The rise of DeFi has been remarkable so far, however it has exposed significant scaling issues with the Ethereum network. Moments of congestion and high transaction costs on the Ethereum main chain have priced out many users, prompting an urgent need for scaling solutions.
One of the most promising of these solutions to date is Polygon, a self-described Layer-2 scaling platform for Ethereum. Previously known as Matic, Polygon has soared in popularity due to a range of factors. These include its sheer speed, its interoperability with Ethereum decentralized applications (DApps), as well as backing from the likes of Coinbase and Binance.
Although some people debate Polygon’s status as a true Layer-2 or as a sidechain, the answer lies somewhere in the middle. The network uses a combination of Plasma (a Lightning Network-style solution) and proof-of-stake (PoS), along with periodic “checkpointing” with the Ethereum blockchain. This enables Polygon to benefit from its own speed and consensus algorithm, but maintain a high level of security via the Ethereum main chain.
Polygon is powered by the MATIC token, which is used for its PoS consensus as well as governance. Transactions cost just a fraction of a cent – orders of magnitude cheaper than Ethereum.
The platform was rebranded to Polygon in early 2021, retaining MATIC as its native token. While Matic was designed purely for scaling, Polygon has expanded to provide a whole platform for launching customizable chains that connect with each other and Ethereum. Polygon claims to be able to scale existing Ethereum-based DApps in just 30 minutes.
Although Polygon has been designed and implemented on Ethereum, the network has plans to eventually extend to other base-layer blockchains. If this is successfully executed, it would ultimately make Polygon a cross-chain Layer-2 platform.
What is Polygon used for?
Polygon currently caters best to DeFi projects that already exist on Ethereum and would benefit from the advantage of cheaper and faster transactions.
Since the Polygon Network is compatible with the Ethereum Virtual Machine (EVM), it is extremely easy to deploy Ethereum-based DApps to the network. Major projects such as Aave, Sushi and several others have already expanded to Polygon and gained significant traction.
Being an extension of the Ethereum network, any Ethereum asset has the potential to be utilized on Polygon, too. Users can currently shift their Ethereum tokens to Polygon via two official bridges: The Plasma bridge and the PoS bridge. If you want to try out the Polygon network, you can follow our step-by-step tutorial on how to use the PoS bridge here.
The Polygon Token (MATIC)
The Polygon token (MATIC) has its maximum supply capped at 10 billion. Around two-thirds of this supply are already in circulation.
These have been allocated as follows:
- 3.8% to the private sale in 2017
- 19% to the launchpad sale in 2019
- 16% for the Polygon team
- 4% for the project advisors
- 12% for network operations
- 21.86% for the Polygon Foundation
- 23.33% for maintaining the ecosystem
Polygon is a clever scaling solution which makes it easy for Ethereum-based DApps to maximize their performance, with minimal effort required. The platform’s compatibility with the Ethereum Virtual Machine (EVM) and ability to easily bridge Ethereum-based assets has enabled a growing number of DeFi protocols to expand to Polygon for a very user-friendly experience.
With Ethereum network congestion growing more common at times of high network usage, we can expect a growing number of well-known DApps to move to Polygon in the near future.
Alejandro is a New Zealand-based trader and writer who has been involved in the cryptocurrency and blockchain space since early 2016. Being extremely passionate about this emerging technology, he has written content for a myriad of projects and news outlets.