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What is Polygon?
Polygon, depicted as “Ethereum’s internet of blockchain”, began as MATIC and is an effective scalability solution created for the Ethereum network. It has gained massive popularity because of its low gas fees, great user experience and great throughput. In this paper, we will discuss Polygon and its ecosystem.
Ethereum and its Limitations
Ethereum is a decentralized, open-source blockchain developed by Vitalik Buterin in 2015. It was built to solve the problems faced by the Bitcoin Network.
Bitcoin was not written in a development-friendly network making the operations possible on the platform restricted. So if someone wanted to run a decentralized application, they would have to create their own network, modify bitcoins code to support the functionality they needed, and then create their own large network to make it truly decentralized.
Ethereum is a development-friendly network, i.e it allows developers to create decentralized applications and deploy them on its network. Anyone can run an Ethereum node on their computer becoming a part of the Ethereum network making it decentralized. People contribute their computational power for validating monetary transactions and running smart contract code.
To incentivize users to provide their computation power to the network, they are paid in the network’s native currency called Ether. When people are talking about the price of Ethereum what they are actually referring to is the price of Ether. Developers pay gas fees in the ether as an incentive to the miners to include their transactions in the next block. These transactions include deploying contracts, running tasks on the contracts, and sending ether to other users.
Also Read: What is Polygon zkEVM?
Source: Trading View
Limitations of Ethereum
Throughput is a measure of the number of actions completed per unit of time. For Ethereum, It is used to measure the total number of transactions being processed by the network in a specified unit of time. Common representations include TP(S/M/H) which stands for Transactions per
|Currency / Platform
|Transactions / second (average)
|3-4 transactions / second
|20 transactions / second
|193 transactions / second
|1700 transaction / second
As you can see, compared to traditional payment processors like PayPal and Visa, Ethereum’s throughput is very low.
Ethereum uses a Proof of Work(POW) consensus. It means that it uses a competitive validation process to confirm the transactions and then add new blocks to the blockchain. For Ethereum blockchains, transactions need to be processed sequentially, i.e., in a given order. This means that a long-running transaction needs to be processed first for the other transactions to take place. This in turn makes the transaction costs higher if the network gets busy.
Etheruem will soon be shifting to Proof of Stake consensus mechansim, to know more view: Etheruem Merge Update
Poor User Experience
As seen above, every second Ethereum can only process ~20 transactions. With the number of applications on the network increasing rapidly, these slots become more and more valuable. This leads to a bidding war among the users causing very large amounts of gas to be paid for a transaction to be processed.
Fig 2. Gas Prices (in Gwei) over the past 5 years
The spikes in the above diagram indicate the rising importance of Decentralized Finance (DeFi), which leads to congestion in the network.
Even if you are willing to pay the premium, it will still take an average of 13 seconds for your transaction to show up on a blockchain because of Ethereum’s long Block Times. All of these factors combined, contribute to a poor experience for the user of any decentralized application. And with Ethereum’s main selling point being its ability to deploy smart contracts, it is a major cause of concern for the platform.
Sovereignty is required as it establishes trust between the involved parties. It guarantees the authenticity of the data without storing data on the blockchain.
Currently, all transactions from all applications go through the same blockchain. This introduces a bottleneck in the infrastructure, which can clog up the entire network.
A very good example of this is the Crypto Kitties Congestion Crisis. CryptoKitties was among the first popular NFT projects on Ethereum. As user interest in the project increased, so did the number of read requests, at one point Infura reported their daily read volume jumped from 2 Billion / day to 4 Billion / day overnight causing the transaction costs to rise to a point where the transaction costs were higher than the Kitties. Even if the organization behind CryptoKitties wanted to pay to make the process painless for their users, they couldn’t because all transactions are sent through the same blockchain.
Additional Read: Polygon Price Prediction 2023
Emergence of Polygon
Currently, the Polygon network is being called ‘the internet of Blockchain’ and has dived into 15 different crypto but before all this, back in 2017, it was known as MATIC. MATIC network was initiated in October 2017 when 3 Indians Jaynti Kanani, Sandeep Nailwal and Anurag Arjun realized how the limited scalability of Ethereum is going to be a certain problem and limit the scope of Ethereum in the coming times.
The thought that Ethereum can only process 15 transactions per second popped into the mind of Jaynti Kanani while he was working as a Data Scientist at Housing.com in 2017. He thought that with an increase in the number of transactions, the gas fees will keep on increasing up to a level where the entire crypto market will be rendered ineffective and uneconomical. He noticed this issue of scalability for the first time in the Crypto Kitties, the famous NFT project. It was this realization that made him reach out to Sandeep Nailwal, a blockchain developer, and Anurag Arjun, a business consultant. These three went on to start MATIC, based in Mumbai.
Polygon is a Layer-2 Protocol. A layer-2 blockchain is an independent blockchain that is connected to the main-chain / layer-1 chain. Layer 0 is the network that runs beneath the blockchain and connects blockchains. Layer 1 is the basic and usual chains that we all know of, like Bitcoin and Ethereum. Examples of Layer-1 Chains are Bitcoin and Ethereum.
Layer-2 chains process new transactions faster and cheaper by summarizing multiple L2 transactions into a single representative L1 transaction. Layer 2 is made upon Layer 1, without changing the underlying layer. Layer 2 helps Layer 1 to scale better while enjoying the safety that Layer 1 offers.
Like the L1 chain, L2 chains have their own set of validators and their own consensus algorithm. Polygon has seen widespread adoption and is using the Proof-of-Stake consensus mechanism which has seen large-scale community approval. A consensus mechanism is a method for validating entries into a distributed database and keeping the database secure. Examples of these are Proof-of-Work(PoW) [Used by Bitcoin, Ethereum], Proof-of-Stake(PoS) [Used by Polygon] etc. All of these have their own pros and cons, but all have received community validation.
As a validator, whenever a block of transactions is ready to be processed, the network chooses a validator from the pool to review the block. The validator then checks if the transactions are accurate and send it to the blockchain. If a validator tries to add an incorrect block to the blockchain, some of their staked cryptos is taken away.
|Polygon (MATIC) Consensus Method
|The blockchain provides a set of tools that enables developers to create ultra-scalable, high-performance blockchains and decentralized apps (DApps).
The MATIC coin is used to pay gas fees and take part in the blockchain’s governance.
Check out the latest Polygon MATIC Coin Price, Charts and Data
Advantages of Polygon
- It’s over 100x faster than Ethereum.
|Transactions / second (average)
|20 transactions / second
|7200 transactions / second
Polygon uses a Proof Of Stake(POS) model for processing transactions and adding new blocks in the blockchain. In POS, the blocks are verified by the machines of coin owners where the owners keep their coins as collateral to validate blocks. This reduces the amount of computational work, compared to the POW model, needed to process transactions and verify blocks in the blockchain.
- Lower Gas Prices.
Initially, the minimum gas price on Polygon was set to 1 gwei, but to avoid spamming of the network it was hiked 30x to 30 gwei and is still much lower than Ethereum.
The reason the platform is able to operate at such low gas prices is because of the much more efficient consensus algorithm and the way Polygon combines transactions before sending them to the mainnet discussed above.
Ethereum faces the problem of scalability because of its POW model as every node in the network needs to process each transaction.
Polygon allows developers to use different scaling solutions depending on their applications to leverage the different advantages offered by these. For Example: Polygon Hermez (for zero-knowledge solutions), Polygon Edge (for public/private Ethereum compatible networks) and many more.
Polygon is an Ethereum framework that allows developers to integrate their own Ethereum-compatible blockchain with the security of Ethereum. It allows transactions to run off-chain before they are documented on the main Ethereum blockchain. Through this interoperability, Ethereum is more scalable and a great deal easier to use.
Polygon is aligned to be interoperable with the existing and future infrastructures of Ethereum, while also providing frameworks for other layer-2 solutions.
Learn more on how to invest in Polygon MATIC token
The Polygon ecosystem consists of 4 layers.
The Ethereum Layer
This is a basic layer that uses Ethereum for its Polygon chain. It provides high security but low flexibility because of its POW model. It is not required to build on this layer if it’s a project on the Polygon chain.
It provides the ‘validator as a service’ function. It allows Polygon validators to be able to serve as the consensus mechanism of the chains. This layer is less secure but more flexible
Polygon Networks Layer
This layer consists of independent blockchain networks. Here, each network maintains functions like block production and transaction processing. For a project on Polygon, it is required to build on this layer.
Here, the transactions, issued in the Polygon ecosystem, are executed. For a project on Polygon, it is required to execute on this layer.
With its unique structure, Polygon can overcome the Ethereum scaling problems. It includes both backward compatibilities as well as scalability. It retains security and user experience at the same time.
Polygon supports two major types of networks, which are, stand-alone networks and networks that leverage “security as a service”.
Stand-alone chains are fully independent chains/networks that are in charge of their own security. They have their own consensus mechanisms, and they don’t depend on Ethereum or any other established Blockchain for security. Although stand-alone chains come with the added advantage of independence and flexibility, developing a consensus mechanism can be a tough ask for many developers.
So, Polygon also supports networks that can leverage its “security as a service” model.
“Security-as-a-Service” is a model where the provider integrates their security mechanisms into a client’s infrastructure. This can either be provided by Ethereum directly (through fraud proofs) or by Polygon with its own dedicated pool of validators created for the client’s chain. Validators verify that the transactions are valid and add them to the blockchain. Such chains which leverage other’s “security as a service” models are referred to as secured chains.
Competitors of Polygon
Polkadot is the biggest competitor of Polygon right now. Other competitors include Cosmos, Kusama and Arbitrum.
Polkadot and Polygon: aside from their lexical similarity, these two networks share a relatively overlapping vision: Scaling Blockchain Networks. As the different number of blockchains in the industry is growing exponentially, these blockchains are getting more and more fragmented from each other. They do not communicate with each other. Both Polkadot and Polygon are working towards interoperability, in this case, they’re striving to be the “the Internet of Blockchain”, making blockchains more connected.
Imagine each unique blockchain as a train. Each train runs on only one track and right now, different blockchains are like trains without an interchange station. Trains can function on their track but don’t communicate or exchange with the opposite train services. Polkadot now provides the tracks and stations that connect the various train services. Polkadot connects the various blockchains, like providing the train tracks for various train services. Polkadot helps to attach the various chains into one system, which makes it a Layer 0 solution. This increases the size of the present blockchains easily and hence, solves the scalability problem in many blockchains. Polkadot currently has over 100 chains in its network which will process up to 1 million transactions a second.
Interestingly, Polygon is additionally solving an equivalent scalability problem, but with a special solution. Polygon is a Layer 2 chain that scales Ethereum, which is a Layer 1 chain. While some people may describe Polygon as “Polkadot on Ethereum” , Polygon effectively transforms Ethereum into a full-fledged multi-chain solution.
Moreover, Polygon makes use of the safety and user base of Ethereum networks to add value to their network. Polygon’s multi-chain infrastructure and skill to completely enjoy Ethereum’s network effects instead of acting as competition in the blockchain ecosystem gives the project significant advantages as compared to other systems.
Additional Read: MATIC vs XTZ
Sidechains are separate blockchains that are connected to the main blockchain through a two-way peg, with which it communicates with the main blockchain. Since the main blockchains are very slow, by trying to increase the throughput of the main blockchain, the security of the chain takes a hit. This is where the layer-2 scaling solutions such as sidechains come into play. Sidechains offload some work from the main blockchain. Compared to the main blockchain, sidechains are more centralized, with which we trade security for speed.
Sharding in database terms, means splitting the database horizontally to spread the load. When it comes to Ethereum, by the process of sharding, new chains called “shards” will be created, which will increase the number of transactions per second, i.e. decreasing block time, and reducing the gas fees per transaction.
Bitgert, one of the fastest-growing projects, is built on the Binance blockchain. It is a decentralized exchange and a staking platform. It has solved blockchain scaling problems and claims to be the solution to expensive gas fees (One of the biggest problems in the blockchain-crypto industry). The Bitgert BRC20 blockchain is the fastest existing blockchain and is the only zero gas fee chain. These factors will definitely make Bitgert a very solid project and attract millions of users.
We get the following differences if we compare Bitgert to Polygon –
- Polygon is 10 times slower than Bitgert
- Polygon Matic has more expensive gas fees than Bitgert 3. Bitgert is a short-chain compared to Polygon
Bitgert still has a long way to go, but it is expected to outperform Polygon. Around 1000 projects are expected to be added to the Bitgert chain in the next 1 year making it a more extensive ecosystem.
Additional Read: MATIC Technical Analysis
Tokenomics of Polygon MATIC Coin Explained
The Matic Network’s native digital cryptographically secure utility token (Matic Token) is a key component of the network’s ecosystem and is intended to be accepted as the network’s primary token. Because computational resources are required for performing various functions on the Matic Network, such as validating blocks and publishing proofs, providers of these services/resources would be rewarded with Matic tokens for providing these resources to the network (i.e. “mining” on the Matic Network) in order to maintain network integrity.
$MATIC, the native token of the Polygon network, is trading at roughly $1.5 with a market valuation of around $13 billion. MATIC tokens are distributed every month and have a total quantity of 10 billion tokens, of which about 7.81 billion are currently in use. The distinction between tokens kept for staking rewards and tokens with a time-locked release schedule is that tokens with a time-locked release plan are held for staking rewards.
MATIC had an initial supply of 3.23 Billion tokens and an initial price of $0.00263. 3 months after the project was rebranded from Matic Network to Polygon, MATIC price hit an all-time high of $2.40 in May 2021.
Additional Read: MATIC Price Prediction
Roadmap and Vision of Polygon
Polygon was founded as MATIC by Jaynti Kanani, Sandeep Nailwal, and Anurag Arjun in October 2017 in India. In 2019 it had its IEO (Initial Exchange Offering), a fundraising event administered by a crypto exchange, on Binance. Towards the end of 2020, top games were boarded on MATIC. In February 2021, Matic was rebranded to Polygon. In April 2021, major DeFi protocols were onboarded on Polygon. In May 2021, Polygon received funding from Mark Cuban which helped its market cap exceed $10B. July 2021 marked the launch of the Polygon Edge, Polygon Studio and Polygon Avail. In November 2021, Polygon Miden was launched which is a zk-STARK-based scaling solution.
It is a part of Polygon’s vision to provide off-chain (movement of values outside the blockchain) scaling solutions for existing blockchain platforms and the Plasma Framework for Ethereum is the first step for this. Plasma Framework enables the creation of child blockchains which will use the main Ethereum chains as a layer of trust. Matic foundation intends to provide a MATIC wallet, payment APIs & SDKs, products, identity solutions and other enabling solutions that will allow developers to design, implement and migrate DApps built on base platforms like Ethereum.
Polygon exists to contribute to the vision of a world free of borders for all. For this, it provides a platform where anyone can freely collaborate and exchange values on a global scale without intermediaries. Although the internet has brought about better connectivity, a serious downside of centralized internet is the lack of privacy, trust, and transparency. Polygon aims to provide a decentralized web to everyone. It is primarily an Ethereum scaling solution and wants to enable everyone in the world to use Ethereum.
What is Polygon (MATIC)?
Polygon (formerly known as Matic Network) is a Layer 2 scaling solution for Ethereum scaling and infrastructure development. The project aims to create “Ethereum’s internet of blockchains”, by solving scalability issues of existing blockchains, and offers developers with a set of tools to build ultra-scalable and high-performance blockchains and decentralized applications (DApps).
Is Polygon MATIC a good investment?
MATIC is a layer 2 scaling solution for Ethereum. Scalability is one of the major issues with most of the top cryptos. Therefore, any working solution that helps in reducing the load of the network as well as increases the speed of the transactions by reducing the cost is highly demanded and welcomed by the crypto community
How much does a MATIC token cost?
The current is $0.4969 per MATIC (as of 23 June, 2022, 2:57pm). Check latest MATIC price here - https://coindcx.com/trade/MATICUSDT
How many MATIC tokens are in circulation?
MATIC circulating supply is 8,001,489,375 MATIC.
HOW TO Invest in Polygon MATIC Coin
Use this three-step process to buy your first MATIC token using the CoinDCX, crypto investment app.
- Sign Up for the CoinDCX account: Enter a valid email address and a user name on the sign-up page. Once the Email Id has been verified, set a strong password to secure your account.
- Verify the account: You need to complete your KYC, to buy a MATIC token on the CoinDCX platform. All you need to do is upload the documents and your account will be set up in 15 minutes.
- Buy MATIC: After the account has been verified, you can deposit any amount of fiat currency you are comfortable with and start your crypto journey!
Additional Read: Ethereum Whitepaper Summary
Disclaimer: User Generated Content – Original Content created by a member of BITS Pilani, under the consultation of Dr. Amit Dua, Assistant Professor, Computer Science Department, BITS Pilani, Pilani Campus in association with CoinDCX. The views and opinions expressed within this post belong solely to the author.
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