Understanding Polygon (MATIC): A Beginner’s Guide to its Blockchain

The Ethereum blockchain holds several economic activities, from NFT markets and games to a growing DeFi ecosystem. It is well suited for this activity because it is compatible with smart contracts, which can be used to build applications that are programmed to execute automatically when certain conditions are met.

What is Polygon? 

Polygon is a set of protocols designed to tackle Ethereum’s scalability constraints. It seeks to solve these issues by managing transactions on a distinct, Ethereum-compatible blockchain within the Polygon network

After processing, these transactions are reintegrated into the main Ethereum blockchain. This strategy effectively reduces the burden on the Ethereum network, enabling Polygon to enhance transaction speed and significantly decrease transaction costs.

Previously recognized as the Matic network, Polygon offers a convenient framework for newly established blockchain projects to develop on Ethereum without grappling with scalability concerns.

What is MATIC?

Polygon operates with its own cryptocurrency, MATIC, serving multiple purposes within the network. MATIC covers fees on the Polygon network, engages in stakeholder activities, and participates in governance, granting MATIC holders the authority to vote on proposed changes to the Polygon ecosystem. Even more, MATIC can be bought and sold through various platforms, including Coinbase and other exchanges.

The genesis of the name MATIC traces back to an earlier phase in Polygon’s evolution. Originally launched as Matic Network in October 2017, the developers opted for a rebranding in early 2021, leading to the adoption of the name Polygon.

Who is Behind Polygon?

Jaynti Kanani, one of the co-founders, currently holds the CEO role at Polygon, a project he initiated alongside Sandeep Nailwal, the Chief Operating Officer, and Anurag Arjun, the Chief Product Officer. The trio embarked on the Polygon journey in 2017 when the project was initially known as Matic Network.

In its early stages, the venture received support from friends and family in Mumbai, laying the foundation for its growth. Despite its Indian roots, Polygon has transcended geographical boundaries, attracting investors worldwide. The platform secured over $450,000 (£360,000) in two startup funding rounds in 2019, accumulating a total funding of approximately $450 million (£400 million) from diverse investors.

Names like Balaji Srinivasa, an angel investor, and billionaire Mark Cuban have joined the expanding list of backers supporting Polygon’s development.

How Polygon Works

Using the Polygon network, many factors come into play with numerous limitations with Ethereum’s transaction speed, handling around 14 transactions per second with associated fuel fees. During network congestion, fuel fees can surge to over $50-$80 (£38-£60), making Ethereum less accessible for users. This congestion also slows down the blockchain, which hampers interaction with smart contracts.

For users engaging in DeFi, NFTs, and token transactions on Ethereum, these issues translate to significant fees, potentially totalling hundreds of pounds. Polygon addresses this by processing transactions on side chains, enabling up to 65,000 transactions per second at a fraction of Ethereum’s costs.

Polygon lets users choose the best scaling option by utilizing various protocols, including zero-knowledge proofs. Zero-knowledge proofs verify statements without revealing additional information. Popular Polygon integrations include plasma sidechainsPoS blockchain bridgezk rollups, and optimistic rollups.

Recognizing diverse application needs, Polygon offers developers various scaling solutions with security, sovereignty, fees, and speed trade-offs. This flexibility allows developers to choose the most suitable scaling solution for their applications, making Polygon a comprehensive scale solution suite.

Will Ethereum’s Layer 2 technology kill the need for Polygon?

While Ethereum 2.0 promises a significant improvement to the blockchain, it only offers a partial solution to the scalability challenge. The increasing adoption of on-chain solutions like Eth2 by decentralized platforms and DApps might push against scalability limits, causing network congestion and surging gas fees, replicating previous issues. Enter Polygon, stepping in to enhance Ethereum’s scalability with an additional layer.

Polygon, functioning as a Layer 2 solution, contributes to refining the Eth2 experience. It acts as a catalyst to expedite any Ethereum upgrade, ensuring a superior end-user experience. Ethereum 2.0 is still on the horizon, addressing the scalability problem acknowledged by Ethereum founder Vitalik Buterin as the Trilemma challenge. Polygon bridges this gap by providing users with some Eth2 benefits—accelerated speed, heightened transparency, and reduced costs—without the need to await the full release of Ethereum 2.0.

When is the Right Time to Invest in Polygon?

Given the robust nature of the Polygon project, its consistent partnership announcements, and cryptographic advancements, Polygon is exhibiting remarkable performance. It has earned a strong reputation, and the MATIC token has distinguished itself amid many projects on Ethereum.

The full potential of the Polygon project may become clearer once Ethereum 2.0 is fully launched. Until then, it remains uncertain how promising Polygon’s trajectory will be. There’s genuine potential for the project’s market cap to grow as it continues to evolve. A key question revolves around whether Polygon will divert some of the Total Value Locked (TVL) currently on the Ethereum base layer, but again, it’s a wait-and-see situation.

Image Source: Adobe Stock

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.