Polygon is a Layer-2 (L2) blockchain network that creates a multichain blockchain ecosystem on the Ethereum network. Polygon isn’t a standalone blockchain in the same way Solana and Ethereum are. Instead, it’s a platform that operates on the Ethereum blockchain and connects projects built using Ethereum.
Building a project on Polygon is almost identical to building a project on Ethereum. The only difference is that Polygon tends to be quicker and has cheaper transaction fees. It’s instantly more scalable, more flexible, and still as secure as a project built on the first layer of Ethereum.
The native token of the Polygon chain is MATIC, and it is an ERC-20 token. That is, it’s a token created on the Ethereum blockchain. MATIC is the token used to govern the Polygon network, and it’s also used to pay transaction fees.
Polygon might seem like a complicated network, but it’s easy to understand. That’s why we’ll be looking at what Polygon is, what it can do, and what it’s already doing as the foremost Layer-2 blockchain in Web3.
The History of Polygon
Polygon started as the MATIC network. It was created by four engineers based in Mumbai. They were Anurag Arjun, Mihailo Bjelic, Jayanti Kanani, and Sandeep Nailwal.
Nailwal, the leader of the group, is originally from Delhi. He had a background in computer science and had established several companies. But they never scaled as much as he wanted. In time, he found himself researching AI and blockchain and decided that he wanted to build something in that sector. That was when he met the people who would eventually co-found Polygon with him.
One of them was Kanani, who’d worked as a data scientist and had a robust tech background. The third person to join the party was Arjun, a serial entrepreneur who had a keen understanding of business. Arjun was working with IRIS, a financial services solution for central banks. The last piece of the puzzle was Bjelic, who’d also been working on a program similar to MATIC.
In 2019, when the MATIC token was first issued, the chain had a market cap of around $26 million. By 2021, the value had zoomed to about $14 billion. The success of MATIC made its founders instant billionaires.
As MATIC grew exponentially in 2021, the company decided to rebrand. It was no longer going to be known as MATIC. Instead, it would take the name Polygon Technology.
What is Polygon?
The Ethereum blockchain is the second biggest blockchain in the world. It’s also the poster boy, as it were, of flexibility. The chain hosts hundreds of dApps and thousands of transactions are completed on it every day. Ethereum can host this number of transactions because it has smart contract compatibility, which means anyone can build anything they want on it via a contract.
But there’s one problem. The popularity of Ethereum means that there are too many projects built on it. Since Ethereum has a scalability problem, the chain struggles to complete all these transactions in time. This means that people experience slow and buggy transactions on the Ethereum blockchain. It also means that the transaction fees can rise to unviable heights.
This was a huge structural problem for Ethereum as it meant that it couldn’t fulfill its potential. However, the solution to this problem wasn’t to tinker with Ethereum’s code to make it faster. It was to create a new parallel chain.
Polygon was that new and parallel chain. The Polygon chain is a fast parallel blockchain that’s running alongside Ethereum. It’s a side chain of Ethereum that makes it faster and connects users, at the same time, to all the projects on Ethereum.
Aside from the fact that Polygon is hitched onto the Ethereum blockchain, it’s just like every other Layer-1 (L1) blockchain. This means it also has a consensus mechanism, blocks, and validators.
Polygon, like Ethereum, runs a Proof-of-Stake (PoS) consensus mechanism. This means that validators have to stake their MATIC tokens— which means they agree not to use or sell them— and hope that the system picks one of the validators to validate a particular block.
Validators of Polygon then validate the new block of transactions and add them to the accepted pile. In exchange for this, they get a cut of the newly minted MATIC. Validators who are malicious or mischievous will lose much of their staked MATIC, and this incentivizes honest behavior amongst validators.
Polygon, the Future of the Internet
For years, blockchain enthusiasts have sought ways to break into the mainstream internet. Unfortunately, that didn’t occur for a while. Centralized institutions like AWS, Facebook, or Google are uninterested in decentralization and have found very good reasons to oppose it. The speed of blockchain transactions makes it improbable for Institutions like Visa, which completes thousands of transactions per second, to accept it.
However, the arrival of Polygon solves the speed problem. In recent months, we’ve seen centralized institutions even take interest in utilizing blockchain to create new products. And a lot of these institutions have chosen to build on Polygon.
In late 2022, for example, Polygon scored an exciting deal with Instagram to support NFT creators. According to Meta, users will soon be able to create and sell NFTs on Polygon via the Instagram app. Meta also says that creators will be given an end-to-end toolkit that will allow them to understand how to create NFTs, market them, and earn from them.
Interestingly, Polygon has pivoted from basing the bulk of its business on all transactions to focusing on NFTs and games. In 2021, the company launched Polygon Studios, a subsidiary mostly focused on building the gaming and NFT parts of the business. The deal with Meta and Instagram is likely one of the fruits of creating that subsidiary.
What Does the Polygon Network Let You Do?
Polygon lets you do anything you can ordinarily do on the Ethereum blockchain. With Polygon, you can complete the same transactions you’d have completed on the Ethereum blockchain.
The only difference is that the fees on the Polygon network are low, and the transactions are speedy.
The Downsides of Polygon
The Polygon network seems too good to be true. The fees are lower, it has better scalability, and it’s simply faster than Ethereum. What could go wrong?
Surprisingly little! Polygon is just as advertised. It’s fast, scalable, and has the same flexibility that Ethereum offers. However, Polygon can only provide this excellent performance because it’s hitched onto the Ethereum wagon.
If something happens to Ethereum for any reason, it also affects Polygon. The only reason why Polygon can perform as it does is that it’s hitched to a high-performance chain like Ethereum. If that were to go, Polygon would be gone as well.
On the Flipside
- Polygon is just one of the Layer-2 solutions on Ethereum, all providing roughly the same services. Another Layer-2 solution is Polkadot, and many more are being built.
Why You Should Care
MATIC is the tenth most valuable cryptocurrency by market capitalization, so it’s a significant network in the crypto ecosystem. Understanding how it works and how it could help developers and users have a seamless experience with crypto is essential.