What is Polygon (MATIC)?

Polygon is a network of secure Layer 2 (L2) solutions and autonomous sidechains. It increases Ethereum scalability and reduces transaction costs. Let’s find out why we need it and how it works.

Polygon will support Optimistic Rollups, ZK-Rollups, and Validium in addition to its own developments’ Matic PoS Chain and Matic Plasma Chains.

Who created Polygon and when?

The platform’s test network went live in October 2017 under the name Matic Network.

The project has four co-founders:

• Polygon Network CEO Jaynti Kanani — a data scientist and analyst;
• CEO Sandeep Nailwal — management consultant;
• Director of production control Anurag Arjun — product manager;
• Mihailo Bjeli, developer.

The founders see Polygon as a solution to the problems of scaling and increasing the efficiency of blockchain networks.

The Polygon team created the Plasma Chains scaling model and the Ethereum Matic PoS Chain sidechain based on Proof-of-Stake (PoS). Over time, this sidechain has become a popular scaling option for various applications.

In April 2019, the company conducted an IEO of the MATIC token and raised $5.6 million. In February 2021, the developers of Matic Network changed the name of the project to Polygon. The rebranding was timed to coincide with the transition from a second-tier Ethereum blockchain solution to a multichain system similar to Polkadot.

What are the technological features of Polygon?

The central component of the Polygon ecosystem is the modular Polygon SDK, which allows developers to create decentralized applications and any element of network infrastructure.

Polygon supports two main types of Ethereum-compatible systems:

• Standalone networks
• Secure networks that use a security-as-a-service model.

Standalone networks rely on their own security — for example, using Proof-Of-Stake or Delegated Proof-Of-Stake consensus models. Such networks are independent and flexible, but it is these features that prevent them from achieving an acceptable level of security. For example, PoS requires a large number of robust validators. This model is suitable for corporate systems and large projects with large user communities.

Secure networks employ a “security-as-a-service” model. It is provided directly by Ethereum, for example, through “fraud proofs” [fraud proofs] used by Plasma, or through a pool of validators. Validators can be used by a variety of projects in the Polygon ecosystem. This model is similar to Polkadot’s collective security mechanism.

Secure networks ensure a high level of security, but at the cost of independence and flexibility. This model is usually preferred by privacy-oriented projects.

The Polygon architecture consists of four abstract and component layers:

Ethereum Layer

Ethereum, which is implemented as a set of smart contracts, can be used as a base layer in polygon-based networks. This layer is used between Ethereum and Polygon for operations such as finalization, checkpoint creation, stacking, dispute resolution, and data exchange. This layer is optional; polygon-based networks do not need to use it.

Security Layer

This is an additional optional layer that can be used to enable the validators-as-a-service model. This feature enables Polygon-based systems to use a set of validators that can check the validity of any of the system’s networks on a regular basis in exchange for a reward.

The security layer is implemented as a metablockchain that runs alongside Ethereum and is in charge of managing the validators, which includes registering, distributing rewards, shuffling, and validating Polygon Chains.

The security layer is abstract and can have many different implementations with different properties. This layer can also be implemented directly on Ethereum and used as validators by its miners.

Polygon Networks Layer

This is the first mandatory layer in the Polygon architecture. It consists of sovereign blockchains, each supporting transaction matching, local consensus and block creation.

Execution Layer

This layer is responsible for interpreting and executing the transactions included in Polygon blockchains. It consists of sub-layers of the execution environment and execution logic.

Matic PoS Chain and Matic Plasma Chains

Matic Plasma Chains is an implementation of the framework for creating scalable, decentralized Plasma applications. This second-tier solution was originally proposed by Joseph Poon and Vitalik Buterin.

Matic PoS Chain is a sidechain that runs parallel to the Ethereum blockchain. Matic PoS Chain uses the Proof-of-Stake consensus mechanism and its own set of validators.

Matic PoS Chain is EVM-compliant, allowing Ethereum-based projects to seamlessly move smart contracts to this blockchain.

What is Polygon’s consensus mechanism?

Plasma/POS uses the Proof-of-Stake (PoS) consensus mechanism.

During the consensus process in Polygon, validator users stack MATIC tokens. Polygon circuits provide a mechanism for removing stacked funds. It prevents stackholders from offering invalid blocks, illegally verifying blocks, and handicapping transactions.

The Matic PoS Chain includes two levels:

Block Producer Layer Bor (Block Producer Layer) is responsible for aggregating transactions into blocks.

Heimdall (validator layer) supports all validation nodes (stackers) that run parallel to the Matic stacking contracts and manage validator accounts, ensure that funds are removed from the stacking and release rewards.

Heimdall runs on the Tendermint engine, which has modified data structures and signature scheme. It is responsible for validating blocks, running a block creator selection committee, and overseeing the implementation of sidechain blocks in Ethereum. Heimdall aggregates the blocks created by the Bor layer into a Merkle tree, and periodically publishes the Merkle root in the root chain.

Polygon SDK.

Polygon links different versions of Ethereum-based scaling solutions. Polygon SDK, a flexible, modular framework for launching new blockchains using different scaling technologies, plays a key role in this process.

Developers can use the Polygon SDK to build or connect blockchains based on the L-2 platforms Plasma, Optimistic Rollups, ZK-Rollups, and Validium to the Matic POS sidechain and its counterparts. The Polygon SDK is currently in development.

What role does the native MATIC token play in the Polygon ecosystem?

The total supply is 10 billion MATICs.

During the April 2019 IEO on Binance, the project sold 3,230,085,551 tokens (~32.30% of the total issue).

MATIC is used to pay transaction fees and settlements between Polygon ecosystem members.

Matic’s sidechains reach consensus through a Proof-of-Stake layer in which network members stack MATIC tokens. Computational resources are required for block validation, proof publishing, and other operations. MATIC inflation rewards the providers of these resources.

The issuance of MATIC is staggered and will continue until December 2022.

MATIC tokens, which were initially designed to raise funds for project development, will eventually serve as a system security mechanism and a means of decentralized management of Polygon platform development.

What are the benefits of Polygon?

The Polygon architecture is feature-rich. It allows other applications to choose the best scaling solution that best suits their needs.

For example, a DeFi-protocol that intends to store billions of dollars in smart contracts will most likely prioritize security over sovereignty. It is most likely to use Ethereum’s base layer.

In order to reduce transaction costs, an NFT marketplace will be willing to give up some security. A project of this type would use the Security Layer and its set of sharing validators.

The gambling application’s developers can use their own consensus mechanism with a high block creation rate. They can completely ignore the Ethereum base layer and the Security Layer, focusing solely on the Polygon Network Layer.

When a project changes or a better scaling option becomes available, application teams can switch from one scaling solution to another. Instead of remaining isolated, the project architecture allows the various Polygon-based scaling technologies to interact.

Unlike Tier 1 blockchains such as Polkadot, Cosmos, and Avalanche, the Ethereum blockchain serves as the primary connecting hub in the Polygon ecosystem. This enables the project to rely on a large user and developer community, the popular Solidity programming language, and the Ethereum Virtual Machine (EVM).

How is Polygon evolving?

Polygon has generated over one million addresses. Every day, over 80 million transactions take place. More than 50 digital assets based on the project’s own PoS blockchain have been released, including MATIC, Tether USD (USDT), USD Coin (USDC), Quickswap (QUICK), Dai Stablecoin (DAI), and Chain Games (CHAIN).

Many projects have migrated or are in the process of migrating to Matic PoS Chain, including Decentral Games, SportX, Easyfi, Neon District, 1inch Network, Quickswap, Uniswap, SushiSwap, Aavegotchi, Polymarket, Polkamarkets, and Superfarm. The Graph and Chainlink will add polygon support. The project also announced a collaboration with Atari, a major player in the video game industry.

In May 2021, Polygon joined Mark Cuban Companies, a list of companies that billionaire Mark Cuban supports. The amount of the investment was not disclosed.