What is Polygon? MATIC explained
Polygon is a set of protocols that are meant to fix Ethereum’s problems with scaling. The Polygon network solves the problems with the network by handling transactions on a separate blockchain that is compatible with Ethereum.
After processing transactions, Polygon sends them back to the main Ethereum blockchain. This method makes Ethereum’s network less busy. By doing this, Polygon can speed up transactions and reduce the cost of each transaction to less than a cent.
In other words, Polygon, which used to be called Matic network, gives new and existing blockchain projects an easy way to build on Ethereum without having to worry about scaling.
With Polygon, users can interact with any decentralized application (DApp) without ever having to worry about network congestion.
This guide explains everything there is to know about the Polygon Matic network, how Polygon works, and how this new solution is making Ethereum easier to use.
Who are behind Polygon?
Polygon has firmly established itself as the most promising Ethereum scalability project thanks to its highly skilled development team. Polygon’s growth is still being driven by the expertise of the team.
Those who made the Matic network had a good idea of what the crypto industry of today would need. In the next section, we’ll look at who is behind one of the projects that is growing the fastest in the industry.
The three people who started Polygon
Jaynti Kanani, one of the company’s founders, is now the CEO of Polygon. He worked on the project with co-founder and chief operating officer Sandeep Nailwal and co-founder and chief product officer Anurag Arjun. In 2017, the three of them made Polygon. It was called Matic Network back then.
At first, the business was helped by money from friends and family in Mumbai. But even though Polygon started in India, it continues to get investors from all over the world. In 2019, Polygon raised more than $450,000 in two rounds of funding for its new business. Several investors have put about $450 million into the project.
Angel investor Balaji Srinivasa and billionaire Mark Cuban are two of the people who are helping Polygon grow.
Is MATIC the same thing as Polygon?
What’s the difference between Matic network and Polygon? Before February 2021, when the name was changed to Polygon, the project was called Matic network. The main thing that the Matic network had to offer was plasma sidechains.
Plasma chains are similar to side chains, but they are more secure and easier to use. Unlike sidechains, Plasma chains publish their “root” on Ethereum layer 1 and work on the assumption that its consensus mechanism can fail. This design gives more security, but these chains can’t do complicated things because of it.
Polygon chose to keep the ticker MATIC for its native token after the project grew. So, Matic changed its name to Polygon. This name change and the rebranding that will come after it may cause some confusion, but they are both for the same project. The Matic network is one of the projects that will now fall under the Polygon umbrella. The MATIC token, on the other hand, is Polygon’s own cryptocurrency.
How Polygon works
A certain number of transactions can be done per second on the Ethereum blockchain. For the base layer, the rate of throughput is about 14 transactions per second. On Ethereum, each transaction has costs that are called “gas fees.”
When there is a lot of traffic on the network, gas fees go up, and Ethereum gas fees can quickly reach over $50 to $80. This is a huge problem. Since you have to pay more than $50 for each transaction at once, most people can’t use Ethereum.
Network congestion also slows down the way the Ethereum blockchain works, which makes people less likely to use smart contracts on the blockchain.
For anyone who uses decentralized finance (DeFi) apps and protocols, trades or buys nonfungible tokens (NFTs), or swaps, buys, or transfers tokens on Ethereum, these problems can quickly add up to hundreds of dollars in fees.
So, how does Polygon do this for less money? Scaling solutions like Polygon process transactions on side chains to cut down on gas costs. Polygon could handle up to 65,000 transactions per second, but Ethereum can only handle about 17 transactions per second.
And Polygon can charge users just a few cents for these fees. Compare this price to Ethereum, where the average transaction fee is around $15. Since Polygon is a set of different protocols, including the zero-knowledge (zk) proof type, users can choose the best scaling option for their needs.
In cryptography, zk proofs are a type of cryptographic primitive that is used to tell another person (the verifier) if a certain statement is true or not. At the same time, the person proving the statement doesn’t have to say anything else besides the fact that the statement is true.
Polygon gives project teams a lot of ways to integrate, but plasma sidechains, a proof-of-stake (PoS) blockchain bridge, zk rollups, and optimistic rollups are the most popular. Matic started out with plasma sidechains, which are lighter and safer.
A plasma chain is a separate blockchain that runs along with the main blockchain, just like a sidechain. Ethereum is the “primary” or “parent” blockchain in this case. Plasma chains connect to the main blockchain and talk to it so that assets can safely move between them.
Polygon added a blockchain bridge to its products because developers asked for it so much. The PoS bridge makes it possible for developers to build DApps on one platform without giving up the benefits of other platforms.
By doing batches of transactions on its own PoS blockchain, Ethereum doesn’t have to deal with all the files on its own. Polygon makes Ethereum lighter and faster by moving transactions off of the main chain and into groups.
Zk rollups process groups of transactions off-chain and make proofs of validity to check that each group of data is correct. After that, these proofs of validity are sent to the main blockchain.
The amount of data on the main chain is reduced because each validity proof acts as a proxy for the bundle it represents. In the end, this method makes it faster and cheaper to validate a block of transactions.
Fraud proofs are a different type of proof that optimistic rollups use. Once a fraudulent transaction is found, a fraud-proof protocol runs and uses the information on the main blockchain to determine the correct transaction.
Those who change the information about transactions on the system must stake ETH. So, if someone uses optimistic rollups to send a fake transaction to the main Ethereum chain, their stake is cut in half.
Polygon knows that there is no best solution that works for all applications. There are trade-offs between security, sovereignty, transaction fees, and the speed of transactions with each scaling solution. Developers should be able to choose the scaling solution that works best for their app. And Polygon’s scaling solutions are the most complete.
How does Polygon help Ethereum?
Polygon is not in competition with Ethereum. It in fact depends on Ethereum, and the same is true for Ethereum. The goal of Polygon is to use the Polygon network to build infrastructure that can handle a large number of people using Ethereum. So, Ethereum is more important to Polygon than Polygon is to Ethereum. Since Polygon is built on top of its blockchain, this is to be expected.
The main problem is that switching to Polygon for speed could make Ethereum less valuable. The loss of value could actually slow the growth of direct users of Ethereum in some places.
To put it another way, Polygon makes Ethereum better, which means that more people will use the Ethereum blockchain. Even though it is possible to steal total value locked (TVL) from Ethereum, its value will go up as more people lock their money in the Ethereum blockchain.
Ethereum Layer 1 vs. Polygon (MATIC)
At first glance, scaling solutions for layer 2 may seem hard to understand. Layer 1 is a simple way to talk about the base blockchain architecture. Layer 2, on the other hand, is a network that is built on top of the blockchain.
Layer-2 solutions are outside protocols that work with the main blockchain to make it faster and more efficient. Also, layer-2 solutions like Polygon can make protocols that are already running on Ethereum faster and cheaper.
Why use Polygon over Ethereum layer 1?
Ethereum was made to work like an auction, so users are encouraged to bid for their transactions to be added to the next block. Because of this, more network congestion is supposed to lead to higher costs.
Polygon has big plans for the future, and they aren’t just about speed or lowering the cost of transactions. The goal of the protocol is to connect all blockchains that are compatible with the Ethereum Virtual Machine (EVM). This will make it easier for developers to use the benefits of other blockchain platforms.
Will Ethereum 2.0 kill Polygon
Ethereum 2.0 will be a big improvement to the Ethereum blockchain, but it won’t solve all of the problems with scaling. As more and more decentralized platforms and DApps use on-chain solutions like Eth2, demand may start to push up against the limits of scalability.
As was already said, this builds up network traffic. Gas prices start to go up, but the network is still as busy as it was before. This is where Polygon comes in. It adds another layer of scalability to the Ethereum blockchain.
Layer 2s like the Polygon network will make what Eth2 has to offer even better. With layer 2, any change to Ethereum can be made even faster. Polygon makes sure that the end user gets the best experience this way.
Ethereum 2.0 is still a ways off, but Vitalik Buterin, the founder of Ethereum, has known for a long time that scaling was a problem. He called it the Trilemma challenge. Users can get some of the benefits of Eth2 with a solution like Polygon, so they can take advantage of faster speeds, more transparency, and lower costs without having to wait for Eth2 to come out.
Scaling solutions: Other layer 2 competitors
Not just Polygon is trying to speed up transactions on Ethereum. The number of transactions per day on the Ethereum network is steadily going up, according to data from the network. Layer-2 solutions are the best way to deal with the fact that the Ethereum blockchain is getting more and more busy. It’s important to point out that the benefits go beyond just making transactions easier.
There are also several competing layer-2 networks that allow transactions to be processed outside of the main blockchain network and then connected to it. Some of the best layer 2 alternatives to Polygon are based on zk-proofs. Arbitrum and Optimism are two of the most popular alternatives.
The TVL of Polygon is about $4 billion. TVL is the sum of all the crypto assets that users have locked into a network’s protocols. DappRadar data shows that Loopring, a zk-rollup protocol, has a TVL of $290 million, which is more than Polygon.
There’s no doubt that Polygon has some strong competitors, and all of the Ethereum layer-2 projects have the potential to improve the blockchain environment. But since Polygon has been putting a lot of money into different kinds of zk-proofs, this layer-2 solution has a lot of potential as a powerful way to make Ethereum scalable.
What’s so great about Polygon?
How is Polygon different from other layer 2 companies? Polygon is the only network that lets you stake your MATIC token on its blockchain. With staking, users can help validate transactions on the blockchain and earn interest every year.
Polygon has solutions for both regular users and large businesses. The main goal of Polygon is to make an Internet of Things (IoT) system for the Ethereum blockchain. The goal of the project is to get Ethereum to a billion users without giving up security or decentralization.
The way Polygon works is what makes it different from other L2 solutions. Polygon has a stack of solutions for developers on a single network. This method gives developers more control and flexibility when choosing the best scaling solution for their applications.
A developer on Polygon can choose between zk-rollups and positive rollups. They could choose to use Polygon Avail instead, which is a very secure blockchain for making data available that can be used for standalone chains, sidechains, and scaling solutions that don’t use the main chain.
In May 2021, the Polygon network announced the release of the Polygon SDK, which makes it much easier for developers to create a multichain network. With the Polygon SDK, developers can make chains that work on their own and are in charge of their own security. A dedicated Proof-of-Stake (PoS) bridge network will connect these separate sidechains to Ethereum.
Polygon has other ways to scale, such as the PoS commit chain. Most of the time, the commit chain is just called Polygon or the Polygon blockchain to make things easier. The most popular part of the Polygon project has been the PoS sidechain. According to data from polygonscan.com, the Polygon blockchain has already handled close to a billion transactions and is still going.
The PoS commit chain is compatible with the Ethereum Virtual Machine (EVM), so it works well with many Ethereum protocols. So, it’s easy for developers to move DApps between platforms.
Polygon is different from other EVM sidechains because it sends checkpoints to Ethereum. In particular, every time Polygon processes a transaction, it adds a few checkpoints to Ethereum. These checkpoints make sure that all the data that has been processed on Polygon up to that point is valid and safe for the Ethereum blockchain. Note that checkpoints are not used by other EVM sidechains.
What is the Polygon MATIC token used for?
MATIC is Polygon’s own digital currency. The PoS consensus mechanism is what makes the polygon plasma chains work. All transactions on the plasma chains will be paid for with MATIC. So, the demand for MATIC goes up the more projects use Polygon as a scaling solution.
MATIC also acts as a governance token by giving its owners the right to vote on which of the many planned scaling solutions should be put into place.
Holders of the token can vote on whether or not a new layer-2 scaling solution should be added to Polygon’s products if the community likes it and wants Polygon to use it. So, governance voting lets people with MATIC tokens decide what will happen to Polygon.
Is it a good idea to buy Polygon?
Ethereum is the first and largest smart contract-enabled blockchain network in the world. Its native currency, Ether (ETH), has a market capitalization of about $350 billion, making it the second-largest cryptocurrency in the world by market cap. Any project that can reliably make Ethereum better is likely to get a lot of support and be used by a lot of people.
People who use cryptocurrencies think Polygon is a good investment for a number of reasons. The project could become Ethereum’s main choice for layer-2 solutions. The team is strong and ambitious, and they work hard to find great ways to work together. The project solves problems that people who use Ethereum have been complaining about for a long time. Polygon has shown itself to be reliable over time.
MATIC is one of the top 25 cryptocurrencies because its market value is about $11 billion. Also, there will never be more than 10 billion MATIC. About 7.5 billion of these 10 billion tokens are in circulation. Since there are only so many MATIC tokens to go around, it’s possible that the demand for them will exceed the supply, which would be good for the price.
How to buy the Polygon digital currency
Putting money into the Polygon cryptocurrency project is as easy as putting money into Bitcoin or Ethereum. The easiest way is to find a cryptocurrency exchange where you can buy MATIC tokens. Users can also choose to bet MATIC and get rewards every year.
Where to buy Polygon, a digital currency
Popular cryptocurrency exchanges like Coinbase and Binance let you buy Polygon (MATIC). The only thing you need to do is set up an account, look for MATIC tokens, and buy them.
Polygon tokens can be bought on decentralized exchanges (DEXs) like Uniswap by people who already know how to use cryptocurrencies. Wrapped Ethereum (wETH), an ERC-20 token that lets users trade ETH on decentralized platforms, can be used to buy things on a DEX like Uniswap. A Polygon wallet can also hold MATIC tokens.
How does a Polygon wallet work?
Users can send and receive crypto assets with a Polygon wallet. They can also stake MATIC on the Polygon network to earn interest and use the Polygon bridge to deposit and withdraw between blockchains.
The Polygon project gives users a web wallet that doesn’t hold their tokens and lets them manage them on the Polygon network. The user of a wallet that doesn’t store private keys has full control over the private keys. Note, though, that any wallet that works with ERC-20 can hold MATIC.
How to get an address for a Polygon wallet
You can buy a MATIC token and send it straight to any Polygon wallet address. After buying MATIC tokens, users should look for the best Polygon wallet to keep them in.
MetaMask and Ledger are two popular crypto wallets for Polygon. Ledger is a hardware wallet that can be linked to MetaMask to add extra security. Also, centralized lending protocols such as Celsius and Nexo offer good annualized returns on MATIC.
Is now a good time to buy Polygon (MATIC)?
As with every other article, none of this is advice on how to invest. But Polygon is doing very well considering how big the project is, how often new partnerships are announced, and how far cryptography has come. The company has built a good name for itself, and the MATIC token has become one of the most popular projects on Ethereum.
Polygon is getting more and more partners all the time. Ocean, Chainlink, Atari, and, more recently, Coinbase are all partners that are worth mentioning. Many investors think that Polygon is way too cheap, and they may be right.
Until Ethereum 2.0 is fully released, it will be hard to know how promising the Polygon project will continue to be. But there is a real chance that the market cap will grow as this project moves forward. One of the biggest worries has been that the Polygon project might start to steal some of the TVL that is currently locked on the Ethereum base layer, but this remains to be seen.
Polygon stands out from its competitors as a layer-2 solution that can’t be ignored. Even though Polygon is still a new technology, it seems to be the most likely to successfully scale Ethereum, for example by keeping decentralization while scaling without sacrificing security.
