Polygon is a blockchain network in its own right, but it isn’t just that. While it works for its own users, it also improves the functionality of Ethereum. This article will discuss how Polygon improves Ethereum and whether that improvement is tangible.
- Polygon is a Layer-2 solution, making it an interoperability mechanism that works on a Layer-1 network, which is Ethereum in this case.
- It aims to allow anybody to deploy their own blockchain, just like anyone can create their own website.
- The network allows anybody to create sidechains on Ethereum to make transactions faster while utilizing the security of Ethereum. This reduces gas fees and transaction times by a significant margin.
- Polygon is helping Ethereum fend off other blockchains by making the network more appealing to users. It lowers the barrier to entry for users who want to use scaling solutions on expensive blockchains, making similar networks redundant.
Introduction to Polygon
Polygon is a little different from the top blockchain networks like Bitcoin and Ethereum.
That doesn’t mean Polygon and Ethereum don’t have differences.
Let me explain.
Bitcoin and Ethereum are what one would call Layer-1 networks. They are solutions that aim to improve the base blockchain protocol of the network and make it more scalable and efficient. Polygon, on the other hand, is a Layer-2 solution. What this means is it is an interoperability mechanism that works on a Layer-1 network, which is Ethereum in its case.
Polygon was created to solve issues that users were facing on Ethereum and resolve them in an effective manner, without disrupting everyday operations. Polygon came up with a solution that involved the use of sidechains. Sidechains are alternative network solutions that support Decentralized Finance (DeFi) protocols. These sidechains help Ethereum divert some of its traffic from the main channel in a cost-effective way, while still retaining all of its functionality.
With the help of Polygon, Ethereum can process more transactions in less time, reducing gas fees for its users.
How Does Polygon Work?
The Polygon framework involves the use of Ethereum-compatible blockchains that will, with some development, be able to serve a host of different services on Ethereum, including but not limited to governance, staking, and so on. Click here to convert ETH to INR!
Polygon aims to allow anybody to deploy their own blockchain, just like anyone can create their own website.
Polygon not only makes Ethereum more scalable but also connects other blockchains with one another for easier integration. Polygon is able to optimize all of this in a way that is primed to take advantage of Ethereum’s protocols for security. Ethereum has a vast decentralized pool worth billions of dollars and Polygon tapping into that security is good news for everybody.
How Does MATIC Help Ethereum?
The Polygon team has already made a lot of scalability changes to the way Ethereum, one of the biggest decentralized networks in the world, functions. They are constantly shipping out scaling solutions to it and, at the same time, making it more suitable to handle greater user volumes.
For example, Polygon has created a sidechain called Fast Ethereum, which is a Layer-2 solution based on Ethereum. Because the network is secured by staker miners, it can scale much faster than the parent chain, which is still a Proof of Work (PoW) blockchain. Networks like AAVE and Curve Finance have already shifted their protocols to Fast Ethereum, enabling their users to enjoy DeFi services without having to pay Ethereum’s high gas fees.
Applications of Polygon
There are, of course, many tangible benefits to using Polygon. For instance, developers can build Ethereum-compatible applications on it for a fraction of the cost. So, as mentioned above, users now have access to Ethereum’s security and several functionalities—like DeFi, Non-Fungible Tokens (NFTs), and GameFi—without having to shell out large amounts for gas fees.
Furthermore, Polygon is almost completely free compared to Ethereum. It is also faster than the latter because of the use of side chains. In the NFT world, these sidechains make farming more feasible for smaller players, by helping them evade the additional cost of transaction fees on Ethereum.
Polygon also has its very own NFT ecosystem, which makes minting new NFTs easier and more efficient for creators and artists.
Applications of the MATIC coin
MATIC is the native token for the Polygon network. It has a lot of functionalities such as:
- Staking: Since MATIC is a blockchain that’s based on the Proof of Stake (PoS) algorithm, miners can use their funds to contribute to the security of the network. They can stake their MATIC coins to earn a fixed amount of interest, which is typically 18% the Annual Percentage Yield (APY).
- Governance: MATIC is also a governance token, which means that coin holders and stakers are allowed to have a say in governance matters that decide the network’s direction. They can participate in decentralized voting on key administrative matters.
- Transaction fees: Transaction fees for using the services of the Polygon network are also paid in MATIC. However, these fees are so negligible that Polygon often gives users free MATIC to pay them!
Recent Developments in Polygon
Polygon became one of the top gainers in the cryptocurrency market in 2021 when it rose from $0.01 in January to more than $2.9 by December. The project also launched a $200 million initiative, Alexis Ohanian’s Seven Seven Six, in an effort to back social media and Web3 projects.
In more recent news, Polygon has also raised more than $450 million in a funding round led by Sequoia Capital India through a private sale of MATIC tokens. Earlier, the project had also received a sizable investment from US-based millionaire Mark Cuban.
In 2019, the project was also distributed through Binance’s Initial Exchange Offering, where it raised more than $5 million in funding directly. Analysts and observers predict that these funds will be used to boost the development of scaling solutions that the team is currently working on, including Polygon PoS, Polygon Edge, and Polygon Avail.
Polygon is the first scaling solution for Ethereum that’s gaining a lot of interest and traction in the crypto community. Currently, Polygon is worth more than $1.6 billion in market cap and is one of the top 15 cryptocurrencies ever. Billions of dollars worth of resources have been poured into the research and development of this project, making Polygon a competitor blockchain in its own right.
Polygon is also helping Ethereum fend off other blockchains by making the network more appealing to users. Polygon lowers the barrier to entry for users who want to use scaling solutions on expensive blockchains, making similar networks redundant.
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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.
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