What is Polygon (MATIC)? Guide For Dummies

Formerly known as the MATIC network, Polygon is a layer 2 scaling solution created in 2019 to address some limitations of the Ethereum blockchain, such as transaction speed, throughput, and gas charges.

Originally designed as a scaling solution, it has rapidly evolved into a multipurpose ecosystem and is gaining attention. The native token, MATIC, debuted in 2019 with the Binance Launchpad in the midst of the Initial Exchange Offerings (IEO) boom.

But first, if you want to get a better understanding of Polygon, let’s take a look at what a Layer 2 solution is.

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What is a Layer 2 solution? Why do you need them?

The Layer 2 solution is a blockchain that runs in parallel with the mainnet (Ethereum in the case of Polygon), but because transactions are processed outside the mainnet, throughput (transaction speed) is improved and gas charges are low. Become.

In other words, Layer 2 builds a communication channel between the two blockchains, sends information packages (transaction data) from the mainnet to the parallel blockchain, and executes the transaction at a low cost. It’s much faster without compromising the Ethereum mainnet.

As you know, Ethereum is a reliable ecosystem for most software developers looking to launch a dApp (decentralized application) due to its vast and secure infrastructure and innovative tools.

However, the demand for dApps was high, and subsequent supply clogged the network, resulting in a significant reduction in throughput. It is not uncommon for gas prices to rise to double or three digits in the equivalent of US dollars. This can be quite expensive, depending on the amount. Interact with the network, leaving the Ethereum blockchain dedicated to “big players”. You can check your current gas rates using Etherscan’s gas tracker.

This is why Layer 2 solutions have become an integral part of the DeFi ecosystem as they benefit from security properties while enhancing Ethereum’s scalability and throughput.

How do polygons work?

Polygon works like any other Proof of Stake (PoS) protocol in terms of network nodes, governance, staking, and other features.

Proof of stake consensus

The platform leverages the Proof of Stake consensus. It relies on a set of node validators to validate and validate transaction blocks on the network, rather than relying on traditional proof of work (PoW), which consumes huge amounts of processing power to create. New block.

The main difference is that PoS does not require the token owner to do the work of validating and validating the transaction (computational work with the PoW algorithm).

Polygon’s PoS ecosystem works by providing users with MATIC, the native token of the protocol. You can choose one of the following options to earn MATIC:

Become a validator Commit to the network by running a full node and validating transactions on the blockchain. As a node validator, you will receive a fee reduction and a newly created MATIC. However, even if you act maliciously, make mistakes, or have a slow internet connection, MATIC’s rewards will be significantly reduced as a punishment.

Become a mandate, A type of public node. As a delegator, take another person’s MATIC and use it to enable your network to perform PoS validation. The larger the delegated stake, the higher the voting right of the delegate. This is easier than becoming a node validator, but it also comes with challenges.

Polygon bridge

If you want to transfer funds from the Ethereum network to polygons, you need to use a PoS bridge. This is a set of smart contracts that will help you transfer assets from the Ethereum mainnet to the polygon sidechain.

The PoS Bridge is the backbone for transferring assets from Ethereum to Polygon and using these funds to interact with apps and blockchains on the Polygon ecosystem. Of course, you have to pay the transaction fee in ETH. This can be expensive, but once you get into the Polygon network, trading is very cheap, less than $ 1.

Polygon protocol

The polygon protocol interconnects all polygon-based blockchains and connects them to the Ethereum network. Chains can also leverage Ethereum to inherit the security model.

Polygon Software Development Kit (SDK)

In May 2021, Polygon announced the Polygon Software Development Kit (SDK). This is a collection of plug-and-play software tools that allow developers to launch their own fully customizable blockchain and DeFi apps.

The main idea is to make Ethereum a full-fledged multi-chain system, but current limitations and the lack of structure in the Ethereum ecosystem make it difficult for developers to work on projects.

Polygon aims to enhance the ecosystem with the Polygon SDK based on three key concepts: compatibility with Ethereum, modularity and extensibility. This provides a flexible framework for developers working on Ethereum scaling and infrastructure solutions.

The Polygon SDK is split into two iterations. The first version supports an Ethereum-compatible standalone chain, which is the sovereign blockchain responsible for modules and security. These chains can use polygon bridges to communicate with Ethereum while maintaining independence (for example, transferring assets or sending arbitrary messages).

The second version shows support for other types of chains, such as Layer 2, with its own set of modules and tools to further enhance developers.

Utility: What can you do with polygons?

With Polygon, you can do almost anything you do with Ethereum, but without the need for high gas charges or low throughput.

Polygon has a wide range of use cases, from simple scaling solutions to launching Ethereum-compatible blockchains for users and developers as well, using Ethereum-based decentralized applications (DApps), and using non-fungible tokens. , Has become a broader and more complex ecosystem. Tokens (NFTs) can be node validators, delegators, stakes MATIC, and so on.

There are many successful projects that work with Polygon, such as yield generation protocols like Aave and Curve Finance, decentralized exchanges like SushiSwap, and the most popular decentralized NFT (non-fungible token) marketplace, OpenSea.

Instead of Ethereum, you can use polygons as the base blockchain for these protocols. For example, in OpenSea, you can choose a polygon instead of Ethereum as your main network and use it every time you trade an NFT. All you need to do is prepare a polygon compatible wallet such as MetaMask or Coinbase Wallet and connect it to OpenSea.

However, keep in mind that not all protocols built on Ethereum have polygon iterations, and there are certain limitations in this regard.

MATIC token

MATIC tokens are ERC-20 tokens that enhance the entire Polygon ecosystem. It is used to pay for gas charges, staking, and governance. According to CoinMarketCap, the current circulation of MATIC tokens is 7.48 billion, with a maximum supply of 10 billion.

After being rebranded to Polygon and implementing new features for developers and users on the ecosystem, MATIC tokens have exploded in price due to an increase in use cases. As of this writing, February 2022 is the 16th largest cryptocurrency by market capitalization.

The supply distribution of MATIC tokens is as follows:

• Advisor: 4%
• Private sale: 4%
• Network operation: 12%
• Team: 16%
• Lunch pad sale: 19%
• Ecosystem: 23%
• Foundation: 22%

Meet the team behind the polygon

Polygon was created by four software engineers with a strong background in software development.

Popular DApp with polygons

• SushiSwap: An Ethereum-based decentralized exchange (DEX) that acts as an automated market maker (AMM).
• Curve finance: Ethereum’s exchange liquidity pool that offers low-risk, seamless stablecoin trading.
• 1 inch: A DEX aggregator that acts as a liquidity bridge between multiple DeFi protocols, providing users with the best liquidity with Ethereum, Binance Smart Chain (BSC), Polygon and more.
• Aave: A yield aggregation protocol that allows users to borrow a cipher and use it as collateral to take advantage of a flash loan.
• QuickSwap: A decentralized exchange that runs on the Polygon network, providing ultra-fast transactions at low cost.

summary

Polygon is one of the most exciting DeFi projects in existence today and has a promising future for the DeFi community in terms of scalability and blockchain interoperability.

And with a huge set of tools for developers, innovative mechanisms and modules, and full support for Ethereum virtual machines (EVMs), you can quickly see a huge influx of thriving projects in the Polygon ecosystem. rice field.