Key Takeaways:
- Polygon — formerly known as Matic Network — is a blockchain that aims to be a scaling solution to Ethereum, allowing for faster transactions and lower fees.
- The Matic Network was founded in 2017 by three software developers based in Mumbai, and rebranded to Polygon in 2021.
- Polygon addresses Ethereum’s scalability issues by executing transactions on Layer-2s and sidechains.
- MATIC is the native token of the Polygon network, used for staking and gas fees, but is set to change after Polygon Labs proposed a third-generation token, known as POL, which will replace MATIC as the native token.
- Polygon 2.0 will consist of four layers to create a network that aims to be ‘The Value Layer of the Internet’.
Introduction to Polygon
The race to solving Ethereum’s scalability issues has never been this close, with Polygon one of the top contenders in the world of Layer-2s (L2s) and sidechains. Polygon, formerly known as Matic Network, surfaced as a scaling solution to address Ethereum’s high gas fees and low transaction speed.
Initially founded in 2017 by three software developers based in India, Matic’s mission was to help create a “better, open world” mainly by improving Ethereum’s infrastructure.
What Is the Polygon Network?
In short, Polygon is a multichain scaling solution for the Ethereum blockchain. Its primary goal is to provide faster and cheaper transactions on Ethereum by leveraging sidechains, which are stand-alone blockchains that run alongside the Ethereum mainnet.
This raises an important question: Is Polygon a Layer-2 or a sidechain? Or both? Polygon displays features of both a Layer-2 scaling solution and as a sidechain for Ethereum:
- Layer-2 Scaling Solution: Initially, MATIC launched as a Layer-2 scaling solution built on top of Ethereum to handle transactions of the mainchain while reducing congestion and transaction fees.
- Sidechain: In addition to its Layer-2 characteristics, MATIC also functions as a sidechain to Ethereum by running a separate blockchain alongside the mainchain. This means that sidechains have their own consensus mechanisms with separate block validation processes — and most important: each sidechain is responsible for its own security.
Ultimately, Polygon has provided solutions to Ethereum’s scalability issues beyond just a single Layer-2 or sidechain: It now envisions a multi-layer ecosystem with multiple sidechains and Layer-2 protocols, all connected to Ethereum. This allows developers to choose the scaling solution that fits their needs.
What Is the MATIC Token?
At the center of this is the MATIC token, the native cryptocurrency of the Polygon network. MATIC is used as a medium of exchange and governance token, and it enables transactions between network participants, as well as allocates staking rewards. Moreover, MATIC is essential in the network’s staking mechanism, which secures the Polygon network and achieves consensus through its adapted Proof of Stake (PoS) algorithm.
What Is Polygon 2.0?
Polygon 2.0 is a blockchain with a vision to be the ‘Value Layer of the Internet’, where users can create, exchange, and programme value through its different technologies.
While Polygon identified Ethereum’s scalability issues early on and proposed several solutions to tackle them, Polygon 2.0 is defined as a blockchain network that consists of ZK-powered L2 chains where users can seamlessly interact with the entire network while feeling like they are using one chain.
What Will Polygon 2.0 Look Like?
Polygon 2.0 is designed to have a group of protocols seamlessly operate together, consisting of four protocol layers that include:
- The Staking Layer, which oversees all aspects of the Polygon 2.0 validators, exists on the Ethereum network as a smart contract.
- The Interop Layer, which allows for seamless cross-chain messaging across the Polygon 2.0 network, where users feel they are interacting with one network, when in reality it is more than one chain.
- The Execution Layer, which enables Polygon 2.0’s block production, executes transactions.
- The Proving Layer, which is responsible for generating proofs for all transactions across all chains on Polygon 2.0.
Tokenomics Shapeshift From MATIC to POL
The Polygon 2.0 developers have proposed a new tokenomics model for Polygon 2.0, with ‘POL’ as the new native token of the Polygon network, replacing MATIC. The proposal to migrate from MATIC to POL was announced on 20 July 2023 with no set date on when it will be completed.
The initial supply of POL will be 10 billion tokens swapped 1-to-1 from MATIC, and holders of MATIC will have four years or more to upgrade their tokens from MATIC to POL. As opposed to the fixed supply of MATIC with 10 billion tokens, POL will have the same initial supply, but with a 1% annual inflation rate for the next 10 years, per the white paper.
How to Trade MATIC
Polygon (MATIC) is listed in the Crypto.com App along with the growing list of 250-plus supported cryptocurrencies and stablecoins, including Bitcoin (BTC), Ethereum (ETH), Polkadot (DOT), USD Coin (USDC), and Cronos (CRO).
Crypto.com App users can now purchase Polygon (MATIC) with USD, EUR, GBP, and 20-plus other fiat currencies and spend it at over 80 million merchants globally using the Crypto.com Visa Card. Alternatively, users can also trade MATIC on the Crypto.com Exchange.
Download the Crypto.com App to start trading MATIC today.
Conclusion
Polygon has positioned itself at the forefront of Ethereum’s scalability solutions, providing different approaches to overcome the challenges of high transaction fees and slow transaction speeds on the Ethereum mainnet.
The transition from MATIC to POL showcases the network’s forward-thinking approach to meet the ever-evolving needs of the blockchain industry. After all, users of the Polygon network will decide for themselves if this transition is a step in the right direction.
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