What Is Polygon (MATIC): Unlocking Limitless Scalability

Ethereum is one busy ecosystem and plays a massive role in driving the web3 movement forward. However, despite its novel architecture, the blockchain is limited in its scalability due to challenges such as network congestion and high gas fees.

To help solve these challenges, Layer 2 scaling solutions were birthed. One such platform is Polygon (formerly Matic Network), designed to bring interoperability between multiple EVM-compatible blockchains, including Ethereum.

Let’s explore the Polygon universe and learn why its token, MATIC, is one of the top Layer2cryptocurrencies in the market.

Key Takeaways:

• Following its rebranding from Matic Network in 2021, Polygon has grown tremendously to become a leading Layer 2 scaling solution for Ethereum with a vast suite of web3 products in its ecosystem.

• The project has proposed a major upgrade on its ecosystem, dubbed Polygon 2.0, that will bring unlimited scalability and unified liquidity to the platform. 

What Is Polygon?

Polygon is a Layer 2 scaling solution designed to provide an easy-to-use platform. It’s equipped with the tools necessary to enhance scalability while maintaining security when using and building on Ethereum. As the home of decentralized applications (DApps) and other decentralized finance (DeFi) products, Ethereum’s network is often clogged, reducing the speed of transactions and increasing gas fees. 

To counter this, projects such as Polygon act as an additional layer designed to enhance the capabilities of the primary blockchain without changing its original structure.

Polygon was initially known as Matic Network and was co-founded in Mumbai, India in 2017 by a team of ambitious Ethereum developers: Jaynti Kanani, Sandeep Nailwal and Anurag Arjun, said to be the first Indian crypto billionaires.

In February 2021, Matic Network rebranded to Polygon in a bid to expand its mission and tech scope to include a suite of developer solutions for catering to various functionalities.

How Does Polygon Work?

Polygon acts as a sidechain to Ethereum, running parallel to the Ethereum mainchain architecture and offering EVM compatibility.

When it was initially launched, Matic Network was basically a scalability solution for Ethereum-based applications. Matic Network started with plasma chains to transfer assets between the mainchain and the sidechain. Plasma chains are independent blockchains outside the main Ethereum blockchain, designed with their own consensus mechanism to allow the confirmation of transactions off-chain. 

With its rebranding to Polygon in 2021, Polygon uses ZK-rollups for more effective scaling of Ethereum. It now aims to be the aggregator for all Ethereum Layer 2 scaling solutions and to transform Ethereum into a multi-chain network. Some of its upgraded features include Polygon zkEVM, Polygon PoS and Polygon Supernets.

Polygon Architecture

Polygon's mainchain is a sidechain that uses a proof of stake (PoS) approach to decide who can mine or validate a block. This is in complete contrast to proof of work (PoW), whereby every competing node attempts to solve a complex problem, and the miner with the most expensive hardware wins.

Polygon uses Heimdall architecture for choosing block producers, which increases the network's scalability and security. Block producers are chosen randomly from among PoS validators in the network, providing increased security and scalability as the pool of validators is quite large.

Polygon validators running parallel to the Ethereum mainchain keep validating the Polygon ecosystem's transactions at regular checkpoints. This helps maintain consistency and addresses any disputes that might arise.

Apart from this, Polygon has its own Polygon Network layer, which is essential for block production and local consensus in its blockchain ecosystem. The Ethereum virtual machine (EVM) helps Polygon implement smart contracts. 

Polygon uses ZK-rollups, which combine a large number of off-chain transfers into a single transaction. This mechanism helps add anonymity to transactions, thus ensuring privacy for users. Even though validation and consensus are available, no private information is leaked, which is referred to as zero-knowledge proof.

All of these strategies combined provide Polygon with a distributed and secure architecture. This is how it easily surpasses the Ethereum network’s current throughput of 14 transactions per second (TPS). The increased scalability makes transactions a much cheaper commodity than they currently are on Ethereum’s overburdened network.

Polygon vs. Ethereum

As two of the most popular blockchains in DeFi, Ethereum and Polygon play a crucial roll, especially among developers. There's often debate about their capabilities and distinctions. At times, Polygon is seen as a replacement for Ethereum.

However, Polygon is built on top of Ethereum and benefits fully from the latter's strengths, such as leveraging its enhanced security and developed architecture. It shares Ethereum’s values of open innovation and complete decentralization. 

Rather than compete with Ethereum, Polygon is designed to help its blockchain provide an improved user experience by speeding up transactions at a lower cost.

There have been concerns that the Ethereum Merge, designed to significantly solve Ethereum’s scalability issues by decongesting its network, could render Polygon redundant. However, Polygon remains a strong network that’s crucial to facilitating Ethereum's shift toward a more scalable system and making it accessible to all. 

For now, it will take time for Ethereum to catch up with Polygon's speeds and low fees. Polygon can process up to 65,000 transactions per second, much faster than Ethereum's current capacity of around 10 to 15 transactions per second. Hence, as a user, you may want to use Polygon for transacting, due to its high throughput and extremely low gas fees as compared to Ethereum. 

Benefits of Polygon Over Alternative Blockchains

Even though there are many scalability solutions based on Ethereum’s network, Polygon has its own distinct set of advantages. Some of these are listed below.

Features

• Polygon successfully uses features such as ZK-rollups, Polygon PoS and Polygon Supernets, which some of its competitors have failed to incorporate.

• Polygon PoS is an EVM-enabled sidechain that uses the Heimdall layer to help Polygon clear bottlenecks, making it more scalable.

• Polygon Supernets enable developers to easily launch modular blockchains tailored to specific use cases while still ensuring security.

Security

• Polygon is highly secure, due to regular checkpoints that ensure consistency across the transaction life cycle.

• In addition, there are mechanisms for local consensus. Polygon adds an extra layer of security to the architecture, and its usage of PoS with Heimdall architecture makes it more secure than its competitors.

Customization

• Polygon is highly customizable, enabling developers experienced in Ethereum-based application development to use the programming language of their choice.

• The additional Ethereum layer and the security layer are optional. Thus, solution providers using Polygon have the complete independence to customize according to their own needs.

Ethereum Optimization

• Polygon has been designed to take complete advantage of the Ethereum network.

• With its decentralized approach, Polygon enables the Ethereum blockchain to complete a thousand times more transactions.

Polygon zkEVM

In July 2022, Polygon introduced zkEVM (at EthCC Paris) — the first-ever EVM-compatible version of ZK-rollups, designed to work effortlessly with all existing smart contracts, developer tools and wallets. At the same time, it also reduces user friction by removing the need for any modification or reimplementation of code. 

In addition, zkEVM inherits Ethereum’s security while increasing performance and reducing fees by a large amount. With zkEVM, any smart contract or developer tool that can be used on Ethereum can now be used on Polygon. 

The development team aims to build zkEVM into the holy grail of web3 infrastructure of scalability, security and Ethereum compatibility.

Polygon’s zkEVM rollup was released on the public testnet on Oct 10, 2022, while the mainnet went live on March 27, 2023. Furthermore, one of the co-founders shared that plans were underway to upgrade Polygon PoS into a zkEVM Validium, making Polygon's security comparable to Ethereum's. Having the network as a validium rather than a rollup implies that only validation proofs will be stored on Ethereum, while all the other data is stored locally. 

This upgrade will also drastically reduce costs and open up the network to applications, such as web3 gaming, which process large volumes of transactions. The upgrade is expected to be made between February and March 2024 in what developers are calling Polygon 2.

Polygon Hard Fork

To reduce its gas spikes as well as its block transaction finality time, Polygon implemented a mainnet hard fork on Jan 17, 2023. =

There are two parts to the upgrade. The first is the reduction of gas spikes. Gas spikes are the abnormal price surges in gas fees that occur due to two factors — the EIP1559 update, and Polygon's switch to PoS, which has led to faster block times. In addition, the Polygon BaseFeeChangeDenominator will be increased from eight to 16 to ease the base fee rate changes, due to a rise above or drop below the target gas limits. After the denominator is increased to 16, the base gas fee is expected to fall from 12.5% to 6.25%.

Source: polygon.technology

The second part of the update aims to reduce the sprint length of Polygon’s blocks from 64 to 16 blocks to solve the chain reorganization issue. As the reorg length is equivalent to the sprint length, a reduction in sprint length will reduce the time needed to produce blocks continuously. This will lower the frequency of reorgs, thereby leading to better transaction finality times. This update doesn’t impact the total time or number of blocks a validator produces, so block rewards won’t be reduced.

History of MATIC Coin

MATIC was first released in 2017 with the launch of the Matic Network, which began with the goal of solving the Ethereum network’s inherent problems related to its performance and affordability issues. Since then, it’s been widely adopted in various projects, making it one of the most popular scalability solutions in the crypto market. To build upon its initial success, the Polygon team expanded its services with a broader vision.

Thus, in February 2021, MATIC was rebranded to Polygon, offering an improved scalability solution incorporating interoperability in its long-term vision.

Following this, Polygon has been designed to create a world where users of EVM-compatible blockchains can interconnect and transact without needing a third-party enabler. 

Polygon (MATIC) Price Prediction

As of Jul 1, 2023, Polygon’s price was $0.70, approximately 22,223% above its all-time low (ATL) of $0.00314 on May 10, 2019, and a 75.94% drop from its all-time high (ATH) of $2.92 on Dec 27, 2021. 

Price forecasting experts are quite bullish on MATIC’s price. According to DigitalCoinPrice’s prediction for Polygon, price analysts believe it could hit a maximum price of $2.56 in 2025 and increase to $7.34 in 2030. Experts at PricePrediction share a similar view, asserting that MATIC could hit $2.02 in 2025 and rise to a maximum price of $14.06 by 2030. 

While these price predictions represent a bullish outlook, they aren’t financial advice or a guarantee of the future price of Polygon. We highly recommend that you always do your own research before investing in MATIC or any other altcoins. 

Use Cases of MATIC Coin

Payments

• Polygon enables users to make payments through cryptocurrencies using DApps.

• Because of the network’s lower turnaround times and cheaper transaction fees, it becomes a suitable solution for application developers and service providers. Polygon improves the overall experience while using any DApp. The MATIC token can also be used to pay transaction fees on the Polygon Network.

Decentralized Exchanges

• People still prefer centralized exchanges (CEXs) over decentralized exchanges (DEXs), due to performance and security issues. Polygon Network mitigates this discrepancy by enabling people to trade in mere milliseconds.

• This performance jump comes without any compromise in the security of trades made on the network. Increased throughput, along with an extra security layer, makes Polygon Network’s security as rigorous as possible.

Gaming Networks

• The gaming industry has been largely centralized. People don’t have any ownership or control over the digital assets they acquire with their hard work — or even their fiat money. They can lose them anytime if the central authority so decides.

• The decentralization of gaming networks puts control in the hands of the gaming community itself, letting people obtain complete ownership of their digital assets. Polygon Network helps build this decentralized gaming world, also known as GameFi, with its impeccable transaction performance.

Staking MATIC

As Polygon employs a PoS consensus, it requires validators and delegators to secure the network. Each time a validator checks and adds new transactions to the blockchain, they’re rewarded in MATIC tokens. 

Anyone can become a validator on Polygon and set up their own node, or lease to a community node. Rewards depend upon the amount of MATIC staked and the transactions in the network. If your selected validator makes a serious error, you may lose part or all of the MATIC tokens you’ve staked.

Alternatively, you can stake your MATIC with Bybit Savings to automatically earn rewards that go directly into your account. Bybit Savings allows you to withdraw your MATIC at any time, as compared to the nine-day unstaking period on the Polygon Network.

Is Polygon a Good Investment?

Polygon has done incredibly well in its bid to onboard more users into web3 by providing an easy way to benefit from the superior architecture of Ethereum, without worrying about high gas fees and delayed transactions. 

Furthermore, the project’s rebranding to expand its technical scope has opened up its architecture to a diverse range of services, leading to a thriving ecosystem.

Notably, Polygon has proposed a major upgrade to its network, dubbed Polygon 2.0, which the team believes will significantly improve scalability and unify liquidity. When successfully implemented, Polygon 2.0 will leverage ZK (zero knowledge) technology to create what it's calling the Value Layer of the Internet, enabling unlimited creation and exchange for all.

Current Projects on Polygon

MATIC is driving innovation payments on DApps, DEXs and gaming networks. Its fast market adoption is behind its favorable prospects and price jump.

There are around 19,000 DApps currently using the Polygon Network to implement their services. 

Some top projects using MATIC coin currently include:

Gains Network's gTrade

• Gains Network is the team behind gTrade, a synthetic leveraged trading protocol that started on Polygon.

• gTrade’s platform allows assets to be traded using oracle price feeds without the actual underlying assets. This approach removes the need for order books or liquidity pools for each pair, increasing capital efficiency and sidestepping issues like slippage, price impact and impermanent loss. 

Decentral Games

• A virtual reality platform powered by Polygon, this metaverse casino is building a global decentralized gaming environment.

• Players can use cryptocurrencies for a variety of games such as ICE Poker on the Decentral Games platform.

Aavegotchi

• Aavegotchi is an open-source NFT gaming protocol with which the team at Aave works closely. Its NFTs are on-chain ghost characters that can be staked with Aave’s interest-generating aTokens.

• The platform allows players to compete for rewards by earning XP, leveling up and increasing the rarity of their Aavegotchi FRENS.

Polygon Partnerships

Polygon has established a wide range of partnerships to adopt more users, including the following.

• Google Cloud — To help drive a faster and increased adoption of key Polygon protocols, the project announced a strategic alliance with Google Cloud during Consensus 2023. Through the partnership, Google Cloud will strategically provide its blockchain-based cloud services to Polygon developers, saving them costs on sourcing and maintaining blockchain nodes from other providers.

• Hamilton Lane — This world-class investment firm, with over $823.9 billion worth of assets under its management, announced that it would onboard individual investors into its wing through Polygon’s Securitize platform. Hamilton Lane chose Securitize as its entry point into web3 due to Polygon’s accessibility and scalability.

While Polygon’s partnership with Disney may have taken a backseat due to the latter’s decision to abandon their metaverse project, Polygon still has hundreds of other partnerships that have helped put it on the global map when it comes to opening up the world to blockchain-based services and products. Polygon is a fundamental network in web3. For a long-term investor, the future of Polygon (MATIC) looks promising.

That said, if you’re considering buying Matic tokens, keep its competitors in mind, such as Solana and Cosmos. These blockchains share Polygon’s vision of scalability, interoperability and decentralization, but with a few differences. For example, Solana is actually a Layer 1 blockchain seeking to compete with Ethereum, and Cosmos focuses on interchain communication and interoperability.

Where to Buy Polygon

You can buy Polygon (MATIC) on Bybit through the various payment options available on titsplatform, such as credit/debit card or the peer-to-peer option. Additionally, you can purchase MATIC as either a USDT Perpetual Contract, USDC Perp, Spot (USDT/ USDC/ BTC) or Leveraged Token (MATIC2S/USDT, MATIC2L/USDT).

Furthermore, Bybit is one of the best platforms on which to stake your MATIC tokens to earn a high APY.

The Bottom Line

Polygon, formerly known as Matic Network, uses innovative technology. No one can predict MATIC’s future performance with complete accuracy, but the Polygon team clearly has a forward-looking vision, and both its network and coin look set to be in the market for the long term. Their outstanding list of partnerships with well-known companies will also help to push adoption and users onto their network over time. Hence, MATIC may well be a good investment in your portfolio.

The adoption of blockchain in general aspects of life has only just begun, and technology offering scaling solutions like those of Polygon can democratize blockchain technology by helping developers build their own sovereign, customized and interoperable blockchain networks. That said, developers and investors would do well to invest in the technology — and the speed with which that technology gains adoption — for their own needs and profitability, instead of the hype.

The cryptocurrency market and world of blockchain are as risky as they are profitable. A little precaution goes a long way toward building a strong crypto portfolio, and it may be wise to include the MATIC coin as part of your plan.

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