The Polygon network (previously known as the Matic network) aims to address the Ethereum network’s limitations by offering scaling solutions and building an ecosystem of Ethereum-compatible blockchains.
What is Polygon?
Polygon, formerly known as the Matic Network, is a “layer-2” scaling solution that runs alongside the Ethereum blockchain.
Think of Ethereum as a bustling city with limited road capacity. As the city grows and more people use the roads, traffic congestion becomes a major problem, leading to delays and increased costs.
Polygon acts like a network of interconnected highways and bridges built around the city, providing alternative routes and easing the traffic flow.
This “network of blockchains” allows for faster and cheaper transactions while still maintaining a connection to the main Ethereum network.
One of the key ways Polygon achieves this is by allowing users to “bridge” their crypto assets over to the Polygon network.
This means you can move your tokens from the main Ethereum blockchain to the Polygon sidechain, where you can interact with a wide range of applications with lower fees and faster speeds.
Polygon effectively transforms Ethereum into a multi-chain system, similar to other networks like Polkadot, Cosmos, and Avalanche, but with the added advantage of Ethereum’s security and established ecosystem.
By improving Ethereum’s usability and addressing its scalability limitations, Polygon contributes to the mass adoption of cryptocurrencies and blockchain technology.
How does Polygon work?
Polygon builds on the Plasma framework proposed by Vitalik Buterin and Joseph Poon in 2017.
The idea is that less critical transactions don’t need to be recorded on the main blockchain. Instead, mundane transactions can take place on parallel sidechains and undergo “checkpoints” before they are submitted to the main chain for finality.
Polygon utilizes a combination of technologies to achieve its scaling goals. One of its core components is the Plasma framework, which allows for the creation of smaller, interconnected blockchains that interact with the main Ethereum blockchain.
This framework enables faster and cheaper transactions while still maintaining a high level of security by leveraging the robustness of the Ethereum mainnet.
Another key technology used by Polygon is Proof-of-Stake (PoS). In a PoS system, users “stake” their tokens to validate transactions and secure the network.
This consensus mechanism is more energy-efficient than the traditional Proof-of-Work (PoW) used by Bitcoin and early versions of Ethereum.
Polygon also employs a modular framework called the Polygon SDK, which allows developers to build and deploy different types of blockchains, including optimistic rollup chains, ZK rollup chains, and stand-alone chains.
To simplify, imagine a construction kit that provides various building blocks for creating different structures. The Polygon SDK provides developers with the tools to create customized blockchain solutions tailored to their specific needs.
Instead of directly returning all transaction data to the main Ethereum blockchain, Polygon uses various mechanisms like checkpoints and fraud proofs to ensure the validity of transactions.
These mechanisms act as efficient verification systems, confirming the accuracy of transactions without overloading the main Ethereum network.
Team background
The Matic network was launched in India in 2017 by data scientist and software engineer Jaynti Kanani, product manager Anurag Arjun, and software engineer and blockchain developer Sandeep Nailwal.
They added information systems engineer Mihailo Bjelic when the project transitioned from Matic to Polygon.
All four are still involved in the project with Kanani – who was heavily involved in implementing Web3, Plasma, and WalletControl protocol on Ethereum – serving as CEO while Nailwal is COO.
What is the MATIC token?
MATIC is the native token of the Polygon network. It’s an ERC-20 token, which means it’s compatible with other tokens on the Ethereum blockchain.
MATIC is used for various purposes within the Polygon ecosystem:
- Transaction fees: Users pay MATIC to conduct transactions on the Polygon network.
- Staking: Users can stake their MATIC tokens to become validators and help secure the network, earning rewards in the process.
- Governance: MATIC holders can participate in the governance of the Polygon network by voting on proposals and changes to the platform.
MATIC also serves as a “unit of account” within the Polygon ecosystem, facilitating the creation and exchange of digital assets, smart contracts, and dApps.
This means that MATIC is not just a token for paying fees; it’s an integral part of the Polygon economy, enabling various interactions and transactions within the network.
MATIC is available on major exchanges, especially ones that focus on DeFi.
Token Metrics:
- Holder Addresses: Approximately 644,768 unique addresses.
- Max Supply: 10 billion MATIC tokens.
- Circulating Supply: Approximately 1.91 billion MATIC tokens.
- Inflation Rate: Polygon has a fixed supply of 10 billion MATIC tokens, with no new tokens being minted, indicating a 0% inflation rate.
Notable Projects on Polygon:
Notable projects built on Polygon include:
- Aave: A decentralized finance (DeFi) protocol that allows users to lend and borrow cryptocurrencies.
- QuickSwap: A decentralized exchange (DEX) enabling fast and low-cost token swaps.
- OpenSea: A leading non-fungible token (NFT) marketplace facilitating the buying and selling of digital assets.
- Decentraland: A virtual reality platform where users can create, explore, and trade digital real estate and items.
- SushiSwap: A multi-chain DEX offering token swaps, staking, and yield farming opportunities.
- Curve Finance: A DeFi protocol focused on efficient stablecoin trading with low slippage.
- 1inch Network: A DEX aggregator that sources liquidity from various exchanges to provide optimal trading rates.
- The Sandbox: A virtual gaming world where players can build, own, and monetize their gaming experiences using NFTs.
- Chainlink: A decentralized oracle network providing real-world data to smart contracts on the blockchain.
- PolygonScan: A blockchain explorer for the Polygon network, offering insights into transactions, addresses, and smart contracts.
Advantages and Disadvantages of Polygon
| Advantages | Disadvantages |
|---|---|
| Scalability: Polygon significantly improves Ethereum’s scalability, enabling faster and cheaper transactions. | Dependence on Ethereum: Polygon relies on Ethereum for security and finality, so any issues with Ethereum could potentially affect Polygon. |
| Low Fees: Transaction fees on Polygon are a fraction of those on the Ethereum mainnet. | Centralization Concerns: Some critics argue that Polygon’s validator selection process is not fully decentralized. |
| Ethereum Compatibility: Polygon is fully compatible with Ethereum, making it easy for developers to migrate existing dApps or build new ones. | Competition: Polygon faces competition from other layer-two scaling solutions. |
| Strong Community: Polygon has a vibrant and growing community of developers and users. | |
| Security: Polygon inherits the security of the Ethereum mainnet while providing enhanced scalability. |
Despite the challenges, Polygon is actively developing new solutions to further enhance its capabilities and address its limitations.
Polygon 2.0 Upgrade
Polygon 2.0 is an upgrade designed to transform the Polygon network into the “Value Layer of the Internet,” enhancing scalability, security, and interoperability.
Key Components of Polygon 2.0:
Introduction of POL Token:
The upgrade includes transitioning from the MATIC token to a new native token called POL. This change is designed to support the expanded functionalities and goals of Polygon 2.0.
Network of ZK-Powered Layer-2 Chains:
Polygon 2.0 envisions a network of interconnected Layer-2 chains powered by zero-knowledge (ZK) technology. This architecture aims to provide seamless interoperability and scalability, allowing different chains to work together efficiently.
Staking and Governance Enhancements:
The upgrade introduces a new staking layer that manages a shared validator pool for all Polygon chains. This approach enhances security and decentralization.
Additionally, Polygon 2.0 implements a comprehensive governance framework, empowering the community to participate in decision-making processes.
Benefits of Polygon 2.0:
- Scalability: By leveraging ZK technology, Polygon 2.0 can handle a higher volume of transactions, making it more efficient and capable of supporting mass adoption.
- Interoperability: The interconnected Layer-2 chains facilitate seamless communication and asset transfers between different blockchain networks, creating a more unified ecosystem.
- Security: The shared validator pool and enhanced staking mechanisms strengthen the network’s security, protecting it against potential threats.
What is POL?
The Polygon network’s native token, previously known as “MATIC”, has been renamed to “POL” as part of a recent upgrade to the Polygon ecosystem.
This transition, which began on September 4, 2024, was implemented on a 1:1 basis, making POL the primary token for gas fees and staking within the Polygon ecosystem.
Key Features of POL:
- Gas Token: POL is used to pay for transaction fees across the Polygon network, facilitating interactions with decentralized applications (dApps) and other on-chain activities. WEB3,
- Staking and Network Security: Validators stake POL to secure the network, participating in the proof-of-stake consensus mechanism. By staking POL, validators help maintain network integrity and earn rewards for their contributions.
- Governance: POL holders have the ability to participate in governance processes, influencing decisions related to network upgrades and protocol changes. This ensures that the community has a say in the evolution of the Polygon ecosystem.
- Hyperproductive Token: POL introduces the concept of a hyperproductive token, enabling validators to secure multiple chains and participate in diverse roles across the Polygon aggregated network of blockchains. This approach enhances security, scalability, and overall productivity.
Transition to POL Token:
The migration from MATIC to POL represents a significant upgrade in the token’s utility and role within the expanding Polygon ecosystem, aligning with the network’s vision for enhanced scalability and interoperability.
Token holders are encouraged to convert their MATIC tokens to POL to take advantage of the new features and improvements.
The process is designed to be straightforward, ensuring a smooth transition for all participants.