First, an Introduction to L2s

 

Polygon is a Layer 2 sidechain that helps Ethereum to scale.

Layer 2 or L2 refers to a secondary framework or protocol that is added on top of an existing blockchain system. In this context, the existing blockchain is called a “Layer 1” or “primary” chain, such as Bitcoin or Ethereum. The Layer 2 protocol’s objective is to help address the scale and transaction performance issues associated with the Layer 1 protocol, enabling improved throughput for long-term growth.

Apart from reducing the burden on the Layer 1 chain, the Layer 2 protocol also often charges lesser fees and is faster at processing new transactions. Both layers are connected via a channel or bridge, so that summaries of Layer 2 transactions can be permanently recorded on Layer 1 from time to time. 

Polygon, an Ethereum scalability solution, is a leading example of Layer 2 protocols. You can use it to connect to the Ethereum blockchain and leverage the Ethereum ecosystem while creating your own dApps. Rather than attempting to surpass it, Polygon acts as Ethereum’s de facto sidekick to offload some of its traffic and transactions. 

However, with the Ethereum Merge completed and Ethereum becoming a faster, more affordable version of itself, what does Polygon’s future look like? 

Key Takeaways
  • Polygon is a Layer 2 scalability solution for the Ethereum Blockchain, which was introduced to relieve the main Ethereum network, ensuring faster transactions and lowering gas fees. 

 

  • With time, Polygon plans to become a multi-chain solution and create its own ecosystem, gaining from the stability and security of the Ethereum network. This is contributing to its rapid growth.

 

  • Since the Ethereum Merge’s announcement several years ago, there has been a lot of hype and speculation regarding the future of not just Ethereum but also sidechains like Polygon. Some of the most widespread notions have been around faster transaction speeds and cheaper fees. But these do not seem likely enough to completely eliminate the need or significance of Polygon.

 

  • According to the Ethereum website, users probably won’t notice any noticeable speed differences after the Merge. It is true that blocks are generated more quickly on proof-of-stake networks, and eventually, Ethereum’s capacity will expand, resulting in faster speeds and lower gas costs. However, end users may not experience this change.

 

  • Moreover, Layer 2 scaling solutions like Polygon will play a significant role in helping Ethereum reach its potential. Ethereum will want some help processing increased transaction throughput in order to achieve its goals, something Polygon is more than capable of doing.

 

  • Ethereum also plans to introduce sharing sometime in 2023 for greater capacity and speeds and lesser costs. Once sharding is implemented, even the processing speeds of Polygon could rise further up. 

 

  • In a nutshell, Layer 2 sidechains like Polygon will not disappear after The Merge. They are likely to benefit these sidechains in much the same way as Ethereum.

A Brief History 

Polygon, formerly known as MATIC Network, provides simple-to-use infrastructure development for scaling Ethereum and creating a variety of applications. The platform aims to create a full-fledged multi-chain solution, bringing blockchain applications closer to conventional ones. 

The user-friendly platform also asserts to be the first to address problems brought on by growing activity on the Ethereum network. 

Polygon was founded by four former Ethereum employees –  Jaynti Kanani, Sandeep Nailwal, Anurag Arjun, and Mihailo Bjelic – in 2017. It was first developed as a modular solution to help Ethereum scale more successfully and was given the name MATIC Network. As of February 2021, it now goes by the name Polygon.

The platform offers a fully interoperable sidechain network, also referred to as a mini-blockchain network. This makes it possible for people to use Polygon with various blockchains. Recently, the platform disclosed intriguing collaborations and innovative partnerships, and it is improving investor relations.

With its many unique attributes, Polygon also enables developers to create decentralized applications, games, and Ethereum-based services more easily and in greater depth. The network’s value proposition and strategic developments have undeniably improved Polygon’s position.

At around a 44,157.6% value gain since its launch in 2017, it would be reasonable to describe $MATIC’s (Polygon’s native token) growth as significant.

Benefits Compared

What Polygon brings to the Table

Speed

Thanks to Polygon, decentralized exchanges may now provide their users speedy and economical trading with speedier block generation and lesser costs. Furthermore, it fortifies gaming networks, improving their capacity to deal with transactions rapidly. Payment services can be paid whenever and everywhere by integrating Polygon on dApps. Confirmations for these transactions are processed in a couple of milliseconds. 

Security

By introducing PoS at the “CheckPoint Layer” and delegates at the block producer layer, Polygon achieves maximum decentralization. At the same time, users of this system must disclose any suspected fraudulent transactions in detail. The result is in the form of fewer fraudulent instances. This mainchain security adds to the PoS protocol security on the sidechains. Polygon Network is also responsible for preserving personal data as a platform for scaling blockchains and a modified version of Plasma.

Scalability

With the ICO craze of 2017, Ethereum has experienced scaling problems. Because of its low throughput and potential for congestion when there are many transactions,

On the other hand, Polygon’s Plasma is built on state-based sidechains that operate on the EVM. This aids in the general smart contracts’ scalability on the Polygon Network. The public “CheckPoint Layer,” which runs at frequent intervals, enables the network to conduct sidechains quickly while publishing the checkpoints in batches.

Developer Support

For developers who are unfamiliar with blockchain technology, Ethereum can be challenging because it necessitates a solid foundation in both programming and cryptography. 

Due to its foundation in the Ethereum mainchain, Polygon has access to developer documentation, a programming language, and other features. Also, since Polygon is an EVM-based side chain, everything is readily available and does not require custom development. 

The Polygon Network team continuously develops interface libraries that are exceptional in their industry. With these technologies, you can build programs and implement the interface.

User Friendly

In the payments industry, the Polygon Multi-Chain Network performs better than competitors like Raiden Network and others. To obtain tokens, users only need to have a functional Ethereum address; they are not required to have any extra payment options. 

The majority of financial decision-service applications, including as DEXs, Lending dApps, and many others, are readily accessible to users of the Polygon Network. Besides, when compared to Ethereum OpenSea, Polygon OpenSea offers much lower prices for NFT buyers and sellers to mint, sell, and purchase NFTs. Transactions on Ethereum can be expensive, especially when the network is busy.

Trade Support

Polygon offers a platform for financing and credit scoring to businesses. The traders may assess the dependability and caliber of their borrowers based on their transaction history, making it simpler to lend tokens to people who have a greater likelihood of making timely payments.

Where Ethereum Still Leads

Layer 1 Capabilities

Although Polygon offers many features, it might not be appropriate for all use cases and might not have the same functionality as Layer 1 blockchains, like Ethereum.

User Base

Although Polygon has made some progress in the blockchain sector, its user base is still quite limited in comparison to Ethereum. On the other hand, Ethereum provides a vast pool of users the capacity to create and work on new tools, apps, DeFi, smart contracts, and NFTs with constant upgrades to technology. 

With JP Morgan Chase, UBS, and MasterCard stating that they were investing $65 million into ConsenSys, a software development company that creates infrastructure connected to Ethereum, in 2021, it is clear that big businesses are also taking notice of Ethereum’s popularity.

Decentralization

Due to its reliance on a group of validators to verify and log transactions, Polygon is only partially centralized. Despite being chosen democratically, it is still possible for these validators to conspire or act in their own self-interest, which might jeopardize the security and integrity of the network. On the other hand, Ethereum is sufficiently decentralized and has over 400,000 validators to prevent censorship.

Market Caps Compared

The market capitalization of an ecosystem is the total value of all the assets that are part of that chain. An ecosystem’s dominance in the cryptocurrency market increases with its market capitalization. Ethereum is a clear winner in this respect.

Polygon

With a value of $0.00263 when it first entered the open market in April 2019, $MATIC originally did not experience significant growth. It achieved a peak of $2.45 in April 2021 after changing its name to Polygon in February 2021 and stating a mission to combine various blockchains. On December 26, 2021, the token reached its all-time high of $2.92. The price of $MATIC fell significantly below $1 by the end of December 2022.

Nonetheless, with a value of $6.93 billion, it was the tenth-largest cryptocurrency by market cap in 2022.

Ethereum

Despite the fact that Polygon has faster throughput and substantially cheaper transaction prices, Ethereum still has a larger total value locked (TVL) market cap.

On August 8, 2015, Ethereum’s market capitalization was $80 million. Ether initially crossed the $1 billion threshold on March 12, 2016. The market capitalization of Ethereum increased at an extraordinary rate beginning in February 2021 and momentarily broke the $500 billion market capitalization milestone on October 21, 2021. 

From 2015 to January 2021, the market value of Ether was considerably below $200 billion. On November 9, 2021, Ethereum (Ether) has the greatest market capitalization at $571.67 billion.

Future Plans

The Roadmap for Polygon

With the announcement of many significant innovations and partnerships, Polygon has had a solid start to the year, boosting investor confidence. Partnerships seem to be a focal point for the platform moving ahead.

In their most recent partnership, Polygon and Mastercard declared intentions to launch a web 3 incubator. While bitcoin payment company Stripe has made big cryptocurrency rewards with its technology, Disney and Reddit have also collaborated with the platform.

The 34th PolygonInsights study’s key metrics for the network as a whole point to a promising future. In just 8 months, Polygon was able to record institutional deposits totaling more over $11 billion because to the platform’s Ethereum PoS and Plasma bridges. The growth of Polygon’s blockchain in tandem with Ethereum should position it to take over as Ethereum’s main scaling solution for many years to come.

 

The Roadmap for Ethereum

One of the first and most well-known cryptocurrencies on the market, Ethereum has a larger community of software developers and projects than its more recent competitors. It is also actively being developed, as evidenced by the Merge from last summer and a bold long-term roadmap. 

The Ethereum 2.0 development, however, is unfinished following The Merge, leaving several essential technological advancements for upcoming platform upgrades.

Moving on, Ethereum has already announced the Scourge phase, which was created to address problems with the amount of ETH that could be extracted whenever a block was added to the blockchain. This helped the cryptocurrency reach a high of $1,661.33 on November 4, 2022, before the market crashed. It is left to see how things pan out for the platform in the days to come.

Summary 

Polygon has emerged as a reliable solution to several of Ethereum’s scalability issues. In order to boost transaction throughput and cut costs, it makes use of Layer 2 techniques including Plasma, Optimistic Rollups, and zkRollups. Using Polygon, developers may also deploy their decentralized applications (dApps) on the Ethereum network without having to change their source code.

Ethereum, on the other hand, focuses primarily on offering a platform for decentralized applications (dApps). It makes it possible for programmers to create, set up, and use smart contracts on its blockchain. The development of digital assets (tokens), decentralized exchanges, lending protocols, and stablecoins are also supported by Ethereum.

At the end of the day, Polygon is intended to be an additional layer to the Ethereum network, with Ethereum itself concentrating on offering a platform for programmers to create dApps.

By offering a scaled-up Ethereum network with reduced fees and quicker transaction times, Polygon aims to make it simpler for users to access and utilize Ethereum. While Polygon’s place in the cryptocurrency ecosystem may be undetermined until Ethereum completes its renovations, it presently plays an important function by assisting in the recruitment of new users by offering scalable web3 solutions.

Together, these two projects—each significant in their own right—offer a potent fusion of scalability, security, and interoperability to the blockchain ecosystem