Polygon and GSR Launch Katana Network to Address DeFi Fragmentation

Polygon Labs and GSR have jointly announced the launch of Katana, a decentralized finance (DeFi)-focused blockchain aimed at solving liquidity fragmentation within the DeFi ecosystem. Katana’s private mainnet launched on May 28, 2025, with plans for a public mainnet launch in June.

This initiative is part of Polygon's broader AggLayer strategy, leveraging advanced technology to unify liquidity and optimize yield generation for DeFi users. The network has been incubated under the AggLayer Breakout Program, a project designed to foster high-impact blockchain solutions.

Marc Boiron, CEO of Polygon Labs, emphasized the necessity of the project, stating, “When you look across everything in crypto, what you realize is that there's no chain that's built very well for actually having deep liquidity”.

Agglayer needs deep liquidity, Katana brings it

Katana is built on Polygon’s AggLayer technology and utilizes a custom version of the OP Stack, called cdk-opgeth, which integrates zero-knowledge (ZK) proofs provided by Succinct Labs' SP1 prover. This design eliminates the long withdrawal windows typically associated with fraud-proof mechanisms and ensures faster finality. The network also introduces VaultBridge, a system that generates yield even before assets like ETH, USDC, and WBTC reach the chain.

Katana concentrates liquidity into a core set of applications and assets, reducing fragmentation across DeFi primitives. It reinvests 100% of net sequencer fees and a portion of core app revenue into chain-owned liquidity (CoL) managed by the Katana Foundation. CoL ensures deeper markets, stabilizes volatility, and enhances borrowing and lending rates, creating a more efficient and resilient DeFi ecosystem.

By leveraging Polygon's AggLayer technology, Katana utilizes the canonical bridge and VaultBridge to generate real yield, ensuring that liquidity is both concentrated and efficient. This approach not only optimizes liquidity usage but also enhances yield generation for DeFi users, making Katana a pivotal player in addressing liquidity fragmentation within the ecosystem.

The blockchain supports key DeFi protocols like Morpho for lending, Sushi for decentralized trading, and Vertex for perpetual swaps. Jakob Palmstierna, the President of GSR, elaborated on their contribution to the Katana project by explaining that GSR is responsible for ensuring sufficient on-chain liquidity. This liquidity is crucial for enabling users to effectively engage with the blockchain from its very first day of operation.

Tokenomics and Future Outlook

Katana's tokenomics is designed to concentrate liquidity across a select group of DeFi protocols, thereby reducing slippage and stabilizing borrowing and lending rates. The network offers KAT tokens as rewards for users who pre-deposit assets during the private mainnet phase. These tokens can later be converted into veKAT governance tokens, enabling users to participate in the platform's decision-making processes.

Katana uses Agglayer as the canonical bridge and VaultBridge for generating real yield. It also becomes the first Agglayer CDK chain to leverage CDK OP Stack—officially kicking off Agglayer’s multistack era. Katana Foundation plans to give back to the Polygon ecosystem with an airdrop of ~15% of KAT tokens to POL stakers, including liquid staking protocols, on Ethereum.

As the public mainnet launch approaches, Katana is set to redefine the DeFi landscape by offering a sustainable, user-centric ecosystem. This marks a significant step forward in Polygon’s mission to create interconnected, high-performance blockchain solutions.