What Is Polygon (MATIC) crypto? Polygon Ecosystem Overview
The Polygon platform aims to build Ethereum's internet of blockchains, the multi-chain ecosystem that allows each developer to launch their custom Ethereum-compatible blockchain in a single click.
|Consensus Mechanism:||Proof-of-Stake (PoS)|
Table of Contents
- TL;DR. 7 Facts About Polygon (MATIC)
- Polygon Ecosystem Overview
- What Problem is Polygon (MATIC) Solving?
- Brief History of Polygon
- How Does Polygon (MATIC) Work?
- Why Does MATIC Have Value?
- What is the Polygon MATIC token?
- Where Can You Buy Polygon’s $MATIC Token?
- How to keep your MATIC coins safe?
- Final Thoughts: Will Polygon “Fix” Ethereum?
TL;DR. 7 Facts About Polygon (MATIC)
- Polygon is a protocol and a framework for Ethereum scaling and infrastructure development.
- It started in India in 2017 and was originally known as Matic Network. In Feb. 2021, it was rebranded to ‘Polygon’.
- Basically, $MATIC is not a coin it’s an ERC20 token based on Ethereum ranked #18 by its market cap. Recently it reached $10B. Currently, it is $9.4B.
- Sending transactions on Polygon is almost immediate and hundreds of times cheaper than on #Ethereum. Now there are about 7.5M transactions per day!
- The percentage of $MATIC held on exchanges has been decreasing from 24.6% in Jan. 2021 to 2.27% as of Aug. 2. That means it is being used rather than just being speculated on.
- Polygon’s number of active addresses is up from just 489 at the beginning of 2021 to 4509 at the beginning of August. Also, the number of Polygon unique addresses quadrupled in June alone.
- Now you know where to buy MATIC as it is available for purchase with your bank card on Guarda!
Polygon Ecosystem Overview
Polygon is an Ethereum sidechain, a protocol, and a framework for building and connecting Ethereum-compatible blockchain networks. It aims to make it easier for Ethereum-based applications to work with other blockchain platforms and make distinct blockchains able to easily exchange information and value.
The Polygon platform aims to build “Ethereum’s internet of blockchains’’, the multi-chain ecosystem that allows each developer to launch their custom Ethereum-compatible blockchain in a single click.
Basically, the Polygon ecosystem consists of multiple actors including developers, users, block producers, and stakers.
- Polygon is a second-layer open-source technology that provides developers with the tools for the fast deployment of a stand-alone network or a sidechain. That can strengthen the security of the Ethereum network via smart contracts. It also allows developers to scale their own dApps.
- Users can use the Polygon Sidechain for transactions and interactions with different Ethereum-based decentralized applications, like on any other blockchain, except it is much faster and cheaper.
- Block producers (stakers that satisfy certain criteria) are chosen by the stakers to produce the blocks and settle all transactions on the network. They need to stake a significant sum of MATIC tokens (Polygon coins) in order to qualify and be elected.
Normally, the number of block producers will be relatively low because fewer consensus creators provide higher throughput and faster transaction settlements. For example, the average Ethereum block time is about 20 seconds, while the Polygon sidechain produces a new block every second.
- The Polygon stakers have the same functions as Ethereum Proof-of-Work miners because they need to stake (lock) MATIC network tokens to verify and confirm transactions on the Polygon Sidechain. They can also elect block producers to produce the blocks using their staked tokens as voting power.
What Problem is Polygon (MATIC) Solving?
Ethereum is the second-largest cryptocurrency by market capitalization and the first to develop a smart-contract blockchain. It is also the most popular hub for DeFi development. However, the popularity of Ethereum led to the most hindering ‘Ethereum scaling problem’.
It runs as follows: the current transaction throughput (the number of transactions the network can process simultaneously) of the Ethereum blockchain is limited, and it’s not enough to satisfy the growing user demands. This leads to high fees and severe congestion issues, so the protocol requires urgent scaling.
As for the scaling process, blockchains can generally proceed in 2 different ways:
- Scale the main chain (the ‘layer one’ of the protocol), where projects have to make a compromise and choose only two out of either decentralization, scalability or security. This is the meaning of ‘the scalability trilemma’ described by the Ethereum creator, Vitalik Buterin.
- Use second layer solutions (frameworks, projects, applications, and infrastructure software technologies that operate on top of the already existing blockchain systems and hence facilitate the main chain congestion).
Sidechain is a second-layer technology that allows digital assets of one blockchain to be safely used on another blockchain and then be returned to the original blockchain if necessary. The sidechain is a separate additional blockchain with a two-way bridge to the main chain. This ensures that assets are fungible at a given rate.
This is where the Polygon sidechain appears. It is designed to be a comprehensive framework for launching interoperable blockchains and providing multiple tools to improve the speed and reduce the transaction fees on blockchain networks.
In simple words, Polygon is like an additional highway that diverts traffic from other roads to reduce congestion. Polygon can provide thousands of transactions per second, and that is why MATIC network transaction fees are greatly cheaper than fees on Ethereum.
Brief History of Polygon
In October 2017 a team of contributors to several projects associated with Ethereum (Jaynti Kanani, Anurag Arjun, Sandeep Nailwal, and Mihailo Bjelic) launched Matic Network with headquarters in India.
In February 2021 the Matic Network was rebranded into Polygon but retained its MATIC cryptocurrency, the digital coin underpinning the network. Some also call it a Polygon coin.
The team also implemented the first version of Plasma, a framework now used by the Polygon Network to process transactions off-chain before finalizing them on the Ethereum main chain.
How Does Polygon (MATIC) Work?
The procedure of using the Polygon ecosystem is described like this:
- If someone on the Ethereum blockchain wants to use the Polygon ecosystem, they can lock ERC-20 tokens in a smart contract controlled by the Matic network.
- The block producers of the Polygon network check that coins are in the smart contract and mint a corresponding number of tokens.
- The users get access to the tokens on Polygon and can use them to interact with any dApps built on the Polygon network.
To sum it up, users put their tokens into Polygon’s smart contract and receive a corresponding number of tokens on the Polygon Matic network. If the users want to exit the network Polygon block producers burn their tokens. When the Polygon coins are burned, the Ethereum smart contract releases the users’ Ethereum based tokens and the Polygon-Ethereum transition is complete.
All transactions on the Polygon (Matic) network are secured by the Proof-of-Stake consensus algorithm. Polygon uses block producers responsible for proposing and verifying new blocks.
Users who wish to interact with Matic Sidechain Dapps need to:
- Approve the Predicate Contract on the Ethereum network, which locks the tokens to be deployed on the Matic Sidechain.
- Put the tokens on the Matic Sidechain.
- Transfer received tokens almost instantaneously and with minor fees within the network (after receiving tokens on the Matic Sidechain).
- Withdraw the tokens back to Ethereum. It is a two-step process:
- First, the tokens are burnt on the Matic sidechain, and then its proof has to be submitted to the Ethereum mainchain.
- Once this process is completed, the RootChainManager smart contract will automatically return assets to the user’s address (wallet) back on the Ethereum mainchain.
The architecture of Polygon (MATIC) consists of four layers:
- The Ethereum layer. In fact, it is a set of smart contracts implemented on Ethereum for finality, staking, dispute resolving, and interoperable messaging between Ethereum and various Polygon chains through this set of smart contracts.
- The Security Layer is an optional layer and provides ‘validators as a service’ that can check the validity of any Polygon chain for a fee. Running in parallel with Ethereum, it operates as a meta blockchain performing validator management (registration, rewards, shuffling) and Polygon Chains Validation. Security layers can be deployed in multiple iterations and on the Ethereum blockchain, where Ethereum miners make validation. Both layers are optional.
- The Matic Networks Layer is a set of sovereign networks each serving its own respective network for handling local consensus, block production, and transaction collation.
- The Execution Layer interprets and executes agreed transactions. It is included in Polygon’s network chains. It has two sublayers:
- Execution environment (pluggable virtual machine implementation).
- Execution Logic (state transition function of a specific Polygon network, usually written as Ethereum smart contracts).
Both the Matic Networks and Execution layers are mandatory.
Polygon also uses various technologies, such as:
- PoS Chain: Polygon’s main chain known as the Matic POS Chain implements a Proof-of-Stake (POS) security layer to Polygon-launched blockchains.
- Plasma Chains: Polygon uses Plasma to move assets between the main chain and side chains via Plasma bridges.
- ZK-rollups: A scaling solution used to process transactions off-chain before finalizing them on the Ethereum main chain.
- Optimistic rollups: A technology that runs on top of Ethereum and facilitates near-instant transactions via “fraud proofs”.
Why Does MATIC Have Value?
- Polygon has succeeded where its competitors have so far failed: solving current Ethereum network difficulties.
- Unlike most second-layer scaling solutions, Polygon has its own POS Consensus Mechanism and doesn’t depend on Ethereum for security. This mechanism allows the protocol to be more flexible and gives dApp developers more options for customizing their projects.
- Multi-Chain Support. Polygon can serve as a bridge between blockchains, enabling Ethereum dApps to interact with dApps running on other blockchains.
- Faster Withdrawals. The process of withdrawing coins from Polygon to Ethereum takes one to three hours, unlike other technologies where the same process may require up to two weeks.
What is the Polygon MATIC token?
Despite the rebranding, the native Polygon’s utility crypto token is still known as MATIC.
MATIC token (also called Polygon coin) is an ERC-20 token and is currently in the top 20 largest cryptocurrencies by market capitalization. It is used for a variety of purposes in the Polygon ecosystem, such as:
- MATIC network token is largely used as the unit of payment and settlement between participants who interact within the MATIC network mainnet.
- This token is a governance token. Its owners can participate in Polygon governance.
- Polygon (MATIC) coins can be staked to earn interest or converted to other assets ported on the Polygon Sidechain via different token swap or exchange protocols on the network.
- MATIC tokens are used to pay gas fees.
- This coin can also be used throughout the Polygon Defi ecosystem.
- Moreover, the MATIC network token is the base resource of the Polygon system. Validators and delegators stake their MATIC tokens in the staking contracts, which are used to achieve consensus and ensure the security of the network.
Where Can You Buy Polygon’s $MATIC Token?
Polygon (MATIC) coin is available to purchase and trade on popular cryptocurrency exchanges, including Guarda, Quickswap, Uniswap, etc.
How to keep your MATIC coins safe?
To store your assets in a safe place you should use a reliable crypto wallet. Among various wallets, MATIC token is available on various wallets including non-custodial Guarda crypto wallet.
How to add MATIC token to Guarda wallet?
Choose a suitable type of wallet on Guarda’s website, create a strong password, and download a wallet backup. Since MATIC is an ERC-20 token, the ETH address is used to obtain it onto the Guarda wallet.
You need to open your ETH Guarda wallet, copy your Guarda ETH address, and send MATIC to it from anywhere else. After receiving the token, it will be displayed as a part of the ETH wallet.
Final Thoughts: Will Polygon “Fix” Ethereum?
The most important keys of Polygon’s significance are that it helps increase Ethereum’s transaction throughput, accelerates withdrawals, and solves the high transaction fees problem. Along with this, it promotes interaction between blockchains and improves the vaster problem of blockchain interoperability.
Wrapping up this long story it can be assumed that the Polygon ecosystem has shown significant success in solving the Ethereum blockchain scalability issues. Let’s see if more is yet to come.