Polygon (formerly MATIC network) is a layer-2 scaling solution that was created in 2019 to address limitations in Ethereum blockchain. These include transaction speed, throughput and gas fees.
It was initially designed to scale, but quickly evolved into an ecosystem with multiple purposes that has been getting a lot attention. MATIC, the native token of the Binance Launchpad, was launched in 2019 during the Initial Exchange Offerings boom.
First, let’s look at layer-2 solutions if you want to get a better understanding of Polygon.
What are Layer-2 Solutions? Why do we need them? How does Polygon work? The MATIC Tokenthe Team behind PolygonPopular DApps using Polygon
What are Layer-2 Solutions? Why do we need them?
Layer-2 solutions are blockchains that run parallel to mainnets, in Polygon’s instance, Ethereum. However, they process transactions outside the mainnet. This results in increased transaction speed and lower gas costs.
Layer-2s, in other words, create a communication channel between two blockchains and transmit the information package (the transaction details) from one blockchain to the other to execute the transaction at a fraction of the cost and at a faster speed. This is all without any compromise to the Ethereum mainnet.
We all know that Ethereum is the best ecosystem for software developers who want to launch their decentralized apps (dApps) because of its secure infrastructure and innovative tools.
The high demand for dApps, coupled with the consequent supply, clogged the network. It’s not unusual to see gas fees rise up to two to three digits USD equivalent. This can make it quite costly depending on how much you interact the network.
Layer 2 solutions are essential for the DeFi ecosystem because they increase Ethereum’s scalability, throughput, and security while also enhancing its security properties.
What is Polygon?
Polygon functions in the same way as other Proof of Stake (PoS), including governance, network nodes and staking.
Evidence of Stake Consensus
The Proof of Stake consensus is used by the platform. This relies on a set of validators to validate and verify transaction blocks on the network. It replaces the traditional Proof of Work (PoW), that requires a lot of processing power to create new blocks.
The difference is that token holders in PoS validate and verify transactions, rather than having to do the work (in PoW algorithms).
Polygon’s PoS ecosystem rewards users with MATIC, its native token. You can choose from the following options to earn MATIC:
You can become a validator by running a full-scale node that validates transactions on the blockchain. You will receive a cut in fees and a newly created MATIC as a node validation. Your MATIC rewards may be reduced if you are malicious, make mistakes, or have slow internet access.
You can become a delegator which is a public node. You are a delegator and receive MATIC from other people. This MATIC is used to validate PoS. The delegator’s voting strength is higher the larger the stake. Although this is simpler than being a validator of nodes, it comes with its own challenges.
You can use the PoS Bridge to transfer funds from Ethereum to Polygon’s network. This is a set smart contracts that allow you to move assets from the Ethereum mainnet into the Polygon sidechain.
The PoS bridge allows you to transfer assets from Ethereum into Polygon. You can then use the funds to interact with apps and blockchains in the Polygon ecosystem. Transaction fees in ETH will be required. However, once you are in the Polygon network transactions are extremely cheap — less than a penny.
The Polygon Protocol links all Polygon-based Blockchains to each other and to the Ethereum network. It allows chains to tap into Ethereum in order to inherit its security model.
Software Development Kit (SDK), Polygon
Polygon’s Polygon Software Development Kit (SDK) was announced in May 2021. This collection of plug-and play software tools allows developers to create fully customizable blockchains or DeFi apps.
Although Ethereum is a multi-chain system with all the necessary features, it is not yet fully functional. Developers find it difficult to work on projects due to the limitations and lack of structure in the Ethereum ecosystem.
Polygon aims to give the ecosystem a boost with Polygon SDK, based on three major concepts: Ethereum-compatibility, modularity, and extensibility, making it a flexible framework for developers keen to work on Ethereum scaling and infrastructure solutions.
The Polygon SDK can be divided into two versions. The first version supports Ethereum compatible stand-alone chains that are sovereign blockchains and in charge of security and modules. These chains can communicate with Ethereum using the Polygon bridge (e.g., sending arbitrary messages or transferring assets) while maintaining their independence.
The second version will support other types of chains such as Layer 2 with their own set modules and tools.
Utility: What can you do on Polygon?
Polygon lets you do almost everything on Ethereum without having to pay high gas fees and low throughput.
Polygon has evolved from a simple scaling solution into a complex ecosystem that allows developers and users to use a variety of uses cases. Developers and users can launch Ethereum-compatible blockchains and mint non-fungible tokens. They can also become node validators and delegators and stake MATIC.
Many successful Polygon projects have been developed, including yield-generating protocols such as Curve Finance or Aave, decentralized exchanges like SushiSwap and the most well-known decentralized NFT (Non Fungible Tokens) marketplace, OpenSea.
These protocols can be used with Polygon instead of Ethereum. OpenSea, for example, allows you to use Polygon as the main blockchain and trade NFTs using it. You just need a Polygon compatible wallet such as MetaMask Wallet or Coinbase Wallet to connect to OpenSea.
It is also important to note that not all protocols built on Ethereum use the same Polygon iterations. There are limitations.
The MATIC Token
The MATIC token, an ERC-20 token, powers the entire Polygon ecosystem. It is used to pay gas fees, for stakestaking and for governance. According to CoinMarketCap, the current circulating supply is 7.48 billion MATIC tokens with a maximum supply of 10 million.
The MATIC token’s price soared after it was rebranded as Polygon and introduced new features for developers on the ecosystem. This is due to a wider use case. It’s currently the 16th most popular cryptocurrency in terms of market capitalization, as of February 2022.
Here is the MATIC token supply distribution:
Advisors: 4%Private Sale: 4%Network Operations: 12%Team: 16%Launchpad Sale: 19%Ecosystem: 23%Foundation: 22%
Meet the Polygon Team
Polygon was founded by four software developers with strong backgrounds in software development.
Jaynti Kanani is co-founder, CEO and Senior Software Engineer. Sandeep Nailwal is co-founder. Anurag Arjun, Chief Product Officer. Mihailo Bijelic, co-founder.
Popular DApps Using Polygon
SushiSwap is an Ethereum-based, decentralized exchange (DEX), that also acts as an Automated Market Maker.
Polygon is one the most exciting DeFi projects, and has a promising future in the DeFi community with regards to scalability as well as blockchain interoperability.
With its extensive set of tools, innovative mechanisms and modules, as well as full support for Ethereum Virtual Machine (EVM), the Polygon ecosystem could see a huge inflow of projects.
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