• Sat. Oct 5th, 2024
Polygon Network

 

Polygon (MATIC) is a layer 2 solution that enhances Ethereum and powers its scalability. Nobody denies that Ethereum is a trendsetting blockchain globally. It is second only to Bitcoin in terms of market capitalization and popularity. Its mass adoption has resulted in some operational challenges concerning higher transaction costs and low speeds resulting in not too good a user experience.

Normally, Ethereum’s extensive network of clients overloads the network affecting scalability. The Indian-founded blockchain platform is offering a solution to these issues through its innovative and unique layer-2 solution.

Polygon network is a complete multi-chained system, an infrastructure, and a protocol. It links Ethereum-compatible blockchain networks and is designed to solve the scalability issues on the current Ethereum network. Polygon is a layer 2 solution that works on top of Ethereum’s primary blockchain. The network uses side chains to unclog the primary platform smartly and cost-effectively.

Polygon’s multi-chain network offers an infrastructure for enabling blockchain platforms to communicate with each other without having to involve Ethereum’s primary chain. However, the network retains Ethereum’s liquidity, interoperability, and security.

MATIC Fundamentals

MATIC is Polygon’s token and operates as the underlying resource that powers this ecosystem. Apart from being an asset, it is mainly used for staking tokens through a proof of stake algorithm to secure the Polygon network.

The MATIC token was designed with a maximum supply of 10 billion with more than 67% already in circulation. Currently, it ranks among the top 25 cryptos in the world with its price hovering around $1.4 per token, with over a $9 billion market cap.

Related: What Is The Polygon (Matic) Network And Why Is It Exploding In 2021?

How Can Polygon Save Ethereum?

The decentralized finance (DeFi) and nonfungible tokens (NFTs) are believed to be pushing the prices of Ethereum (ETH) explosively higher. Hence, the price surge is attracting a lot of usage on the network. In the first few months of this year, at least $1.6 trillion was settled on this network. This metric mainly explains why using Ethereum has become highly expensive.

In that context, Ethereum has to speed up its throughput or be left behind by more scalable and faster blockchains to keep up with the world’s appetite for all its decentralized services. Polkadot, Binance Smart Chain, and Solana are ranked as the three high-performance blockchains aiming to take over from Ethereum’s dominance.

Polygon, formerly known as Matic, came into the picture. This platform connects decentralized applications and blockchains to Ethereum through sidechains. Whenever one is using Ethereum via the Polygon layer, they enjoy instantly settled transactions and pay nearly zero in gas fees.

Initially, Polygon was known as the Matic Network described as a scaling solution for Ethereum. In 2019, Maatic held its token sale hosted on the Binance Launchpad at a time when the Initial Exchange Offerings (IEO) were becoming trendy.

Amongst the earliest supporters of this network is Coinbase Ventures, the investment group of Coinbase cryptocurrency exchange. Since the early Polygon investors are leaders in the blockchain and crypto industries, the belief in the new protocol to offer a long-term solution to ETH network congestions has always been massive.

Related:Umbria Partners with Polygon to Leverage DeFi Protocol

In 2021, Matic Network already rebranded to Polygon, and it comes with an expanded mission. Moving past its original branding as an Ethereum scaling solution, Polygon now refers to itself as an ‘internet of blockchains’ for Ethereum.

When put in another way, Polygon is Ethereum 2.0 without needing to wait for the release of ETH 2.0 which might take some more time to materialize. It supports many blockchains and dApps to benefit from Ethereum’s components and core protocol layer without having to deal with exorbitant gas fees and slow transaction speeds.

Ethereum is currently winning the blockchain race with the many use cases that are coming up on the network. Being the home of decentralized finance, Ethereum now enjoys massive support and mindshare from many developers, investors, and end-users.

Nevertheless, the ETH experience is mostly frustrating since it is expensive and slow. Many users are now convinced that its current popularity arises from its first-mover advantage. That is where Polygon comes in. the Polygon sidechains bypass Ethereum’s worst features, including high cost, to enhance user experience and make Ethereum adaptable, practical, and a real multi-chain network.

How Does Polygon Work?

Polygon has been designed to work more than just an Ethereum scaling solution. It operates as the glue linking blockchains that revolve around Ethereum. When it goes live, Ethereum 2.0 will be an internet of independent blockchains known as shards. Every shard has unique data, qualities, and characteristics. It means that a shard is its blockchain but it is always supported by the Ethereum network.

The Ethereum 2.0 vision is quite a long way off since the ETH developers are still testing various features. During its past life as the Matic Network, Polygon discovered the opportunity to fill the gap that exists between Ethereum 1.0 and 2.0.

To provide the world with tomorrow’s Ethereum today, Polygon created two major components; Polygon Protocol and Polygon Framework.

Polygon Framework

The developers say that the Polygon Framework is a way to easily and readily deploy Ethereum-compatible blockchains in one click. As development continues, the Framework will provide an assortment of modules for deploying with customized components features related to staking, governance, and much more.

When completed, the Polygon Framework, which is currently available to the developers as the Polygon SDK, will simplify the process of deploying blockchains. Just like WordPress is integral for website building or Canva for graphic design, Polygon seems committed to creating blockchain deployment tools for the masses.

Although it is still under development, the Polygon SDK is out now for the interested developers to test it.

Polygon Protocol

The Polygon Protocol is the internet, or web, that connects different Polygon-built blockchain platforms and Ethereum.

Moreover, the Polygon Protocol enables every blockchain to tap into Ethereum’s security or select its preferred security modules. The benefit of using ETH’s security is that Ethereum has a huge decentralized staking pool that is worth billions of dollars.

The Polygon SDK and Protocol integrated with Ethereum’s security amounts to a great way to deploy many highly secure and scalable blockchains.

What Are The Benefits of Using Polygon Network?

Although Polygon’s advanced solutions like the Protocol and SDK are miles away from completion, the team has already shipped many Ethereum scaling solutions. Currently, users can enjoy fast Ethereum services using the Matic Layer-2 Chain, which is an Ethereum sidechain entirely secured by a network of staker-validators.

Major DeFi platforms like Curve Finance and AAVE have now ported their protocols over the thriving Matic Sidechain. This move has enabled the end-users to enjoy using decentralized finance without incurring the high ETH fees paid in gas.

Notably, the benefits that come with using Polygon/Matic sidechains for users and developers are massive. These advantages include:

  • It is faster and nearly free to use Ethereum-based NFT, DeFi, and gaming apps.
  • It is now cheap to build Ethereum decentralized apps and blockchains on Polygon/Matic.
  • Minting nonfungible tokens is faster and it involves near-zero gas fees. It operates within a huge Polygon-based NFT ecosystem.
  • Farming on DeFi platforms has now become financially feasible for the smaller farmers with the introduction of Polygon.

All of these benefits that come with Polygon technology are powered by two already-live pieces of the Polygon stack.

Related:Kine Protocol to Integrate with Polygon Network to Provide High-Speed Dependable Derivatives Trading

Matic PoS Sidechain

Aave is a DeFi lending protocol and it recently launched Aave Polygon. This new Polygon-based market differs from Aave’s v1 and v2 markets in the sense that the transaction fees are massively reduced. More than $2 billion in cryptocurrency assets have now been deposited on the Aave Polygon market, a figure that has already surpassed Aave’s v1 market on ETH.

The reason for this performance is obvious since the lower fees for interacting with the Aave Defi platform mean that more money is saved and made by the users. Interestingly, the Polygon/Matic PoS sidechain is the space where Aave Polygon thrives together with several other high-volume Ethereum applications.

The Matic PoS sidechain operates mainly by bundling transactions and then sending them to Ethereum later. This strategy rapidly reduces congestion on Ethereum and fees for Polygon/Matic users. Ethereum is Layer 1 while Polygon sidechains are Layer 2. Pushing transaction volume from DeFi apps likes Curve and Aave away from Layer 1 to Layer 2 results in almost instant scalability and an enhanced UX for all.

Matic, The Ethereum Bridge

For anyone who wants to use Curve Polygon or Aave Polygon, they have to get their native Ethereum ERC-20 tokens from Ethereum Layer 1 to Layer 2 (Polygon) using the Matic Bridge. To move assets from Ethereum to Polygon, one has to wrap them in an ERC-20 equivalent that operates on the Polygon layer.

Once you manage to port your assets over, you can readily use them across any application that is plugged into Polygon. The more blockchains and applications connect to the Polygon, the more you can achieve once you get inside.

This Matic Bridge needs a transaction fee that is paid to the Ethereum layer directly. This means that it is more subjective and expensive than the normal ETH gas fees. Nonetheless, once you pay the fee and bridge your crypto assets, you are now inside the thriving Polygon layer where you are allowed to conduct your business cheaply.

The Polygon MATIC Token

MATIC is the native token that powers the Polygon network. It has several uses that are familiar to the Ethereum users.

  • Governance – MATIC stakers together with delegators are mainly entitled to participate in governance matters that are meant to determine the network’s direction.
  • Staking – MATIC tokens are used to stake on the Polygon platform. In this context, staking MATIC secures and decentralizes the network and earns nearly 18% staking APY.
  • Tx Fees – once the user gets inside the Polygon layer, the transaction fees are paid in MATIC instead of Ethereum. The fees are quite minimal such that Polygon gives users free MATIC to pay them.

These features make Polygon the first Ethereum scaling solution that keeps gaining real-world traction. Billions of dollars’ worth of cryptocurrency have already been bridged into Polygon through some of the largest names in the DeFi sector. This makes Polygon a competitor blockchain in its own right.

More interesting is how Polygon helps Ethereum remain ahead of competitors by making it more attractive. Polygon reduces the financial hurdle for the users and developers aiming to get started on Ethereum. The incentive and urge to use other blockchains remains minimal with ETH becoming more useful through its integration with Polygon.

Why Are Web3 Developers Selecting Polygon Over Other Solutions?

There is only one place that enables most of the developers to readily migrate their projects whenever they deploy on Ethereum. The solution also provides a wide range of scaling options and comes with some of the sector’s lowest transaction rates. These are some of the most notable reasons why the teams that are using Polygon have spiked 100-times in the last year.

By October 2021, the total number of decentralized applications (DApps) that are building on Polygon have exceeded 3,000, from just 30 at the same time in 2020, according to Alchemy data. Alchemy is a developer platform that tracks all teams building on various blockchains.

In the largely crowded space of Layer 2 competitors, Polygon came in as the go-to scaling solution. It is designed to ensure that Ethereum becomes the most fundamental, and definitive settlement layer of the thriving Web3 ecosystem.

Polygon has become the destination for most projects due to its complete compatibility with the Ethereum Virtual Machine (EVM). This enables Polygon to benefit from the established community of developers that can migrate their work to and from the vibrant Ether network leveraging their existing tools.

Notably, Polygon offers a whole suite of solutions that give the users an extremely high degree of instant and real-time operational scalability and flexibility. Concurrently, its extensively developed messaging protocol makes the cross-chain communication operations majorly streamlined and hassle-free for the users.

There is also the plain economic sense. The past 12 months witnessed the transaction costs on the Ethereum network exploding. The average fee surged as high as $200 in early September. High gas fees have continued to dominate this space even after the deployment of the London Fork that was designed to stabilize rates. The Polygon users now pay a small fraction of what it currently costs to transact on Ethereum.

Related: Matic Launches Mainnet Aiming to Bring More ‘Firepower’ to Ethereum

Since its launch in 2017, Polygon has grown from a basic Layer 2 Ethereum scaling solution to become a massive ecosystem of the now-popular Web3 projects. This growth has made it a sustainable base of operations. The solutions that this platform offers range from Polygon SDK that offers an infrastructure that enables the developers to create Ethereum-compatible blockchain networks, to the Polygon Hermez.

Hermez is a decentralized Zero-Knowledge rollup that gets its security from Ethereum Layer 1. Today, Polygon is also setting up some other interesting and intriguing solutions like a privacy-centric rollup with Polygon Nightfall, EY, and a general-purpose data availability layer that is known as Polygon Avail.

Polygon hosts large Web3 platforms and developers that dominate this sector, ranging from luxury brands company Dolce & Gabbana, decentralized finance (DeFi) protocols like lending platform Aave, to NFT marketplaces including Marck Cuban’s Lazy.com and OpenSea. Some of the dApps that have so far integrated with Polygon include Aavegotchi, Sushi, and Arc8.

Research, development, and investment that has been put into Polygon have changed the network which has made it become a sought-after developer hub. Just like Amazon Web Services enables the users to select between Windows, Linux, and other OS to power their developer-related activities, Polygon is designed to offer the same atmosphere for the Web3 builders.

What Does Polygon’s Native Architecture Entail?

The underlying philosophy is that Ethereum scaling is perceived to be a spectrum that results in an open-minded approach. This approach is seen to go beyond the small definition of Layer 2. Polygon was developed to support various secured chains, like L2, and stand-alone chains.

That is an umbrella term for sovereign sidechains and app chains. The latter promises a high level of data integrity and network privacy by using a ‘security-on-Ethereum-as-service’ setup. On the other hand, the former offers a high degree of operational flexibility and sovereignty to its ‘child chains,’ but somehow downplays the necessity of security.

Here are the components that makeup Polygon’s digital network:

  • Security Layer – it provides digital protection to all Polygon-compatible platforms through the ‘validator-as-a-service’ protocol. Notably, it enables the projects to gain smooth access to Ethereum’s validator pool.
  • Execution Layer – it can be considered to be the run-time environment where all the blockchains that are participating can be deployed. For instance, the Ethereum Virtual Machine (EVM) is implemented and used within the layer for the execution of different smart contracts.
  • Ethereum Layer – this layer helps in facilitating many internal operations like dispute resolution, checkpointing, finality, staking, and messaging that exists between all of the participating Polygon chains and Ethereum.
  • Polygon Network Layer – this is described as the substrate where all of the Ethereum-compatible blockchains are deployed. It is important since it supports the smooth functioning of all the major operational processes that are happening within the network.

What Technology Powers Polygon?

Polygon is gradually overcoming Ethereum’s scaling challenges using Optimistic Rollups, Polygon PoS, and Zero-Knowledge (ZK) Rollups.

The Polygon mainnet is powered by the Proof of Stake (PoS) algorithm that consumes less energy when compared to the Proof of Work (PoW). PoW needs every node to validate each transaction, offering a significantly higher transaction throughput. Hence, PoS is more scalable and efficient than PoW.

In the case of Optimistic Rollups (OR), developers consider it to be a popular scalability solution due to the rise of decentralized finance and their smart contract capabilities. Unlike the Zero-Knowledge rollups, ORs rely majorly on fraud proofs. All the transactions are correct unless they are proven to be fraud.

While the Optimistic Rollups enable near-instant and cheap transactions, they have a downside. The withdrawals to Layer 1 might take up to a week since some time is required to challenge the proof.

On their part, Zero-Knowledge (ZK) Rollups utilize validity proofs and integrate on-chain and off-chain processes, validating transactions quicker than all traditional Layer 1 blockchains like Ethereum mainnet. All that is achieved while ensuring that the gas fees remain minimal. A benefit that comes with ZK-rollups is their Merkle Tree architecture that enables the off-chain storage of data.

Related: Lympo Partners with Polygon Studios to Bridge NFTs to Polygon Blockchain

Only the most important data that is relevant to the smart contracts are stored on the Merkle Trees. They are accessed and requested to output information less frequently than in the Layer 1 solutions, saving lots of processing power and time for the blockchain network.

The ZK-rollups provide a promising solution to Ethereum’s scaling challenges. Earlier in the year, Polygon merged with Hermez which is an open-source ZK-Rollup that is optimized for low-cost token transfers on the Ethereum blockchain. The firm has also committed up to $1 billion from its treasury to fund the efforts to develop its ZK thesis, in a bet that the technology will be the main catalyst for the next wave of cryptocurrency adoption.

Why Do You Need To Start Building On Polygon?

Polygon has now come up as the leading platform solution for Ethereum scaling and network development. Throughout this journey, partner projects and developer tooling have dominated the space. Hence, the Polygon network actively gives back to the wider community of projects aiming to make Web 3.0 a reality.

Over 3,000 dApps are already building on Polygon. Here are some of the ways that the team at Polygon supports every stage of development:

  • Access to PolyBuilders – benefit from an internal group of Discord partners and Polygon developers to discover various synergies and enjoy assistance in cross partnership with other teams.
  • Analytics Support – users can make the most of Dune Analytics dashboards to understand how the platform operates. The community has created lots of its dashboards and Dune Analytics have extended their support by launching bounty programs for all the Polygon projects.
  • Infrastructure Support – Polygon has established itself to become a go-to scaling solution for the developers. The team has gone further to partner with more tooling projects. Through these partnerships, operators and developers can use the RPC providers, decentralized cloud storage on Akash Network, and the special developer packages available on Gelato, Tenderly, Certora, and many others.
  • Technical Assistance – the in-house developers are always ready to help when users experience hiccups on Polygon.
  • Marketing Support – Polygon’s official media partners channels, Twitter Spaces, AMAs, and other platforms give users’ messages a wider reach in all the regions globally. Their global expertise network includes universities and ventures enabling projects to benefit from top content creators.
  • LPs & VCs – these enable you to leverage an exclusive venture capital support and incubation offered by Polygon’s liquidity providers, investor network, and many market-maker partners.
  • Security Audits – whenever you use the Polygon network, you enjoy discounts on security audits from top partner companies operating in the sector/ the Polygon ecosystem offers top-quality and impenetrable security services at affordable rates.

Building on the Polygon platform gives developers to enjoy using a wide range of solutions from Polygon SDK, offering a network that enables them to set up Ethereum-compatible blockchain networks. There are many powerful tools in development, like Polygon Nightfall, a privacy-centric rollup with EY, and a general-purpose data availability layer known as Polygon Avail.

What Is Important – Cheaper Transactions Or Maximum Security?

Ethereum scaling solutions have taken center stage lately which is a great thing since Ethereum and its massive community requires scaling quickly. Polygon came in to develop different types of Ethereum scaling solutions including roll-ups and sidechains. However, all these solutions have come with drawbacks. Today, there is no perfect scaling solution that may satisfy every need and everybody. The most common include rollups and sidechains.

Related:Ethereum Scaling Fix Cuts Time to Create a Block in Half, Test Finds

Sidechains

Also known as “childchains”, they are a type of blockchain. Practically, many sidechains are EVM-compatible chains. It means that they use similar technology to the Ethereum blockchain, normally a Geth node software, but with various modifications.

Hence, the experience of using EVM sidechains is similar to using Ethereum. Developers can readily use MetaMask with any EVM-compatible sidechain except that you will have to change the network in MetaMask from Ethereum to the particular sidechain.

Nonetheless, not all EVM-compatible chains are sidechains. For instance, Tron and BSC also use EVM and Ethereum node software, but they are not ETH’s sidechains. For any platform to be a childchain or sidechain to Ethereum, it requires to have a dependence on it.

For instance, the Polygon PoS Chain has all its staking management defined on Ethereum. This definition means that it depends on Ethereum. Thus, Polygon cannot function properly if Ethereum stops working.

Binance Smart Chain and Tron are not dependent on Ethereum. It means that they can exist without ETH. Thus, the two chains are Layer 1 blockchains (L1). On the other hand, Polygon PoS Chain is not an L1 since it can never exist independently. It is a sidechain to Ethereum that depends on it.

The benefits that come with sidechains include low transaction fees and high throughput (high TPS) since they can create bigger blocks and have a smaller block time. This strategy impacts decentralization. However, that is a tradeoff that makes sense for the resulting scaling solutions to remain appealing to the users.

“Polygon PoS Chain still has a very good level of decentralization with 100+ distinct PoS validators (compared to other scaling solutions that are currently mostly completely centralized).”

Rollups

Just like sidechains, rollups are also types of blockchains. The optimistic rollups normally utilize customized Geth for EVM compatibility. On the other hand, the ZK-rollups create in-house node software from zero. That is the reason why these rollups are not EVM compatible by default. Rollups are different from sidechains since they store all their transactions on L1 on Ethereum.

The reason to store on Ethereum is to provide the users with maximum security of their resources and investments. In case the rollup block producers (BPs) begin acting maliciously or stop working for any given reason, rollup users can still get their funds back to ETH without requiring any permission from the rollup nodes.

There are different methods of getting funds back to L1. However, the most common is an “escape hatch”. It enables users to ‘escape’ from a rollup back to L1 whenever something wrong or bad happens on a rollup. All the rollup transactions have to be stored on Ethereum for the escape hatch to operate permissionlessly.

The key thing is that transactions are only stored on Ethereum. But, they are not processed on Ethereum. Storing transactions is cheap while processing the transaction accounts for a big part of the transaction costs.

A rollup, as previously noted, is a separate blockchain that can be used in the same manner as Ethereum. Every time a rollup BP develops and processes a new block of transactions, it stores it on ETH to enable the Escape Hatch mechanism. Furthermore, in case all the rollup nodes malfunction and lose all data, the rollup chain can be readily restored from the data stored on Ethereum. It acts like a backup in case any issue comes up.

Whenever a rollup block producer stores block data on L1, it achieves that by executing a transaction on Layer 1. Such a transaction features all rollup transactions from the said block as data. However, the transactions are not processed on Layer -1, they are only stored there. Experts and developers say that there is a set limit on how much data one can store within a single transaction on L1.

As Vitalik Buterin wrote in his blog post about rollups, it is possible to store 62,500 rollup transactions in a single L1 block. This gives the user a theoretical rollup TPS limit of about 4807 TPS. That is a theoretical limit since it would mean that this BP’s transaction on L1 takes the entire L1 block space. That is unlikely to happen especially with many rollups competing for the same L1 block space.

The realistic TPS limit for rollups is considerably lower, maybe at about 300 TPS, and might even remain considerably low until sharding comes up. For comparison purposes, Polygon PoS Chain has a theoretical limit of 7200 TPS, but in the real sense, it is just getting closer to 1000 TPS.

It means that the thing that makes these rollups more secure by storing transactions on L1 also is the same thing that limits their scalability. Hence, the rollups are more expensive than non-rollup scaling solutions that mostly have significantly high TPS.

Higher Security Or Lower Gas Fees?

Many wonder what to choose between lower gas fees and higher security. But, you do not have to choose one of these in the multichain world where most people are active on many chains. These can be rollups, sidechains, and other L1 chains.

All that is needed is to switch a network in MetaMask, but this process will be automated by the wallet. Some of the mobile wallets like Rainbow are already doing all that. A normal blockchain user might have some funds on Ethereum L1, some on rollups, and some on sidechains. Polygon has come with solutions to help users transact quickly on Ethereum.

Over 3,000 apps are active on the Polygon ‘layer 2’ platform with research stating that Polygon might be becoming more independent from Ethereum as the app numbers keep rising. There is a 61% increase in the number of teams that are building on the chain month-over-month. Alchemy product manager Mike Garland said:

“Polygon is growing two times faster than Ethereum did at this point in its lifecycle.”

Polygon to become more independent

While Polygon is described as a sidechain, developers are now working to push it to become a compliment instead of a competitor to Ethereum. With new Polygon-native apps is exceeding apps deployed to both chains, many insist that it is a sign of growing independence. 38% of the apps that are deployed to Polygon are powered by both Ethereum and Polygon, compared to 62% deployed solely on Polygon.

Garland concluded:

“I think the most interesting thing to me about this data is that we’re seeing both developing in parallel (roughly 4/10 using Polygon alongside Eth, 6/10 using just Polygon). There are certainly many teams that are launching and growing natively on Polygon, but also a substantial group using Polygon to deepen what they started in the Ethereum ecosystem and enable new use cases.”

Kevin Moore - E-Crypto News Editor

Kevin Moore - E-Crypto News Editor

Kevin Moore is the main author and editor for E-Crypto News.