The Polygon network is a series of protocols created to resolve Ethereum’s scalability problems. It does this by processing transactions on a different Ethereum-compatible blockchain and returning them to the primary Ethereum blockchain after processing. This method reduces the network burden on Ethereum, allowing Polygon to speed up transactions and decrease transaction costs to less than a cent.
Polygon, previously known as the Matic Network, offers a simple platform for blockchain projects to build on Ethereum. Using Polygon, users can easily interact with any decentralized application (DApp without worrying about network congestion. This guide comprehensively explains the Polygon Matic network, its working mechanism, and how this innovative solution makes Ethereum more user-friendly.
Behind Polygon?
Polygon has solidified its position as the most promising Ethereum scalability project. The team’s ability is the driving force behind Polygon’s growth. The creators of the Matic network deserve credit for expecting the needs of the current crypto industry.
Polygon founders
Polygon is a project founded by Jayanti Kanani, Sandeep Nailwal, and Anurag Arjun in 2017. Initially known as Matic Network, the project received support from friends and family in Mumbai during its early stages. However, as the platform gained traction, it began attracting investors worldwide, raising over $450,000 in two rounds of startup funding in 2019. Polygon has since secured roughly $450 million in funding from various investors, including Balaji Srinivasa and billionaire Mark Cuban. Despite its Indian roots, the platform has a growing list of international backers. Jayanti Kanani, one of the co-founders, is currently serving as the CEO of Polygon.
Are MATIC and Polygon the same?
Before February 2021, Polygon was known as the Matic Network. The Matic Network’s main feature was its plasma sidechains. Plasma chains function similarly to side chains but prioritize security over convenience. These chains publish their “root” on Ethereum layer one and work under the assumption that their consensus mechanism may fail. This design offers increased security while limiting the complexity of operations performed on these chains.
Polygon, previously known as the Matic Network, underwent a name change and rebranding while keeping its native token ticker as MATIC. It is important to note that despite the name change, Polygon and Matic Network refer to the same project. Polygon now serves as an umbrella for multiple projects, including Matic Network.
How Polygon works
The Ethereum blockchain has a limited ability to process transactions per second. The base layer of Ethereum can process 14 transactions per second, and every transaction comes with gas fees, which can increase during network congestion. In such cases, gas fees can rise rapidly up to $50 or $80 per transaction, making it difficult for most users to afford it. High network congestion also slows down the Ethereum blockchain, making it less attractive to users.
As a result, the cost of using decentralized finance (DeFi) apps and protocols, buying non-fungible tokens (NFTs), and swapping, buying, or transferring tokens on Ethereum can quickly add up to hundreds of dollars in fees.
Polygon offers scaling solutions that process transactions on separate sidechains. Unlike Ethereum, which can only process around 17 transactions per second, Polygon can handle 65,000 transactions per second, a remarkable improvement. Furthermore, the transaction fees on Polygon are much lower, costing only a few pennies compared to Ethereum’s average transaction fee of around $15.
Polygon has developed several protocols that offer different types of zero-knowledge proofs (zk) to allow users the best scaling option for their specific use case. In cryptography, zero knowledge proofs are a cryptographic primitive that verifies whether a statement is valid to another party, the verifier, without requiring more information.
Polygon offers various integration options, such as plasma sidechains, proof-of-stake (PoS) blockchain bridges, zk rollups, and optimistic rollups. Plasma sidechains are more secure and lightweight and run parallel to the primary blockchain, Ethereum, in this case. The PoS bridge enables building DApps on one platform while keeping the advantages of other platforms.
Polygon is a technology that helps Ethereum to be faster and less heavy by grouping transactions off the main blockchain. Through Zk rollups, groups of transactions are processed off-chain, and validity proofs are created before being sent to the main blockchain. This reduces the amount of data on the main chain. With optimistic rollups, a fraud-proof protocol is used to confirm the correct transaction while penalizing those who submit fraudulent transactions.
Polygon understands that there are trade-offs between scaling solutions, such as security, sovereignty, transaction fees, and speed. Therefore, developers can choose the most suitable scaling solution for their application, and Polygon offers a comprehensive suite of scaling solutions.
Why is Polygon suitable for Ethereum?
Polygon and Ethereum are not in competition with each other. They rely on each other. The mission of Polygon is to use its network to create an infrastructure that can handle the mass adoption of Ethereum. Since Polygon is built on Ethereum’s blockchain, it depends more on Ethereum than vice versa.
However, there is a potential disadvantage of using Polygon for speed. It may dilute the value gained by Ethereum, which could hinder its direct user growth in specific locations. Despite this, Polygon helps improve Ethereum by attracting more users to the blockchain. As more people lock their capital in Ethereum, its value will rise, even if some of the total value locked (TVL) moves to Polygon.
Polygon (MATIC) and Ethereum Layer 1
Layer-2 scaling solutions may seem complicated at first glance. In simple terms, layer 1 refers to the central blockchain architecture, while layer 2 is an overlaying network on top of the underlying blockchain.
Layer-2 solutions are external protocols that enhance speed and efficiency with the base blockchain. With solutions like Polygon, protocols already running on Ethereum can become even faster and more cost-effective.
Using Polygon
Ethereum has an auction-based transaction model where users bid to include their transaction in the next block. This means that the more congested the network, the higher the cost of transactions.
Polygon has ambitious plans beyond just improving speed and cost of transactions. The protocol connects all blockchains that use the Ethereum Virtual Machine (EVM), making it easier for developers to access the perks of other blockchain platforms.
Ethereum 2.0 extinguishes the need for Polygon
Ethereum 2.0 is a significant upgrade to the Ethereum blockchain, but it has a limited solution to the scalability challenge. The increased usage of on-chain solutions like Eth2 by more decentralized platforms and DApps may lead to a rise in demand that could exceed the scalability limits.
This will result in a buildup of network traffic, causing gas fees to spike and the network to struggle under the same load conditions. This is where Polygon comes in, providing an additional scalability layer to the Ethereum blockchain.
Layer 2s, like the Polygon network, will further enhance the experience of Eth2. Any Ethereum upgrade can be made faster with layer 2. Thus, Polygon ensures that the end-user receives the best experience.
Although Ethereum 2.0 is still developing, scalability has long been acknowledged as the Trilemma challenge by Ethereum founder Vitalik Buterin. Solutions such as Polygon bring some of the benefits of Eth2 to users, enabling them to take advantage of increased speed, transparency, and lower costs without waiting for the release of Eth2.
Layer two competitors
It’s important to note that Polygon is not the only project working to speed up Ethereum transactions. The number of daily Ethereum transactions is growing, putting a strain on the blockchain network. Layer-2 solutions are the most effective way to handle this issue. It’s also worth mentioning that these solutions offer benefits beyond just handling transactions.
Several competing layer-2 networks allow transactions to be processed outside the leading blockchain network and then bridged onto it. Two of the most notable competitors to Polygon are Arbitrum and Optimism, which both rely on zk-proofs.
Polygon currently boasts a TVL (total value locked) of around $4 billion. TVL refers to the total amount of cryptocurrency assets users have locked into protocols on a network. In comparison, Loopring, a zk-rollup protocol, has a TVL of $290 million, according to data from DappRadar.
While there are intense competitors to Polygon, all Ethereum layer-2 projects have the potential to impact the blockchain environment positively. Polygon has been heavily investing in different types of zk-proofs, which makes it a promising solution for Ethereum scalability.
What makes Polygon unique?
For several reasons, Polygon stands out among its competitors in the layer two space. Firstly, it is the only network that allows its token staking on the Polygon blockchain. This means that users can earn interest annually by staking MATIC tokens to help validate transactions on the blockchain.
Polygon offers solutions for everyday users, developers, and enterprises. The objective is to create an Internet of Things (IoT) for the Ethereum blockchain, scaling it to one billion users without compromising its decentralization or security.
What differentiates Polygon apart from other L2 solutions is the approach. Polygon provides developers with a stack of solutions on a single network, giving them greater control and customization when choosing the best scaling solution for their application. Developers can choose between zk-rollups and optimistic rollups or use Polygon Avail, an extremely secure data availability blockchain for standalone chains, sidechains, and off-chain scaling solutions.
In May 2021, Polygon network launched the Polygon SDK so that developers can participate in building a multichain network. Using the Polygon SDK, developers can create standalone chains that are fully responsible for their security. These standalone sidechains have a dedicated PoS bridge network connecting them to Ethereum.
Polygon also has other scaling approaches, such as its PoS commit chain. The commit chain, often called Polygon, is EVM-compatible and works seamlessly with many Ethereum protocols. Developers can easily move DApps across platforms.
Polygon, unlike other EVM sidechains, commits checkpoints to Ethereum. Every time a transaction is processed on Polygon, a few checkpoints are created on Ethereum to ensure that all processed data on Polygon is valid and safe for the Ethereum blockchain. Other EVM sidechains do not use checkpoints.
The Polygon blockchain has processed over one billion transactions and counting, according to data from polygonscan.com.
What is the Polygon MATIC token used for?
MATIC is the cryptocurrency token that belongs to Polygon. The Plasma chains of the Polygon operate on the PoS consensus mechanism. To pay for all transactions on the plasma chains, you can use MATIC. This means that as more and more projects use Polygon as their scaling solution, the demand for MATIC increases.
Apart from serving as a payment medium, MATIC also acts as a governance token. This means token holders can vote for the scaling solutions that Polygon should integrate. If a new layer-2 scaling solution is proposed and the community likes it, token holders may vote for it to become part of Polygon’s product line. Therefore, governance voting allows MATIC token holders to have a say in the future of Polygon.
Polygon as an investment
Ethereum is a blockchain network that introduced smart contract functionality and is currently the largest of its kind. Its native currency, Ether (ETH), is valued at $2,368 and has a market capitalization of around $350 billion, making it the second-largest cryptocurrency in the world. Any project that can improve Ethereum reliably will gain massive support and adoption. Polygon is a project that cryptocurrency users consider to be a good investment for various reasons, such as becoming the leading layer-2 solution for Ethereum. The team behind Polygon is strong, ambitious, and aggressively pursuing exceptional partnership opportunities. The project offers solutions to problems that Ethereum users have complained about for years, and over time, it has proven reliable.
MATIC is a cryptocurrency with a market capitalization of roughly $11 billion, making it one of the top 25 cryptocurrencies globally. The maximum supply of MATIC tokens is capped at 10 billion, and the circulating token supply is currently around 7.5 billion out of the total supply of 10 billion. With a finite supply, the demand for MATIC tokens may exceed the supply, leading to positive price action.
Prepare to invest in Polygon
Investing in the Polygon cryptocurrency project is as simple as investing in Bitcoin or Ethereum. The easiest method to buy the MATIC token is to find a cryptocurrency exchange. Users also have the option to stake their MATIC tokens and receive annual rewards. Polygon’s impressive performance, continuous partnership announcements, and cryptographic advancements make it a project with massive potential. The company has established a solid reputation, and its MATIC token has become a standout among the thousands of other projects on Ethereum.
Polygon has been adding more and more partners to its list, including notable names like Ocean, Chainlink, Atari, and, most recently, Coinbase. Many investors consider Polygon to be undervalued, and their opinion could be justified.
The potential of the Polygon project will be more evident only after the full launch of Ethereum 2.0. However, market cap expansion is possible as this project evolves. One of the main concerns is whether the Polygon project will start to take away some of the Total Value Locked (TVL) that is presently locked on the Ethereum base layer, but this still needs to be seen. Compared to its competitors, Polygon stands out as a layer-2 solution. Even though it is still an emerging technology, it holds the most promise for scaling Ethereum successfully while maintaining decentralization and security.
Where to buy the Polygon cryptocurrency
To buy Polygon (MATIC), you can visit cryptocurrency exchanges like Coinbase and Binance. Just create an account, search for the MATIC tokens, and make a purchase.
For experienced cryptocurrency users, purchasing Polygon tokens through decentralized exchanges (DEXs) such as Uniswap is possible. To do this, you can use wrapped Ethereum (wETH), an ERC-20 token that allows you to trade ETH on decentralized platforms. Additionally, you can store your MATIC tokens in a Polygon wallet.
Polygon wallets
A Polygon wallet is a digital wallet that enables users to send and receive cryptocurrency assets, stake MATIC on the Polygon network to earn interest and access the Polygon bridge for depositing and withdrawing between blockchains.
The Polygon project provides a non-custodial web wallet for users to manage their tokens on the Polygon network. Non-custodial wallets give users complete control of their private keys. It’s important to note that any ERC-20 compatible wallet can store MATIC.
Acquiring a Polygon wallet address
You can purchase and transfer MATIC tokens directly to any Polygon wallet address. After buying the tokens, it is advisable to choose the best Polygon wallet to store them securely. Popular crypto wallets for Polygon include MetaMask and Ledger, which is a hardware wallet that can be linked to MetaMask for added protection. Additionally, you can earn significant annualized yields on MATIC through centralized lending protocols like Celsius and Nexo.
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