Ethereum needs to speed its throughput or be left behind by faster and more scalable blockchains to keep up with the world’s appetite for its decentralized services. Binance Smart Chain, Polkadot, and Solana are three high-performance blockchains waiting in the wings to take Ethereum’s crown.
Enter Polygon, the scaling solution formerly known as Matic. Polygon connects blockchains and decentralized applications to Ethereum via sidechains. When using Ethereum through the Polygon layer, you get instantly settled transactions and pay almost zero gas fees.
Can Polygon solve Ethereum’s scaling woes and fend off up-and-coming blockchains?
Polygon (MATIC) is built to scale Ethereum
Polygon got its start as Matic Network, a scaling solution for Ethereum. Matic held its token sale on Binance Launchpad in 2019, just as Initial Exchange Offerings (IEO) were becoming fashionable.
Amongst Polygon’s earliest supporters is Coinbase Ventures, the investment arm of Coinbase crypto exchange. Given the caliber of early Polygon investors, belief in the protocol delivering a lasting solution to Ethereum network congestion has always been high.
Fast forward to 2021, and Matic Network rebranded to Polygon with an expanded mission. Going beyond its original billing as an Ethereum scaling solution, Polygon now calls itself an internet of blockchains for Ethereum.
Put another way, Polygon is ETH 2.0 without having to wait for the release of ETH 2.0 (something that might take years to materialize). It enables countless blockchains and dApps to take advantage of Ethereum’s features and core protocol layer without suffering its slow transaction times and exorbitant gas fees.
Everyone knows that so far, Ethereum is winning the blockchain race. As the home of DeFi, Ethereum enjoys unparalleled support and mindshare from investors, developers, and end-users. However, the Ethereum experience is often frustratingly slow and expensive, leading many to conclude that its popularity results from its first-mover advantage.
Polygon sidechains bypass Ethereum’s worst characteristics, like high cost, to boost user experience and make Ethereum practical, adoptable, and a true multi-chain ecosystem.
These are all big promises — but does Polygon actually work?
Overview of how Polygon works
Polygon is more than just an Ethereum scaling solution — it’s the glue between blockchains that revolve around Ethereum. To understand this point, it’s helpful to refresh your memory on what Ethereum 2.0 promises.
When it’s fully operational, ETH 2.0 will be an internet of independent blockchains called shards. Each shard contains unique data, characteristics, and qualities — in effect, a shard is its own blockchain, albeit always supported by the Ethereum network.
The ETH 2.0 vision is still a long way off as Ethereum developers plod forward with testing. In its previous incarnation as Matic Network, Polygon sensed the opportunity available to whoever filled the gap between ETH 1.0 and 2.0.
To give the world tomorrow’s Ethereum today, Polygon created two major components.
The Polygon Framework is a way to easily (in one-click) deploy Ethereum-compatible blockchains. As development progresses, the Polygon Framework will offer a vast suite of modules for deploying with customized features pertaining to governance, staking, and more.
When finished, the Polygon Framework, available to developers as the Polygon SDK, will make it simple enough that anyone can deploy a blockchain. Like WordPress for website building or Canva for graphic design, Polygon is making blockchain deployment tools for the masses.
Despite still being under development, the Polygon SDK is out now for eager developers to try out.
Deploying an Ethereum-compatible blockchain is all well and good, but what then? The Polygon Protocol is the web, or internet, connecting various Polygon-built blockchains with each other and Ethereum.
Additionally, the Polygon Protocol enables each blockchain to tap into Ethereum for security — or choose its own security modules. The advantage of using Ethereum for security is Ethereum already has a vast decentralized staking pool worth billions of dollars.
All told, the Polygon SDK and Protocol combined with Ethereum’s security amounts to an easy way to deploy highly secure and scalable blockchains.
Advantages of using Polygon
Even though Polygon’s advanced solutions like the Polygon SDK and Protocol are still a ways off from completion, the Polygon team has already shipped several Ethereum scaling solutions.
Today, you can use fast Ethereum via the Matic Layer-2 Chain, an Ethereum sidechain secured by a network of staker-validators. Massive DeFi platforms like AAVE and Curve Finance have already ported their protocols over to the Matic sidechain. The move has enabled end-users to enjoy using DeFi without the high ETH fees paid in gas.
The advantages of using Polygon/Matic sidechains, whether you’re a developer or user, are enormous.
Building Ethereum decentralized apps and blockchains is far cheaper on Polygon/Matic.
Using Ethereum-based DeFi, NFT, and gaming apps is faster and almost free.
Farming on DeFi platforms is finally financially feasible for smaller farmers.
Minting NFTs is faster, involves near-zero gas fees, and works within a large Polygon-based NFT ecosystem.
All of the advantages Polygon technology offers right now are based on two already-live pieces of the Polygon stack.
Matic PoS Sidechain
Aave, the DeFi lending protocol, recently launched Aave Polygon. The new Polygon-based market differs from Aave’s v1 and v2 markets in that transaction fees are drastically reduced.
Over $2 billion in crypto assets have been deposited on the Aave Polygon market, a figure that’s easily eclipsed Aave’s v1 market on Ethereum. The reason is obvious — lower fees for interacting with the Aave DeFi platform means more money saved and or made.
The Polygon/Matic PoS sidechain is where Aave Polygon resides alongside dozens of other high-volume Ethereum applications. The Matic PoS sidechain works by bundling transactions and sending them to Ethereum later, which drastically reduces congestion on Ethereum and fees for Polygon/Matic users.
Ethereum is Layer 1, whereas Polygon sidechains are Layer 2. Taking transaction volume from DeFi apps like Aave and Curve off of Layer 1 and onto Layer 2 results in near-instant scalability and a better UX for all.
Matic < — > Ethereum Bridge
If you want to use Aave Polygon or Curve Polygon, you need to get your native Ethereum ERC-20 tokens from Layer 1 (Ethereum) to Layer 2 (Polygon) using the Matic Bridge.
To move your assets from Ethereum to Polygon, you need to wrap them in an ERC-20 equivalent that exists on the Polygon layer. Once you’ve ported your assets over, you can seamlessly use them across any application plugged into Polygon. The more applications and blockchains connect to Polygon, the more you can do once inside.
The Matic Bridge requires a transaction fee paid directly to the Ethereum layer, meaning it’s more expensive and subjective than regular ETH gas fees. However, once you pay this fee and bridge your crypto assets, you’re inside the Polygon layer and can move about cheaply.
Governance — MATIC stakers and delegators are entitled to participate in governance matters that decide the network’s direction.
Tx fees — Once inside the Polygon layer, transaction fees are paid in MATIC instead of ETH. Fees are so minimal that Polygon gives you free MATIC to pay them.
Polygon is the first Ethereum scaling solution gaining real-world traction. Billions of dollars worth of crypto have been bridged into Polygon via some of the biggest names in DeFi, making Polygon a competitor blockchain in its own right.
Even more interesting is the way in which Polygon is helping Ethereum fend off other blockchains by making it more appealing. Polygon lessens the financial barrier for developers and users wanting to get started on Ethereum. With Ethereum becoming more useful as a result, the incentive to use other blockchains might ebb.
About The Author:
The Shrimpy Team
The Shrimpy Team is comprised of highly experienced content writers who analyze and research the latest market trends, delivering content suitable for both beginner and veteran crypto investors.