During my searching for the best altcoins used in the cryptocurrency market I ran into an interesting cryptocurrency called Polygon!
A cryptocurrency which right now belongs at the top 25 cryptocurrencies in terms of market capitalization.
While I was studying more and more about Polygon cryptocurrency it became obvious to me that it is a network that has amazing potential and we are witnessing just the beginning of it.
After complete reading this post you’ll be in position to answer to the following pivotal question;
What is Polygon crypto?
In a nutshell a brief answer it could be;
“Polygon cryptocurrency is a network which seeks to overpass some of Ethereum’s major limitations like the low transaction speed and expensive fees using an add-on layer to Ethereum”.
As a result, in order to completely understand the Polygon crypto we first need to take a look at what Ethereum is and which are its limitations that Polygon aspires to improve.
Ethereum Network
Ethereum network is considered by many to be the most useful cryptocurrency network that exists!
It has some serious advantages like the concept of smart contracts but also at this right time encounters some serious drawbacks.
Let’s analyse those problems.
Ethereum is;
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- Slow – Ethereum is the pioneer in the smart contracts solutions and as a result the vast majority of DeFi applications run on its network. At the same time Ethereum handles only 13 transactions per second ending up creating heavy congestion which results in frustrated and non productive delays!
- Expensive – Due to extreme congestion created inside the Ethereum blockchain by DeFi users the price fees for a transaction are soaring day by day! At the time of writing the average transaction fee fluctuates from 20 to 40 dollars! In a nutshell, in order to send to your friend 10 dollars you also have to pay an extra 20 to 40 dollars!
- Limited options for developers – All Ethereum Projects run on the same network and have similar throughputs, which means that all developers share the same problems without exception.
These 3 challenges are exactly what Polygon solves since it is able to process transactions a lot faster, cheaper and at the same time being more adaptable.
Who created the Polygon network
The Polygon network first started in 2017.
The people behind the creation of the network are 3 developers from India named Jaynti Kanani, Sandeep Nailwal, and Anurag Arjun who attempted to find a solution to the major Ethereum problems.
The 3 creators risked a lot in order to develop their project since at the time the cryptocurrency conditions in India were unfavorable due to legal complications.
Finally the success that Polygon had, led the way for plenty of other developers based in India who were afraid to deal with the cryptocurrency market due to legal issues.
From Matic to Polygon
At this point it is worth mentioning that during the first years the network was named Matic but finally its name changed to Polygon network.
Although the name has changed, the network’s token retained its name which is Matic.
Matic Token
Matic is used for several reasons inside the Polygon network;
- The holders can participate in voting on Polygon Improvement Proposals (PIPs)
- Providing liquidity to the network by staking
- Paying gas fees
The above 3 utilities sum up the basic functionality of the Matic while we are waiting for an expansion with more utilities.
The maximum circulating supply is set to be 10 billion tokens and is expected to be reached by December 2022.
The current supply (at the time writing) is around 6 billion tokens and the market cap is around 11 billion dollars which means its price is at 1,60$.
How Polygon works
Polygon is a layer two scaling solution that connects ethereum compatible blockchain networks.
It uses Proof-of-Stake as a consensus mechanism meaning that a user can mine or validate block transactions according to how many Matic he holds.
The user (or else validator) later receives Matic tokens as a reward.
Network members (holders of Matic) have the choice not to become validators and can delegate their tokens to other validators.
Despite that, members will still take part in the staking process and will earn staking rewards.
Polygon’s Architecture
Polygon architecture consists of four abstract, composable layers.
- Ethereum layer
As mentioned above, Polygon chains are able to use Ethereum to host and implement a set of Ethereum smart contracts providing functions like
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- Finality/checkpointing
- Staking
- Dispute resolving
- Message relaying
- Security layer
A non-mandatory layer managing a set of validators that can regularly check the validity of any Polygon blockchain for a fee.
This layer can be implemented in parallel to Ethereum and is in charge of functions like:
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- Validator management (registration/deregistration, rewards, shuffling etc)
- Polygon blockchains validation
This specific layer is abstract and has multiple instances, implemented by different entities and with different characteristics.
- Polygon networks layer
A constellation of sovereign blockchain networks.
Each of the networks serves its respective community, maintaining functions like:
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- Transaction collation
- Local consensus
- Block production
- Execution layer
This layer interprets and executes transactions that are agreed by both sides and included in Polygon network’s blockchains.
It consists of two sublayers:
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- Execution environment (pluggable virtual machine implementation)
- Execution logic (state transition function of a specific Polygon network, normally written as Ethereum smart contracts)
