An In-Depth Guide to Polygon MATIC

Polygon is an abstracted transaction layer that sits on top of the Ethereum ecosystem. Polygon sets out to tackle Ethereum's shortcomings like improving transaction processing speed and in turn reducing fees. All in all, this frees up connections and makes the whole ecosystem run faster!

Before we dig deeper into Polygon's solutions, let's first take a look at some shortcomings in Ethereum's network.

Ethereum: The Giant Needs Help

Ethereum has established itself in the crypto world. It has a first-mover advantage, a huge community, and it allows developers to deploy decentralized applications (dApps). While these are all amazing features, Ethereum still has some challenges. As its adoption exploded, 3 main issues became apparent with the antiquated ecosystem.

1. Cost

In late 2021, the average transaction fee increased to over $60. This rendered Ethereum useless for smaller transactions.

2. Speed

Ethereum is relatively slow in its current form. That's because it was the first of its kind and matured organically over the years as its use-cases flourished.

3. Governance

Ethereum lacks community governance. This practice is currently outdated in the crypto-space, since everyone leans towards decentralized governance.

That's where Polygon comes in, built specifically to address these issues. It uses the Ethereum's ecosystem benefits while making it more efficient to use.

How do they achieve this as an intermediary layer? Let's take a closer look!

Polygon's History: From Necessity Comes Invention

To understand Polygon better, we need to look at its history and starting point.

Jaynti Kanani, an Indian data scientist, first noted the Ethereum network's congestion issues while playing with Crypto Kitties. For reference, CryptoKitties was a very successful blockchain game on the Ethereum ecosystem with kittens forming early Non-Fungible Token (NFT). As the game's popularity soared, transactions became significantly slower and more expensive.

Kanani reached out to his acquaintances, developers Sandeep Nailwal and Anurag Arjun, to figure out a solution. In October 2017, the trio started MATIC Network in Mumbai. Mihailo Bjelic, another co-founder, later joined the team.

A photo of the three original founders of the MATIC project.

They released the MATIC testnet to developers as a closed Alpha version in Q3 2018. In the same quarter, a nifty little tool called Dagger appeared on MATIC, becoming its first noteworthy release which later integrated into Zapier. Basically, it allowed you to track Ethereum smart contract event notifications in real-time. That opened it up for thousands of use-cases, like getting an email notification when a specific crypto token was transferred on Ethereum. Finally, on June 1, 2020, and after one year from its ticker release, the MATIC mainnet went live.

Illustration showing Ethereum Mainnet and bridges to the MATIC side chain.

As adoption increased, the vision behind MATIC grew. What was initially a more performant side chain to Ethereum slowly turned into what's now called the “internet of blockchains.” In short, the team behind MATIC realized their project's potential to provide a solution. They made a platform that can create and connect many different blockchains to Ethereum, through a layer 2 scaling mechanism.

When the team realized MATIC's true depth, they changed its name to Polygon in February 2021. They also changed the project's mission, which helped open doors to a broader vision, beyond the MATIC abstraction layer's simple use. It's worth noting that, while the project's name changed, the token's name remained the same–MATIC.

That's all great, but how did this newly-born project add any value to the well-established giant, Ethereum?

How Does Polygon Improve Ethereum?

Ethereum is one of the largest crypto-assets in the crypto-space, so it makes sense to try and improve the existing platform rather than compete with it. That's Polygon's target, but how does it achieve it?

How Polygon Works: The Fundamentals

Imagine Ethereum as the main highway in a densely populated area. Everyone wants to use it to get from point A to point B. Even if the highway is well-designed and ultra-wide, traffic would be slow if it has an on-ramp every hundred feet.

The same thing happens with Ethereum. Since everyone can build their own on and off-ramps on the network, it leads to congestion: nobody can ever pick up speed.

Polygon takes away the need for many ramps and streamlines the transaction process. It provides a small number of strategically placed on- and off-ramps from surrounding highways to Ethereum. It also expedites the transaction process through packeting transactions, which moderates the traffic. Polygon's value add is that it handles requests directly on non-Ethereum specific queries, which helps reduce network usage.

Polygon doesn't limit how many blockchains could be connected to Ethereum. That's why Polygon describes itself as the internet of blockchains.

How Does Polygon Integrate Projects?

Polygon is specifically designed to accommodate as many projects as needed. Generally speaking, Polygon supports 2 main types of Ethereum-compatible blockchain networks:

  • Secured chains, or networks that use the security as a service model mentioned above

  • Stand-alone networks

Secured chains rely on existing security solutions: they don't provide their own security. These solutions could come directly from Ethereum or from a pool of professional validators. This option offers high security, and it's quickly scalable. That makes it favorable for startups and security-focused projects. Its downside is that it heavily relies on the security provider.

Stand-alone chains provide their own security solution, like a Proof-of-Stake consensus model. This gives a high degree of independence, but it requires a high number of reliable validators. This model is suitable for established projects with solid communities or enterprise blockchains.

Let's look at how exactly Polygon is supporting these solutions.

The Polygon Bridge System: Secured Chains

A bridge is a core component in any scaling solution. It enables assets to be moved from the main chain, Ethereum in this case, to any other network and vice-versa. Since Polygon is attempting to be the internet of blockchains, its bridge isn't just a single solution. The Polygon Bridge for secured chains consists of multiple types of bridges, some still in development.

Polygon Plasma Bridge

The Polygon Plasma Bridge uses the independent Plasma chain to enable cheap and fast transactions. To do this, it offloads transactions from the main chain into secondary chains. It's highly secure but rigid and slow, and it includes a 7-day challenge period and a wait time. That's because this bridge uses Ethereum's security structure to ensure the transaction is approved.

The Polygon PoS Bridge

The Polygon Proof-of-Stake (PoS) Bridge is a faster and more flexible method of moving assets between Ethereum and any secondary chain. It offers its own Proof-of-Stake system using external validators, so it doesn't rely on Ethereum for approving transactions.

ZK Sync Bridge

ZK Rollup is also called ZK Sync Bridge. One of its main features is trustless operation. ZK stands for zero-knowledge. In essence, a ZK rollup is a smart contract that collects transactions off the main chain. ZK then bundles these transactions into a single transaction packet. That allows it to perform the computational task efficiently. Otherwise, that task would slow down the main chain by using a separate chain (layer 2).

For instance, imagine you had 100 people that needed to submit a passport picture for verification to the same authority. Instead of sending 100 pictures, a ZK rollup would take all those pictures and combine them to form one large image. That's the premise for Polygon's ZK Sync Bridge as it sends only one validity proof back to Ethereum. That can get you lower transaction costs and faster transaction times if most transactions are handled through Polygon.

Optimistic Rollups

Optimistic Rollups are optimistic because they assume a transaction is valid by default. While this bridge type isn't out yet, you can expect to see it soon. Optimistic Rollups sit parallel to the Ethereum chain on layer 2 and don't perform any computation by default. Instead, after a transaction, they propose a new state to the mainnet, or notarise the transaction.

The rollup will only execute what's called a “fraud-proof” if a fraudulent transaction is reported. It'll then run the actual computation. That means challenges create longer wait times because the data has to be computed to determine the challenge's validity.

Validum Chains

Another bridge type we can expect to see soon is Validum Chains. Like ZK Rollups, Validum uses proof of validity. Yet, the complex layer 2 transaction data is stored off-chain, instead of on Ethereum's layer 1 protocol. That means Validum chains can, in theory, process up to 10,000 transactions per second, and multiple Validum chains can run in parallel.

These are the bridging mechanisms you'll likely come across these types of bridging mechanisms the majority of the time. Now let's take a look at standalone chains and how their features can be useful to you.

The Polygon Bridge System: Standalone Chains

Standalone chains are fewer in number than secured chains. Since blockchain technology is progressing, it's more apparent that we need highly specific use-cases, different from what we know. That's why, we'll likely see a sharp increase in industry, enterprise, or otherwise application-specific chains. So what are they?

Polygon can be used to spin-up standalone blockchains that enable you to manage; sovereignty, scalability, and flexibility. That means you could create a blockchain just to manage a business's digital assets, which would be using Polygon's protocol privately. That's different from public blockchains like Ethereum, where security, interoperability, and developer experience are key requirements to success.

Even though Polygon's website isn't listing any specific projects just yet, they plan to offer Ethereum connectivity to any kind of project. This could be an interesting prospect for you when you come to design and establish your own blockchain. Investors will also likely desire this flexibility and future-proofing in a crypto-asset.

Polygon's Architecture

Polygon's architecture consists of 4 abstract, composable layers, stacked on top of each other. Let's take a look at these layers:

1. The Ethereum Layer

This layer is optional. It allows Polygon chains to use Ethereum as their base layer and leverage Ethereum's benefits, like high security. In essence, this layer is a set of smart contracts on Ethereum. Examples of use cases include messaging, staking, and dispute resolution.

2. The Security Layer

This is the second optional layer. It provides what's best described as “validators as a service” functions. This layer allows Polygon chains to use validators to periodically check the validity of any Polygon chain, in exchange for a fee. It's usually a meta blockchain that runs in parallel to Ethereum. It's entirely abstract and can have multiple instances, implemented by different entities and with different characteristics.

3. The Polygon Networks Layer

This is the first mandatory layer. Essentially, it's a constellation of sovereign blockchain networks. Each network serves its respective community. That helps maintain functions like transaction collation (gathering and sorting relevant information about transactions), local consensus (agreement between validators), and block production (data building blocks on the chain).

4. The Execution Layer

This is the final layer, which is also mandatory. It consists of two sublayers: The execution environment, and the execution logic typically used for smart contracts. As its name state, it interprets and executes agreed transactions included in Polygon networks' blockchains.

Why Should Developers Use Polygon?

Easy, fast, cheap, and flexible Polygon certainly appeals to the developer community. The dApps' recent rapid growth on Polygon's ecosystem speaks volumes. For developers, using Polygon is almost a no-brainer for 3 main reasons:

1. Ethereum Compatibility

Since Polygon uses an Ethereum Virtual Machine (EVM), it's fully Ethereum compatible. That means developers don't have to make more effort compared to simply deploying on Ethereum.

2. Improved Transaction Times

Polygon can drastically reduce wait times and fees for the use of any dApp, making it more attractive to users. That facilitates mass adoption.

3. Unrivaled Flexibility

Polygon offers unrivaled flexibility among all Ethereum scaling solutions. That's because it has four layers, only two of which are mandatory, and it can connect to virtually any blockchain out there. Developers enjoy a degree of flexibility they don't have when using Ethereum alone.

Now you know that Polygon's technology offers genuine benefits to users and developers alike, let's take a look at its tokenomics and investability.

$MATIC Price And Tokenomics

Polygon's token is implemented in-line with the Ethereum Request for Comment (ERC-20) token standard. That means it's compatible with the Ethereum network and runs on top of it.

Polygon was also launched on Binance, and it has a Binance Chain Evolution Proposal 2 (BEP2) token standard equivalent. This MATIC token is pegged to the ERC-20 token 1:1.

As of early 2022, the MATIC token has a newer BEP20 Binance standard variant and native Polygon network versions. It shows that those in the cryptomarket are embracing the Polygon project.

$MATIC Total Supply and Distribution

The total supply of $MATIC that'll ever exist is 10 billion. At the beginning of 2022, just over 7 billion tokens were in circulation, or just over 70% of the total supply. Tokens are released every month, with 100% of the supply scheduled to be in circulation by the end of 2022.

The MATIC token is distributed among the following stakeholders:

Private sale: 3.8%

Launchpad sale: 19%

Team: 16%

Advisors: 4%

Network operations: 12%

Foundation: 21.86%

Ecosystem: 23.33%

What Are the $MATIC Token's Use-Cases?

Polygon's token has 3 main use-cases:

  1. Participating in the Proof-of-Stake consensus: Much of Polygon's security mechanism works on a PoS-layer. That's why network participants can stake $MATIC tokens, acting as validators.

  2. Receiving staking rewards: Any token holder participating in staking will be paid staking rewards in relation to the number of tokens staked. These rewards are paid in $MATIC.

  3. Payment for network transaction fees: Even though they're much less than Ethereum's, you still have to pay fees on Polygon. Those fees are paid in $MATIC tokens.

Tokenomics

The very first tokens (2.09% of total supply) were sold in a seed round in early 2019, for $0.00079 per token. Shortly after, each token saw a price of $0.00263 in an early supporter sale. The same price was used at the launchpad sale in April 2019, where 19% of the total supply was sold for a total raise of $5,000,000.

Since the initial sales, MATIC's price stayed around 20 cents per token for over a year. It stayed like that all the way up to the end of 2020. Starting in February 2021, MATIC slowly climbed up to around 40 cents in March. In May 2021, we saw a price peak of $2.44 per token as it took off, a 10x within a few months ago.

Yet, MATIC wasn't immune to the crypto drop that followed shortly after, and July 2021 saw prices as low as $0.75 per token.

Screenshot of chart of Polygon's price in USD since the inception of the coin.

Polygon's Current State

Polygon is growing rapidly in terms of users, partnerships, investors, and technology. They're announcing new memberships almost every month! Polygon is deploying its technology in every area possible, from partnering with DraftKings' NFT marketplace, to creating new NFT games with GameOn. As of early 2022, over 3,000 dApps were live on Polygon PoS, making it one of the most outstanding players in the smart contract space.

Its success has also attracted some big names in the investment world. Mark Cuban is a prominent investor in Polygon, and prestigious investment firms like Sequoia Capital India and Steadview Capital are apparently ready to write checks.

Polygon is rapidly growing its utility, through integrating Optimistic Rollups and Validum Chains. Acquisitions like the Ethereum scaling startup Mir for $400,000,000 are starting to pay off, with Polygon announcing the world's “fastest zero-knowledge layer 2” thanks to its new Plonky2 technology.

Polygon's Future

MATIC had a roadmap, but it ended in Q1 2020. Since then, the project doesn't have an official roadmap, especially after its name change in 2021. That isn't unusual for crypto projects. That said, it's not like the team is leaving users in the dark, though. They run a very active Twitter account, and they have an official Telegram account just for announcements. The detailed page about their technology is regularly updated with “coming soon” or “in development” projects. Given their track record and their war chest's size, it's likely Polygon won't fall short on new developments.

Novel next-generation chains are popping up everywhere, with projects like Polkadot, Cosmos, and Avalanche making disruptive waves. While they don't have exactly the same use-cases, their purpose is the same. They want to provide developers and end-users with fast, cheap, and scalable blockchains that they can use as an underlying structure for dApps of any kind.

It's also worth noting that Ethereum itself went from a Proof-of-Work consensus to a Proof-of-Stake consensus with the London Hard Fork EIP-1559 improvement protocol upgrade. While that's certainly not perfect, it's a significant change and a big step towards eliminating Ethereum's glaring issues. It also acts as a stepping stone toward Ethereum 2.0 (ETH2.0). Once ETH2.0 finally rolls out sometime this year, we'll have to see if Polygon will still be attractive as a layer 2 solution.

At the time of writing, Polygon is the #13 cryptocurrency in market cap. The team behind it wants to push it to #3, right behind Bitcoin and Ethereum, ambitions as high as anyone could have at this stage.

How To Buy MATIC on Atomic Wallet

Atomic Wallet makes buying MATIC super simple! Simply follow these 5 steps:

1. Create an account on an exchange that offers the MATIC token, like Binance or Coinbase. Atomic Wallet integrates the exchange with the Wallet, meaning you only need one account!

2. Buy MATIC using fiat currency, like dollars or euros.

3. Send your MATIC to a crypto wallet that supports the token, like Atomic Wallet.

4. If you haven't already, most exchanges and wallets will ask you to verify your account with a photo ID.

5. Send the MATIC you purchased to your Atomic Wallet address.

Screenshot of Atomic Wallet's easy three-step getting started process. The download button is shown below the three stage icons. Step one, download the app. Step two, deposit funds, Step three Exchange crypto.

Final Thoughts

Polygon is called the internet of blockchains because it's a scaling solution that allows any blockchain to connect to Ethereum. That way, Polygon leverages Ethereum's excellent security features and global adoption without contributing to its overwhelming traffic and exorbitant fees.

Polygon is fully compatible with Ethereum, making it easier to adopt for developers familiar with the Ethereum environment. Polygon continuously develops more performant ways of layer 2 scaling, so it may just be one of the best options to avoid Ethereum's scalability issues. That is, unless Ethereum's move to a Proof-of-Stake consensus solves those problems. In that case, Polygon may be living on borrowed time.

Yet, Ethereum has been promising this upgrade for many years now and has failed to achieve this. As of now, we don't know if they'll ever upgrade their ecosystem successfully. That may be why they've put off upgrading an old code that was never designed for its current purpose. No matter what, nothing is certain in the cryptosphere!

FAQ

What is Polygon?

Polygon is what's called a layer 2 scaling solution for Ethereum. It works with Ethereum, attempting to overcome its shortcomings like slow speeds and high transaction fees. It also enables unified access to other chains, allowing traffic to be offloaded from Ethereum efficiently. That makes transactions quicker and cheaper. In theory, any blockchain can use Polygon to connect to Ethereum, which is why the project is dubbed the internet of blockchains.

Is MATIC the same as Polygon?

MATIC was the Polygon project's original name. The name changed to Polygon in 2021, but the token is still called MATIC due to this being its ticker symbol.

Is Polygon trying to replace Ethereum?

No, Polygon's goal is to offload traffic to help overcome Ethereum's shortcomings. It's a supplement to Ethereum, not a standalone replacement.

How is Polygon different from Polkadot and Cosmos?

Polygon is a layer 2 scaling solution for Ethereum only. Cosmos is a heterogeneous network of many independent parallel blockchains. Polkadot is also a heterogeneous blockchain protocol that connects multiple specialized blockchains into one unified network, but it's a layer zero solution working as a substrate for blockchain ecosystems like Ethereum, Cardano, and Solana.

Where can I buy $MATIC?

The simplest way to buy MATIC is using Atomic Wallet. You also can trade any other supported cryptocurrency into $MATIC. Most major cryptocurrency exchanges offer MATIC, but Atomic Wallet integrates a wallet with an exchange–making the process far easier for new users.

Resources

Atomic Wallet's Website

Check the latest wallets and cryptocurrencies on Atomic Wallet on their website.

Atomic Wallet Academy

Learn about cryptocurrencies like Polygon with the Atomic Wallet Academy.

Atomic Wallet Blog

Keep up-to-date with the latest crypto news with Atomic Wallet's blog.

Polygon's Official Website

Visit the Polygon Official Website for the ultimate source of information.

Polygon on Twitter

Stay up to date by following the Polygon Twitter Account.

Polygon on Reddit

Explore answers in the Polygon Subreddit.

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