had previously surged nearly 20% in the week following the Open Money Stack announcement. The price reached an intraday high of $0.1842 before retreating to $0.16 as of January 12. Bitget's Ryan Lee noted that the price movement reflects broader altcoin volatility and that the token's fundamentals are improving with stronger utility and staking mechanisms.

Market analysts expect POL to consolidate between $0.15 and $0.25 in the near term, creating a "healthy accumulation zone" ahead of broader ecosystem expansion. The token's recent performance has not overshadowed Polygon's strategic vision, with investors showing cautious optimism about future developments.

What Are Analysts Watching Next?

Analysts are monitoring the success of Polygon's Open Money Stack initiative as a potential driver of long-term adoption. The modular platform, which integrates blockchain rails, stablecoin interoperability, compliance tools, and fiat on/off-ramps, aims to facilitate seamless global on-chain payments. Bitget's Jamie Elkaleh stated that this initiative positions Polygon as a leader in enabling mainstream crypto adoption.

Investor sentiment in the broader crypto space remains mixed. Myriad prediction market users estimate a 76% probability of Bitcoin reaching $100,000, but only a 19% chance of a major altcoin season in the first quarter of 2026. These probabilities reflect cautious optimism about the crypto market's trajectory, with Polygon's developments seen as part of a larger trend toward institutional-grade blockchain infrastructure.

Polygon's recent strategic updates come amid a broader regulatory and market environment shaped by U.S. political dynamics. The Federal Reserve's recent receipt of grand jury subpoenas has raised concerns over policy independence, influencing market sentiment across asset classes. While these broader macroeconomic factors affect crypto as well, Polygon's fundamentals remain focused on improving token utility and network scalability.