Polygon
Last updated
Last updated
Remember the blockchain trilemma?
Polygon is a stack of protocols designed to fix Ethereum’s scalability issues. The Polygon Network addresses the network’s challenges by handling transactions on a separate Ethereum-compatible blockchain.
Polygon then returns transactions to the main Ethereum blockchain post-processing. This approach lowers the network load on Ethereum. In doing so, Polygon can speed up transactions and lower transaction costs to less than a cent.
In other words, Polygon provides an easy framework for new and existing blockchain projects to build on Ethereum without scalability issues.
Using Polygon, users can interact with any decentralized application (dApp) without ever having to worry about network congestion.
Co-founder Jaynti Kanani is the current CEO of Polygon. He developed the project alongside Sandeep Nailwal, co-founder and chief operating officer, and Anurag Arjun, co-founder and chief product officer. The trio created Polygon in 2017 (formerly known as Matic Network).
At first, funds from friends and family in Mumbai helped support the venture. But, while Polygon has its roots in India, the platform continues to attract investors from all around the globe. Polygon raised over $450,000 in two rounds of startup funding in 2019. The venture has roughly $450 million in funding from various investors.
Balaji Srinivasa, an angel investor, and Mark Cuban, the billionaire, are among Polygon’s growing list of backers. Are MATIC and Polygon the same thing?
Before the project changed its name in February 2021, Polygon was known as Matic Network. The Matic network had one primary offering: plasma sidechains.
Plasma chains are a bit like side chains, except they offer greater security in exchange for convenience. Unlike sidechains, Plasma chains publish their "root" on Ethereum layer 1 and function based on the assumption that its consensus mechanism can fail. This design affords greater security but while rendering these chains unable to run complex operations.
After the project expanded, Polygon opted to keep the ticker MATIC for its native token. Thus, the Matic network became Polygon. This name change and subsequent rebranding may generate some confusion, but they are the same project. Polygon is the new umbrella for multiple projects including the Matic network. The Polygon (MATIC) token, however, is Polygon’s native cryptocurrency.
The Ethereum blockchain can perform a limited number of transactions per second, sitting at roughly 15 transactions per second for the base layer. Each transaction comes with transaction costs called gas fees on Ethereum.
Gas fees ramp up during times of high network congestion, and Ethereum gas fees can rise quickly to above $50 to $80. This is a massive issue; having to pay more than $50 at one time for each transaction places Ethereum squarely out of reach for most users.
Network congestion also makes the Ethereum blockchain process slower, discouraging users from engaging with smart contracts on the blockchain.
These issues can quickly add up to hundreds of dollars in fees for anyone who uses decentralized finance (DeFi) apps and protocols, trades or purchases non-fungible tokens (NFTs) and swaps, buys or transfers tokens on Ethereum.
So, how does Polygon make this cheaper? To cut gas costs, scaling solutions like Polygon process transactions on side chains. Polygon has the potential to handle up to 65,000 transactions per second, whereas Ethereum can process only up to roughly 15 transactions per second.
And, Polygon is able to provide these fees to users for pennies, compared to Ethereum’s average transaction fee of around $15 per transaction. Since Polygon comprises a suite of different protocols including the zero-knowledge (zk) proof variety, users get to choose the best scaling option suited to their use.
In cryptography, zk proofs are a cryptographic primitive used for verifying to another party (the verifier) whether a particular statement is valid. At the same time, the prover is not required to provide any additional information, other than the fact that the statement is true.
Of the multiple options project teams can choose to integrate using Polygon, the most popular are plasma sidechains, a proof-of-stake (PoS) blockchain bridge, zk rollups and optimistic rollups. Matic began with plasma sidechains, which are lighter and more secure sidechains.
Like sidechains, a plasma chain is a separate blockchain that runs alongside the primary blockchain. In this case, Ethereum is the 'primary' or 'parent' blockchain. Plasma chains link up to and communicate with the main blockchain to allow assets to transfer between them securely.
Due to the high demand from developers, Polygon introduced a blockchain bridge to its product lineup. The bridge allows developers to create dApps on one platform without having to sacrifice the benefits afforded by other platforms.
Processing batches of transactions on its own PoS blockchain eliminates the need for Ethereum to process all the files on its own. By batching transactions off the main chain, Polygon makes Ethereum lighter and faster.
Zk rollups process bundles of transactions off-chain and create validity proofs, verifying that each bundle of data is accurate. These validity proofs are then sent to the main blockchain.
Each validity proof acts as a proxy for the bundle it represents which reduces the amount of data on the main chain. In effect, this approach reduces the time and gas fees required to validate a block of transactions.
Optimistic rollups use a different type of proof system called fraud proofs. Once a fraudulent transaction is discovered, a fraud-proof protocol self-executes and determines the correct transaction based on the data available on the main blockchain.
Those who update transactional data on the system are required to stake ETH. Consequently, if anyone submits a fraudulent transaction to the main Ethereum chain using optimistic rollups, their stake is slashed.
Polygon recognizes that there is no single best solution that will accommodate all applications. Each scaling solution comes with tradeoffs between security, sovereignty, transaction fees and transaction speed. Developers should have the option to select the best-suited scaling solution for their application. Polygon offers the most complete suite of scaling solutions.
Polygon isn’t in competition with Ethereum. If anything, it’s reliant on Ethereum and vice versa. Polygon’s mission is to leverage the Polygon Network in order to create infrastructure that can handle the mass adoption of Ethereum. Consequently, Polygon is more dependent on Ethereum than Ethereum is on Polygon, which is expected since Polygon is built on top of its blockchain.
The main disadvantage is that switching to Polygon for speed may dilute the value gained by Ethereum. Value dilution might actually hinder Ethereum’s direct user growth in certain locations.
Polygon improves Ethereum and, thus, more people will use the Ethereum blockchain. With more users locking their capital in the Ethereum blockchain freely, its value will rise, despite the potential for stealing total value locked (TVL) away from Ethereum.
At first glance, layer-2 scaling solutions may appear to be complex. In simple terms, layer 1 describes the underlying base blockchain architecture. Layer 2, on the other hand, lies on top of the underlying blockchain as an overlaying network.
Layer-2 solutions are external protocols that interact with the base blockchain to increase speed and efficiency. Moreover, with layer-2 solutions like Polygon, protocols that are already running on top of Ethereum can become even faster and cheaper.
Ethereum was designed with an auction-based model, thus encouraging users to bid for their transaction to be included in the next block. Therefore, by design, more network congestion leads to increasingly prohibitive costs.
Polygon has major ambitions for the future, and they don’t just include speed or transaction costs. The protocol aims to link all Ethereum Virtual Machine (EVM)-compatible blockchains with each other, allowing developers to access the benefits of other blockchain platforms with minimal friction.
Ethereum 2.0 will be a major upgrade to the Ethereum blockchain, but it will only provide a limited solution to the scalability challenge. As more and more decentralized platforms and dApps use on-chain solutions like Eth2, demand may start to creep up against the limits of scalability.
As mentioned, this results in a buildup of network traffic. Gas fees begin to spike and the network ends up under the same load conditions as before. This is where Polygon comes in by providing the Ethereum blockchain with an additional layer of scalability.
Layer 2s like the Polygon network will further improve the experience Eth2 will have to offer. Any Ethereum upgrade can be made even faster with layer 2. In this manner, Polygon ensures that the end-user receives the best experience.
Ethereum 2.0 is still some time away, but scalability has been an issue that was long acknowledged by Ethereum founder Vitalik Buterin as the Trilemma challenge. A solution like Polygon brings some of the benefits of Eth2 to users so that they may take advantage of the increased speed and transparency as well as lower costs, all without having to wait for the release of Eth2.
Polygon isn’t the only project attempting to speed up Ethereum transactions. Network data for Ethereum shows that the number of transactions per day is steadily increasing. Layer-2 solutions are the best way to handle this growing strain on the Ethereum blockchain. It’s worth mentioning that the benefits go beyond simply offloading transactions.
Several competing layer-2 networks also allow transactions to be processed externally and bridged onto the main blockchain network. Some of the more notable layer-2 alternatives to Polygon rely on zk-proofs, the two most notable competitors being Arbitrum and Optimism.
There's no doubt that Polygon has some strong competitors, and all the Ethereum layer-2 projects have the potential to positively impact the blockchain environment. But, since Polygon has been investing heavily in different types of zk-proofs, this layer-2 solution has shown great promise as a powerful solution for Ethereum scalability.
What sets Polygon apart from other L2 solutions is its approach. Polygon offers developers a stack of solutions on a single network. This approach grants developers higher levels of control and customization when choosing a scaling solution best suited to their application.
On Polygon, a developer can choose between zk-rollups or optimistic rollups. They may opt to use Polygon Avail instead, an extremely secure data availability blockchain for standalone chains, sidechains and off-chain scaling solutions.
In May 2021, the Polygon network announced the launch of the Polygon SDK, which makes the process of building a multichain network much easier for developers. With the Polygon SDK, developers can create standalone chains that are fully responsible for their own security. These standalone sidechains will have a dedicated PoS bridge network connecting them to Ethereum.
Polygon also has other scaling approaches like its PoS commit chain. For convenience, the commit chain is often simply referred to as Polygon or the Polygon blockchain. Polygon’s PoS sidechain has been the project's most popular product. To date, the Polygon blockchain has processed roughly one billion transactions and counting, according to data from polygonscan.com.
The PoS commit chain is EVM-compatible and, thus, works flawlessly with many Ethereum protocols. Consequently, moving dApps across platforms is simple for developers.
Unlike other EVM sidechains, Polygon commits checkpoints to Ethereum. Specifically, each time Polygon processes a transaction, it creates a few checkpoints on Ethereum. These checkpoints ensure that all the data that has been processed on Polygon up to that point is valid and safe for the Ethereum blockchain.
MATIC is Polygon’s native cryptocurrency token. Polygon plasma chains run on the PoS consensus mechanism. MATIC will be used to pay for all transactions on the plasma chains. Therefore, the more projects that use Polygon as a scaling solution, the greater the demand for MATIC.
In addition, MATIC serves as a governance token by granting holders the right to vote on which of the several scaling solutions planned should actually be rolled out.
If the community likes a new layer-2 scaling solution and wants Polygon to integrate it, holders of the token may vote on whether the solution becomes part of Polygon's product line. Therefore, governance voting allows MATIC token holders to vote on the future of Polygon.
