What Is Polygon (MATIC)?
Feb 24, 20227 min read
Polygon (Matic Network) started in October 2017 in India. Polygon co-founded Jaynti Kanani, Sandeep Nailwal, Anurag Arjun, two advanced blockchain developers, and a business consultant. Before creating their own network in 2019, the Polygon team was a serious, well-involved contributor in the Ethereum network. So, the first intention was to create a platform where Ethereum fees would be lower, and transactions would be faster.
Why is that so crucial? Everyone knows that Ethereum transactions are famous not only for their innovative approach but also for being pretty expensive. The transaction's cost is, on average, around $25. However, these fees aren't fixed, and they depend on high network demand, for example. In May, the average Ethereum fee flew up to $71.
What is Polygon?
Polygon is a framework that helps to build interconnected blockchain platforms.
It aims to reduce some of Ethereum's major limitations—including its high speed, delayed transactions, and lack of community governance.
Polygon is an entire platform designed for launching blockchains, so it's not just a simple scaling solution like it was with the previous version, Matic Network. It empowers developers to build scalable, user-friendly dApps.
Thanks to Polygon, dApps can be customized with a widening range of modules, which allow developers to create supreme blockchains with more specific functionality.
How does Polygon work?
Polygon's architecture can best be described as a four-layer system consisting of the Ethereum layer, security layer, Polygon networks layer, and execution layer.
The Ethereum layer is fundamentally a set of smart contracts applied to Ethereum. These smart contracts manage such things as transaction finality, staking, and communication between Ethereum and numerous Polygon chains. The security layer works side by side with Ethereum and provides a "validators as a service" role, allowing chains to advantage from an extra layer of security. Both the Ethereum and Security layers are optional.
Moreover, there are two mandatory layers. The first is the Polygon networks layer, the ecosystem of blockchain networks built on Polygon. Each of these has its community and is responsible for handling local consensus and validating blocks. The second is the Execution layer, which is Polygon's Ethereum Virtual Machine (EVM) implementation used for executing smart contracts.
Chains launched on Polygon can communicate with the Ethereum main chain thanks to Polygon's arbitrary message passing capabilities. This will create a variety of new use-cases, such as interoperable decentralized applications (dApps) and the simple exchange of value between diverse platforms.
What Is a MATIC token?
There's a slight confusion, as Polygon decided to remain the ticker MATIC for its native utility token after the rebranding. So, the two words are identical. Polygon is to Matic the same as Ethereum is to ETH.
The MATIC token is used for different purposes within the Polygon ecosystem, including voting on Polygon Improvement Proposals (PIPs), contributing to security issues via staking, and paying gas fees.
MATIC's total supply is 10 billion crypto coins, and at the moment of writing, there are 4,877,830,774 MATIC tokens in circulation. The rest will be minted by stakers, people who deposit their MATICs into a staking smart contract to become validators. Polygon is a proof-of-stake network that chooses stakers to validate new transaction data randomly.
The Polygon's popularity mainly lies in the bull run for NFTs, play-to-earn games, and decentralized finance protocols. The prices also skyrocketed thanks to the leading decentralized exchange platform Uniswap that declared it has plans to deploy on Polygon.
Accordion to market capitalization, the MATIC token is one of the top 100 largest cryptocurrencies and profits from a great level of liquidity. It is available to buy and trade on a large number of cryptocurrency exchanges such as Binance, SimpleSwap, Uniswap, and alike.
Polygon as a scaling solution
Polygon is a Layer-2 scaling solution primarily designed to make a mass adoption to the Ethereum platform. It provides tools to create scalable decentralized applications (dApps) with a high level of performance, user experience design, and security. Polygon accomplishes those goals thanks to the underlying technical core of its Proof-of-Stake (PoS) Commit Chain and its More Viable Plasma (MoreVP) L2 scaling solution. Polygon's PoS blockchain works as a Commit Chain to the Ethereum main chain, which attracts 80+ Ethereum dApps to its platform that transacts without instances of the network congestion pretty usual for Ethereum and Proof-of-Work (PoW) blockchains in general.
Polygon functions primarily through Commit chains, which are transaction platforms that operate adjacent to the main blockchain — in this case, Ethereum. The Commit links a bunch of transactions and confirms them together before giving data to the main chain back. Polygon will probably have thousands of chains scaling together to increase throughput, so that's pretty possible that one day it will generate millions of transactions per second (TPS) when attached to a mainchain like Ethereum. Polygon now only uses Commit Chain connectivity to improve transaction times but will eventually make use of other Layer-2 scaling mechanisms such as Optimistic Rollups.
Polygon plans to develop its scalability-focused product offering to support other blockchains apart from Ethereum and provide cross-chain interoperability between different protocols.
Top projects built on Polygon
Polygon reached the milestone, and now 7000+ decentralized applications (dApp) are operational on its network. It's massively used for NFT games, payment systems, lending platforms, etc. Let's have a more detailed look at some of them:
- Sushiswap (Exchange)
SushiSwap is a decentralized exchange (DEX) with AMM capability. It runs on Ethereum and aims to be a platform where users can buy and sell crypto assets. Anyone having a balance of the assets can propose changes to how it operates and can vote on other users' proposals. It also reduces custody risk and is available on Polygon because of its comparatively low fees and fast transaction speed.
Sushiswap has its own governance token with a SUSHI ticker. It's an ERC-20 token that is built on Ethereum and is mainly used for staking and earning rewards. Coin holders have governance rights and a share of the protocol's fees.
- Curve (Exchange)
Сurve is a popular DEX and a key DeFi protocol. It is a decentralized AMM exchange. It works for exchanging stablecoins and wrapped assets with fewer fees. Users have several options to gain profit from on Curve. First, by supplying assets to different platforms, users can also earn fees while benefiting from the protocol's automated yield farming option. The platform is considered to be one of the biggest DEXes on Polygon.
- Polycat Finance (Finance)
Polycat Finance is a value-oriented, economically sustainable hybrid yield aggregator on Polygon.FISH is officially Polycat Finance's governance token, and FISH owners receive profit.
Polycat Finance is a Polygon-based DeFi platform, which offers a few products and has its native FISH token. Polycat users access an AMM-style exchange, automated yield farming, and vaults, auto compounding yield farms for liquidity providers.
PolyCat Finance is kind of unusual because it's one of the first Polygon platforms to offer IFOs (Initial Farm Offerings). To put it simply, IFOs give investors to get in at the ground level on new farming opportunities. The platform successfully raised around 4 million USDC.
- QuickSwap (Exchange)
QuickSwap (QUICK) is a decentralized exchange that works on the Polygon Network that aspires to provide faster and cheaper transactions on Ethereum. QUICK is a governance token used to create and vote on proposals governing QuickSwap and can be staked to earn some trading fees.
- Pegaxy (Game)
It is a free-to-play blockchain horse racing game. In Pegaxy, you can earn while playing. The game has a dual token economy primarily based around the governance token PGX (Pegaxy Stone) and the utility token VIS (Vigorus). It somehow reminds Axie Infinity game as you can breed, rent, sell and race your Pega to earn VIS tokens.
Polygon differs from everything was earlier. Polygon tries to transform Ethereum into a multi-chain ecosystem that profits from all kinds of Layer-2 scalability.
Polygon's already proved its infrastructure worth watching — its PoS chain and plasma sidechains really work and help developers build new dApps and have their business.