Polygon is a blockchain that seeks to reduce the network congestion and high gas fees on Ethereum network. Rather than striving to become the next “Ethereum Killer”, Polygon acts as an Ethereum saver.
What is Polygon?
Polygon is a network that seeks to address some of Ethereum’s major challenges like poor user experience, slow transactions and high transaction fees using a special sidechain solution.
In February 2021, it upgraded from its predecessor Matic Network—which uses Plasma to process transactions off-chain before finalizing them on the Ethereum main chain. Currently, it goes above just settling transactions off-chain and now enables the deployment of interoperable blockchains.
Polygon blockchain network makes it possible for developers to deploy preset blockchain networks with specific attributes that guide its operation. These compatible blockchains can be further customized with more features, making it possible for developers to create distinct blockchains with more specific functionality.
The network’s core element is Polygon SDK, an adjustable framework that enables the creation of several types of applications. Polygon network has an enabling architecture that makes it possible to build decentralized applications in a cheaper, easier and faster way. With the use of its Plasma side chains, transactions can be processed in a faster and inexpensive way.
Polygon’s multi-chain ecosystem uses MATIC utility token for governance, staking and for gas fees. It makes use of a proof of stake (PoS) consensus mechanism for validating transactions.
How does Polygon Work?
Polygon has a four-layer system which is made up of the Ethereum layer, security layer, Polygon networks layer, and execution layer.
The Ethereum layer is made up of a set of smart contracts which are executed on Ethereum blockchain. These smart contracts carry out on-chain activities like transaction finality, staking, and facilitate the interaction between Ethereum and the numerous Polygon chains.
The security layer operates jointly with Ethereum and offers a “validators as a service” role which allows chains to enjoy an extra layer of security. Both the Ethereum and Security layers are optional layers on Polygon blockchain.
The Polygon networks layer is the ecosystem of blockchain networks that is built on Polygon. Each of the blockchains operating on Polygon is responsible for running its own consensus and producing blocks.
The Execution layer is Polygon’s Ethereum Virtual Machine (EVM) which is used for executing smart contracts.
Blockchains that are created on Polygon are able to interact effectively with each other and with the Ethereum main. This will lead to the emergence of interoperable decentralized applications (Dapps) and simplify the exchange of value between various platforms.
Polygon Use Case: Staking for Rewards
Polygon makes use of the Proof of Stake consensus mechanism. Validators on Polygon network stake their MATIC tokens in order to earn the right to validate transactions and vote on Polygon network upgrades. Validators also earn MATIC tokens in return.
Polygon network members can decide not to become validators and they can distribute their tokens to other interested validators. However they can still take part in the staking process and earn staking rewards.
Furthermore, Polygon network uses a system of PoS ‘checkpointing’ in its consensus mechanism. This means that consensus is attained by a select team of block producers who are elected to validate each checkpoint or header block by stakers. These producers allow the system to produce blocks at a rapid pace.
Polygon Use Case: Interoperability
The Polygon blockchain is one of the projects that attempts to solve the problem of interoperability and scaling that exists in the blockchain space. Through the following measures;
- It’s compatible with the Ethereum Virtual Machine, which makes it easy to build apps by developers who like building apps on Ethereum and programming in Solidity, rather than using a WASM-based virtual machine.
- Making use of Polygon’s security layer is entirely optional for developers looking to build on Polygon. There is no need for external solutions to forgo any independence or flexibility for the sake of additional security. Polygon is also flexible enough to integrate any scalability solution—beyond the current Plasma chains, ZK-rollups, and optimistic rollups planned.
Developers can leverage Polygon’s technology to build more user-friendly Dapps through its blockchain technology. Various projects have already been launched that make use of Polygon’s scaling technology, including:
Ocean Protocol – a platform that allows businesses and individuals to exchange and monetize data and data-based services
EasyFi – a layer 2 decentralized borrowing and lending platform which provides support for undercollateralized loans.
Aavegotchi – a DeFi trading game which is played with non-fungible tokens (NFTs).
Polygon seeks to provide support to a lot of decentralised financial applications (DeFi) outside the Ethereum ecosystem. Polygon currently only supports the Ethereum main chain, but it aims to become an interoperable Layer 2 blockchain platform for other blockchains soon.
POLYGON MATIC USE CASE: GOVERNANCE AND FEES
Even though Polygon has rebranded and upgraded on vision of Matic Network, it still makes use of MATIC token as it’s utility token. MATIC is currently the 17th most valuable coin by market value and its price has increased by 43,214% since its launch.
The MATIC token is used for several purposes in the Polygon ecosystem like taking part in network governance by voting on Polygon Improvement Proposals (PIPs), contributing to security through staking, and paying gas fees on Polygon transactions.
Matic tokens are distributed into the market on a monthly basis. The current circulating supply of the token is 4,877,830,774 tokens, and the maximum supply is capped at 10,000,000,000.
During MATIC’s private sale in 2017, 3.8% of the maximum supply was issued. At the launchpad sale in 2019, another 19% was sold at $0.00263 per token. This sale brought a total of $5 million for the team.
The remaining MATIC tokens are allocated in the following manner:
- Team tokens: This takes 16% of the max supply.
- Advisor’s tokens: This takes 4% of the max supply.
- Network operations tokens: This takes 12% of the max supply.
- Foundation tokens: This takes 21.86% of the max supply.
- Ecosystem tokens: This takes 23.33% of the max supply.
According to MATIC’s official release schedule, all MATIC tokens will be distributed by December 2022. MATIC tokens distributed in the ecosystem allow community members to vote on changes and updates made to the network as well as the overall goals and direction of Polygon.
All network fees and fees on Polygon sidechains are also paid with MATIC token. The more people use Polygon, the more fees and thus more utility the MATIC token has in this regard.
WHAT DOES THE FUTURE HOLD FOR POLYGON?
The Polygon team is working on some major features and it’s significantly investing in ZK and ZK Rollup technologies for the platform. The team has spent $250 million on acquiring Hermez, a decentralized, open-source blockchain platform and also purchased four more platforms to help them develop more ZK Rollup chains.
With these developments, the Polygon team seeks to create a highly scalable EVM-enabled ZK Rollup technology.
There are also plans for more DApps integrations as well. The team will continue to work with LBank Exchange to launch more Polygon projects and tokens to the community.
In conclusion, many Developers are seeking new ways to make cryptocurrencies fully frictionless and convenient and Polygon is making this a reality by offering a platform that is interoperable and tackles transaction delays
Until Ethereum 2.0 is launched fully, the Polygon network is offering a better alternative for several new projects to launch easily. The platform has much to offer in this thriving decentralized finance space.