Crypto Investing
26 Apr 2022

Everything you need to know before investing in Polygon

Ananda Banerjee

Blockchain scaling solutions are exciting enough. But not many are as resilient, resourceful, and robust as Polygon, the ultimate layer-2 network for Ethereum. With plans of foraying aggressively into the Web 3.0 space, Polygon, an Ethereum infrastructure development and scaling platform based out of India, has taken the crypto realm by storm.

Currently ranked 15th according to market cap, Polygon has grown by more than 1200% Year-on-Year. And that’s just the tip of the iceberg. With a great future ahead, Polygon seems geared up to bring a revolutionary change in how Blockchain transactions are handled, managed, and charged.

Interested in knowing and trading in Polygon? Well, there is a lot more to it than what meets the eye. And we shall touch upon every aspect to help you make informed decisions. 

Polygon: Technical Conversation Starters

  • A layer-2 scaling platform, working on top of Ethereum;
  • Supports Proof-of-Stake consensus mechanism;
  • Also, a layer-2 aggregator that aims to make Ethereum more interoperable;
  • Facilitates faster transactions at a fraction of what Ethereum charges;
  • Has MATIC as the native token;
  • Currently a thriving ecosystem for dApps and transactions;
  • Takes most demanding activities off Ethereum’s shoulders while leveraging its security and massive user base;
  • Currently working on a host of scaling solutions like Avail, Edge, Polygon PoS, and more;
  • Leads most of the other Blockchains in its quest to be a Web 3.0 builder;
  • Breeding ground for the latest NFT marketplaces and DeFi instruments;
  • Currently houses over 7,000 dApps on its framework;
  • It aims to create a borderless ecosystem where Blockchains aren’t disparate entities anymore.

Polygon: The Historical Spread

  • Founded in 2017 by Anurag Jain, Sandeep Nailwal, and Jaynti Kanani;
  • It was initially named Matic Network (hence the MATIC token);
  • Has Mihalio Bjelic as the fourth Co-Founder;
  • Has recently roped in Ryan Watt, head of gaming, YouTube
  • Mark Cuban, the owner of Dallas Mavericks (a popular NBA team), is an investor;
  • Over $5 Million was raised in 2019 via an Initial Exchange Offering over Binance
  • Popular blockchains like Chainlink, MakerDao, and Decentraland have partnered with Polygon across specific use-cases;
  • Currently hosting several Web 3.0 projects ideated by the likes of Aave, OpenSea NFT Marketplace, D&G, and more;
  • Recently raised $450 Million from marquee investors via a private token sale;
  • Has big plans to become the AWS (Amazon Web Services) of the Web 3.0;
  • Has eyes on gaming adoption and NFTs

Polygon investing

Why should you consider Polygon for Investing?

  • Is in the lead over other Blockchains when it comes to developing virtual games (Idle Mystic, PooMania, and more and DeFi projects (TokenPocket, Beefy. Finance, Balancer, and more);
  • On its way to offer scalable ‘Decentralized Computation Resources’ to the dApp, marketplace, and ecosystem builders;
  • Polygon is in it for the long haul, precisely as an infrastructure builder, instead of a use-case-specific ecosystem;
  • Still looking to reduce storage and computing needs via ZK-Rollups, which is the centerpiece of Polygon’s long-term strategy.

The ‘MATIC’ Token: What’s with all the Buzz?

  • Works as a governance token to facilitate technical and ecosystem-specific decisions
  • ERC-20 token, adhering to Ethereum’s standards and guidelines
  • Used for payment for services deployed within the Polygon ecosystem
  • Settlement currency for Polygon users
  • Meant for fee payments on standalone chains and side-chains

MATIC Tokenomics

  • Coin Rank- 15th 
  • Market Cap – $14.41 Billion
  • Market Dominance- 3.40%
  • Coin Economics- Fixed Supply (But has a Deflationary effect due to the EIP-1559 Upgrade)
  • Total Supply- 7.46 Billion
  • Circulating Supply- 10 Billion
  • Yearly Growth- 1332%

Polygon Whitepaper: Key Points

Here are the key pointers from the whitepaper to help you understand Polygon’s short and long-term vision better:

  • Polygon is an interoperability facilitator that supports other Blockchains on its framework;
  • Has predefined working modules to help other networks build projects, like Aave’s new social media platform, Lens Protocol;
  • Architecture helps connect Ethereum with other blockchains;
  • Offers several resources to the developers and a simple UX for building dApps;
  • Houses the Polygon Software development kit to help developers further;
  • Comprises a network of sidechains to help other ecosystems connect with each other and Ethereum concurrently;
  • Comprises four layers that help with current and futuristic developments.

Understanding Polygon’s Architecture

Polygon is a ‘layered’ scaling solution that allows dApp builders and developers to use services as required. Each layer of Polygon brings a handful of those services, which users can pick or skip accordingly. 

With four layers to its architecture, Polygon aims to keep Ethereum’s flavor intact by handling security, scalability, and execution separately and effectively. 

  • Layer 1– Also termed as the Ethereum layer, this is the base chain of Polygon. It comprises smart contracts and addresses Polygon’s need to interact with the mainnet Ethereum.
  • Layer 2– Termed as the security layer, this part of Polygon’s architecture is meant for dApps, networks, and other ecosystems that want to focus on the security aspects of a blockchain, like slashing penalties and more. This layer supports Optimistic rollups for faster transactions and ZK Rollups for lesser resource requirements. Also, using this layer of Polygon is optional for users. 
  • Layer 3- Here is the Networks layer of Polygon that allows it to scale courtesy of standalone sidechains. In simple terms, this layer allows Polygon to host other sidechains and live up to the concept of interoperability.
  • Layer 4– The final layer or Execution layer underpins the functioning of Polygon with its scaling solution Plasma and its consensus PoS protocol. 

The Growth Potential of Polygon (MATIC) Coin

Fundamental Analysis

The whitepaper bit reveals that Polygon has an architectural base to scale as per the requirements of its community. And while it uses the Ethereum base net, for now, it has enough resources to try out other main nets as well.

Here are the fundamental pointers that work in MATIC’s favor

  • Sovereign Blockchain
  • Excellent developer experience
  • Highly scalable
  • Can work together with ETH 2.0 whenever it goes live
  • Token economics is slightly deflationary after the London fork
  • Future of cross-chain projects that will make MATIC a sought after commodity

Technical Analysis (Short to Mid-Term)

Polygon Community
Source: Trading View

Key Pointers (4-Hour Chart)

  • The current trading price is $1.35 (As of 26th April 2022).
  • The 20-EMA line (Black) is trading under the 50-EMA line (Blue), signaling rangebound movements for now.
  • A Falling Wedge pattern is identified, and MATIC needs to breach the upper trendline to have any chance of going towards $1.5.
  • Traders should be aware of false (lower-trendline) breakouts.
  • The MACD line has just crossed above the signal line, hinting at some positive momentum at the MATIC counter. 

*MACD-Moving Average Convergence/Divergence

*EMA- Exponential Moving Average

The Wrap

If we were to sum up Polygon in one sentence, the entire vision would be hinged on a clear aim, i.e., ‘One Blockchain for All.’ For now, we have covered only the key pointers to help you understand the project better, its potential, and the overall state of its native MATIC token. 

But before we leave, here are some additional Polygon stats for the Blockchain fanatic in you:

  • Supports close to 65,000 transactions/sec
  • Transaction finality is less than 2 seconds
  • Also termed Ethereum’s Internet of Blockchains

Thank You!!!

Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.

writer

Ananda Banerjee

Content Writer

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