Polygon MATIC: Will it solve Ethereum’s scaling woes?
Ethereum’s prices are soaring along with network usage. In 2021, this DeFi trailblazer moved $11.6 trillion worth of transactions — more than Visa or Bitcoin. Yet, despite the support from a massive community of investors, developers, and enthusiasts, the user experience on this blockchain is often slow and costly.
In recent years, faster and more scalable blockchains have come to the forefront. Faced with competition from Polkadot and Binance Chain, Ethereum desperately needs to accelerate its throughput. Polygon could become the ultimate solution to its scaling issues. The network previously known as MATIC brings instant transactions with nearly non-existent gas fees.
History of MATIC Polygon
The MATIC Network was launched in 2017 by former contributors to the Ethereum ecosystem. The token started trading on Binance in 2019 as part of the company’s IEO. Belief in the protocol’s potential has always been high — the list of early supporters includes Coinbase Ventures. In 2021, the network received an undisclosed sizable investment from Mark Cuban, the US-based billionaire entrepreneur.
As an easy-to-use platform for scaling and developing Ethereum’s infrastructure, the MATIC network was the first of its kind. This Layer-2 solution is focused on simplified expansion and instant blockchain transactions. As of this writing, the network connects 130+ million unique addresses. Over 2.67 million active monthly users are generating around 3 million transactions daily.
Mission of Polygon network in 2022
Today, Polygon is more than a robust scaling solution for Ethereum. Its 2021 rebranding signified a major strategic change. Polygon is a self-proclaimed internet of blockchains, a network aiming to become a Layer-2 aggregator.
Other multi-chain environments mainly build new systems from scratch and connect them through bridges. For example, Cosmos establishes the IBC connections and decentralized bridges with Ethereum and other compatible chains. While it also claims to be the internet of blockchains, it is fundamentally different.
Full compatibility with Ethereum Virtual Machine (EVM) allows Polygon to process transactions more efficiently than the mainnet. Its key strengths include:
- Leveraging the upsides of the ETH ecosystem
- More open and robust support of different architectures
- High connectivity and extensibility combined with efficient core layer maintenance
Polygon vs. Ethereum
Polygon already provides the benefits of ETH 2.0, which is still in the works (its release is scheduled for June 2022). Numerous blockchains and Dapps can use Ethereum’s best features and core protocol layer without its inherent drawbacks — that is, slow transaction processing and high gas fees.
Now you know what blockchain is Polygon helping to scale and why. Let's have a closer look at how it works.
Overview of the Polygon blockchain
To fully understand the importance of Polygon, consider the promised benefits of Ethereum 2.0. When the system is finally brought to full fruition, it will introduce an internet of shards — separate blockchains containing unique characteristics and data. Despite their independence, these blockchains will always be supported by the Ethereum network.
The Polygon networks fill the gap between ETH 1.0 and 2.0. This ecosystem is more than a purely scaling solution — it also bonds other blockchains linked to Ethereum. Combined with its features, Polygon’s framework and protocol provide an easy way to deploy secure and scalable blockchains. Here is how.
Polygon framework
The Polygon Framework, which is still being developed, will let anyone deploy new blockchains quickly and easily, in one click. When finalized, the SDK will contain a wide selection of modules for deployment with customizable staking, governance, and more.
Polygon will bring blockchain deployment tools for the masses. Essentially, it will work like WordPress for web content management. The first release of the SDK is currently available on GitHub.
Polygon protocol
The network protocol is the glue, or internet, binding new blockchains with each other and Ethereum. For security, they can rely on their own modules or tap into the core blockchain — that is, its enormous decentralized billion-dollar staking pool.
Fully-fledged scaling solutions
Although the network pillars are still under development, some of the scaling solutions are fully formed. For example, the MATIC Layer-2 Chain supports fast and low-cost transactions on Ethereum. A network of stake-validators ensures the security of this sidechain.
Protocols of such large DeFi platforms as Aave and Curve Finance have already been ported over to MATIC. Their users can take advantage of decentralized finance without high ETH gas fees.
MATIC PoS sidechain
The Polygon sidechains enhance DeFi apps by moving transaction volume from Layer 1 to Layer 2. Scalability is nearly instant, while the user experience is significantly improved.
The MATIC sidechain has been implemented on Aave, an open-source protocol for crypto lending and the largest DeFi protocol in the world by TVL. The biggest difference between this new market and Aave’s v1 and v2 is the cost — the transaction fees are dramatically lower.
The Aave Polygon market has so far attracted cryptoassets worth over $2 billion — significantly more than Aave’s v1 Ethereum-based market. Lower fees are the primary selling point as users can save and make more money compared to v1.
Aave Polygon resides on the Polygon/MATIC PoS sidechain. It also hosts several dozen high-volume Ethereum apps. The sidechain bundles transactions before transferring them, which reduces congestion and gas fees.
MATIC Ethereum Bridge
The MATIC Bridge converts native Ethereum ERC-20 tokens from Ethereum’s Layer 1 to Polygon’s Layer 2, which is a mandatory process on Aave and Curve. First, you need to wrap your tokens in Polygon’s variation of ERC-20 for transfer. Once they are ported over, you can use them in any app linked to the network.
The ETH Polygon transaction fees are paid to the Ethereum layer directly, so they are higher than its regular costs. On the upside, operations with cryptoassets inside the layer are much cheaper. To learn more about what is MATIC Bridge, check the comprehensive FAQ on the official website.
Advantages of using Polygon
Here are the four biggest advantages for developers and end-users. All of them are delivered by two pieces of the stack that are already live — MATIC PoS Sidechain and MATIC < — > Ethereum Bridge.
- Building blockchains and Dapps on Ethereum at a reduced cost
- Faster use of DeFi, NFT, and gaming apps running on Ethereum at nearly no cost
- Financial feasibility of DeFi farming for smaller farmers
- Accelerated NFT minting with minuscule gas fees, and access to a vast Polygon-based NFT ecosystem
Applications of MATIC token
MATIC is a multifunctional native token of the Polygon ETH ecosystem. It has three standard applications.
Governance
Stakers and delegators have special privileges. They can vote on governance matters concerning Polygon's direction — Polygon Improvement Proposals (PIPs).
Staking
By staking MATIC, users help secure and decentralize the network. Polygon rewards them with around 18% APY. Staked tokens support the Proof-Of-Stake consensus mechanism.
Tx fees
Fees for using the chains, which incentivize miners, are paid in MATIC. They are much lower compared to ETH rates, and Polygon even distributes free tokens through dedicated faucets.
Conclusion
Polygon is not the only scaling solution for Ethereum, but it was the first one to gain traction. As the number of connected blockchains and apps is growing, so are the opportunities inside the network. Inherent strengths and support from prominent names in DeFi make Polygon and MATIC highly competitive.
Ethereum upgraded through Polygon is much faster, more convenient, and appealing to developers and end users. This Layer-2 network lowers the financial barrier to entry, provides cheaper transactions, and facilitates the deployment of new blockchains. These enhancements can help Ethereum keep rivals at bay until ETH 2.0 is finally released.