What Is Polygon (MATIC)? And How Does It Work?

Polygon, formerly known as the Matic network, is a layer-2 blockchain solution geared towards improving the efficiency of blockchain transactions. The primary goal of the Polygon network is to solve some of the most common issues associated with blockchain networks, including speed and transaction costs. In this article, we will take a deeper dive into Polygon to explore how it works. Let’s take a look:

What is Polygon (MATIC)?

Polygon is a layer-2 blockchain solution built on the Ethereum network. Its main aim was to tackle the scalability challenges encountered by the layer-1 network. To put is simply, Polygon was built to accelerate Ethereum’s processes, improve efficiency, and reduce transaction fees.

Polygon is famously referred to as the “internet of the Ethereum blockchain” and helps in mitigating some major network hurdles. The network was first introduced as Matic, but the project underwent a rebranding to Polygon as it progressed. Its native token is called MATIC and is used for payments, staking, and governance. Currently, there’s a plan within the Polygon network to rebrand the MATIC token to POL as well.

The shift to Polygon’s branding also stems from the community’s perception. For a long time, it was only being viewed as a layer two solution, but in reality, it’s much more than that. Polygon MATIC forms an ecosystem of interconnected blockchains capable of serious scalability while maintaining their autonomy.

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Layer-2 Solutions Explained

Layer 2 solutions act as supplementary frameworks or protocols built on top of an existing blockchain network. Their main objective is to solve scalability and transaction bottlenecks faced by layer-1 blockchain networks. Layer-2 solutions are quite handy for blockchains like Ethereum, which have low Transactions per Second (TPS) rates and are in dire need of scalability.

With increasing adoption, Layer-1 solutions can face an influx of transactions, which can lead to bottlenecks and high gas fees. Layer 2 solutions offer a solution for this by significantly improving the TPS, allowing these blockchains to handle thousands of transactions per second more efficiently. These solutions establish a unique framework wherein transactions can operate independently. This takes the strain away from the layer one blockchain and makes thousands of transactions per second possible.

How Does Polygon (MATIC) Work?

Scalable and Secure dApp Ecosystem

Polygon functions as a highly scalable, efficient, and secure platform for developing and deploying decentralized applications (dApps). Polygon fully uses its Ethereum foundation and is compatible with the Ethereum Virtual Machine (EVM). This compatibility allows for a smooth migration of Ethereum dApps to the Polygon network. To validate transactions and secure the network, Polygon uses a Proof of Stake (PoS) consensus mechanism. Users can stake their Polygon tokens (MATIC) and become part of the ecosystem as validators, earning rewards for their involvement in the consensus process.

Layer 2 Scaling Solutions

Polygon’s scalability and efficiency are all about its utilization of Layer 2 scaling solutions. This includes the following:

Plasma Chains: Creating smaller chains connected to the main Ethereum network, Plasma chains process transactions off-chain and settle them on the main chain. This improves the transaction speed and helps with congestion.

Optimistic Rollups: Optimistic roll-ups allow for the execution of smart contracts off-chain. This allows for quicker and cost-effective transaction processing compared to the Ethereum main network.

ZK Rollups: By employing zero-knowledge proofs (ZKPs), ZK Rollups process large batches of transactions off-chain, resulting in reduced transaction fees and faster confirmation times.

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Performance and Security

Apart from Layer 2 scaling solutions, Polygon uses various technologies and protocols to improve its performance and security:

Sidechains: These are like special chains for things such as gaming, NFTs, and DeFi. Polygon has its own customized sidechains made for specific purposes, and they are an important component of the network.

Polygon SDK: This is a toolkit that gives developers all the necessary tools and resources to create dApps smoothly on the Polygon network. It includes features like a unique agreement system, a transaction method that does not require a gas fee and compatibility with various programming languages.

Polygon Bridge: This is just like any other bridge that connects two things, which in this case are the Ethereum network and the Polygon network. Polygon bridge simplifies the process of transferring assets between these two networks and makes it easier. It also allows users to reap the benefits of both networks at the same time.

How Fast is Polygon (MATIC)?

Polygon is built to enhance transaction speeds for projects operating on the layer-1 blockchain. Currently, the Polygon network can handle an impressive capacity of up to 65,000 transactions per second (TPS). This is quite remarkable especially if you compare it to the processing capabilities of most layer-1 solutions, which typically struggle with fewer than 100 TPS. On average, the Polygon network processes around 2.5 million transactions per day, which shows how massive a difference it can make on the Ethereum blockchain.

The MATIC Token

MATIC operates as an ERC-20 token which is compatible with various Ethereum-based digital currencies. It serves as the utility token for the Polygon blockchain and facilitates payments for services and governance within the network. Initially, the circulating supply of MATIC stood at 3.2 billion, which has since been increased. However, the maximum supply of MATIC is capped at 10 billion tokens, and the limit cannot be exceeded.

During the initial phases, 3.8% of MATIC’s supply was privately sold, with 16% allocated to the team, 4% to advisors, and 12% to network operations. As of writing this article, MATIC is trading at slightly over $1.1, with an impressive market capitalization of $11 billion.

Advantages of Polygon (MATIC)

Polygon (MATIC) is one of the most popular layer-2 solutions and is a preferable choice because it offers the following benefits:

• Fast, Efficient, and Scalable: Polygon is really fast, efficient, and can handle a lot of users at once, making it easy for people to use.
• Off-chain Transactions: MATIC makes transactions happen quickly by doing some of the work off the main blockchain, which helps make the whole network run smoother.
• Ethereum Integration: Because it’s built on Ethereum, Polygon’s apps can easily connect with the Ethereum ecosystem. This makes Polygon apps compatible and easy to use.
• Low Fees, Fast Speed: MATIC keeps fees low, and transactions happen quite quickly, which is great for people who want to buy and sell quickly without spending a lot of money.
• Popular Cryptocurrency: MATIC is one of the top 15 cryptocurrencies in the world, which shows that a lot of people know about it and think it’s important in the crypto world.

Disadvantages of Polygon (MATIC)

Where Polygon (MATIC) has some excellent benefits, it has some drawbacks as well. These include:

• Obsoletion Threat: Polygon was made to help with Ethereum’s traffic issues. However, as Ethereum switches to a Proof-of-Stake (PoS) system, Polygon might not be needed anymore.
• Reliance on Ethereum Ecosystem: Polygon depends heavily on the Ethereum ecosystem. If Ethereum gets significant upgrades, Polygon might not be as important anymore.
• Growing Competition: Other crypto projects are also trying to solve similar problems. For example, Polkadot is working on solutions that can work with different blockchains, making competition tougher for Polygon.

How to Buy Polygon (MATIC)

To acquire or trade MATIC, you can turn to numerous decentralized or centralized exchanges, as it is available on most exchanges. For those investors who are fairly new to the crypto world, the simplest and the most convenient method is to buy it from a trusted centralized exchange. These platforms offer ease of use and good security measures. Plus, you can also look for an exchange with a low fee to cut your costs. Some of the top exchanges that offer MATIC include:

• Bybit
• BITFLEX
• Binance

Conclusion

In summary, Polygon (MATIC) is a cryptocurrency and a layer-2 solution that helps Ethereum projects and blockchains grow. MATIC tokens play an important role in governing and securing the Polygon network, as well as facilitating transaction fees. If you are interested in acquiring MATIC tokens, you can buy them on different crypto exchanges. Even though Polygon has lots of benefits and great tech as a Layer-2 solution, Ethereum’s move to 2.0 might change its future course.

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