What is Polygon Blockchain? Why Should You Use it?
Polygon is emerging as a practical option for a few new exceptional projects as Ethereum 2.0 is still under development. It has gained popularity because of the great throughput and low gas expenses experienced by clients and developers in its platform. Polygon began as MATIC, a profoundly effective scalability solution created for the Ethereum network that pre-owned an adapted version of Plasma and PoS-based alt chains.
Rather than being a simple scaling solution like its predecessor Matic Network — which uses a technology known as Plasma to process transactions off-chain before finalizing them on the Ethereum main chain — Polygon is designed to be an entire platform designed for launching interoperable blockchains.
Through Polygon, developers can launch preset blockchain networks with attributes tailored to their needs. These can be further customized with a growing range of modules, which allow developers to create sovereign blockchains with more specific functionality.
Polygon uses a variety of technologies to achieve this expanded vision, these include:
· POS Chain: Polygon’s main chain is an Ethereum sidechain known as the Matic POS Chain, which adds a proof-of-stake (POS) security layer to blockchains launched on Polygon.
· Plasma Chains: Polygon makes use of a scaling technology known as Plasma to move assets between the root chain and child chains via Plasma bridges.
· ZK-rollups: An alternative scaling solution used to bundle a large number of transfers off-chain into a single transaction, using zero-knowledge proofs for the final public record on the Ethereum main chain.
· Optimistic rollups: A solution that runs on top of Ethereum to facilitate near-instant transactions through the use of “fraud proofs”.
Polygon has ambitious plans for the future. Its goal is to provide a framework for blockchain networks. Users would be able to create blockchain networks that interconnect with each other instead of being totally separated. This could offer developers the best of both worlds. They can create their own standalone blockchains with all the benefits those provide, including scalability and flexibility. They’d also have the advantages Ethereum offers, including its security and the tools available through it.
The Polygon token is used for fees, governance, and staking
We’ve gone over goals for Polygon as a project, but what about its cryptocurrency token? There are a few different uses for it:
· Gas fees: These transaction fees on the Polygon network are paid with its cryptocurrency.
· Governance: Polygon is a governance token, meaning token holders help influence the future of the project by making and voting on proposals.
· Staking: Staking is when you lend a cryptocurrency. With Polygon, you can stake your tokens and let the network use them in exchange for interest. You can currently earn an annual rate of over 15% staking Polygon, although rates often change from day to day.
The price increased by over 13,000% to start the year
Polygon holders have been on a wild ride in 2021. In January, a single Polygon token was worth a little under $0.02. On May 18, 2021, the value had gone up to $2.68, an increase of over 13,000%.
The crypto market, in general, has cooled off since then, and Polygon’s price right now is about $0.90. It shows how volatile this cryptocurrency is, as well as how profitable it can be.
Like every cryptocurrency, Polygon is high risk. It has potential, and it could be worth a reasonable investment if you like the direction it's going. Just follow the golden rule when buying crypto — don’t put in more than you could afford to lose.
Advantages of using Polygon
Even though Polygon’s advanced solutions like the Polygon SDK and Protocol are still a ways off from completion, the Polygon team has already shipped several Ethereum scaling solutions.
Today, you can use fast Ethereum via the Matic Layer-2 Chain, an Ethereum sidechain secured by a network of staker-validators. Massive DeFi platforms like AAVE and Curve Finance have already ported their protocols over to the Matic sidechain. The move has enabled end-users to enjoy using DeFi without the high ETH fees paid in gas.
The advantages of using Polygon/Matic sidechains, whether you’re a developer or user, are enormous.
- Building Ethereum decentralized apps and blockchains are far cheaper on Polygon/Matic.
- Using Ethereum-based DeFi, NFT, and gaming apps are faster and almost free.
- Farming on DeFi platforms is finally financially feasible for smaller farmers.
- Minting NFTs is faster, involves near-zero gas fees, and works within a large Polygon-based NFT ecosystem.
Matic < → Ethereum Bridge
If you want to use Aave Polygon or Curve Polygon, you need to get your native Ethereum ERC-20 tokens from Layer 1 (Ethereum) to Layer 2 (Polygon) using the Matic Bridge.
To move your assets from Ethereum to Polygon, you need to wrap them in an ERC-20 equivalent that exists on the Polygon layer. Once you’ve ported your assets over, you can seamlessly use them across any application plugged into Polygon. The more applications and blockchains connect to Polygon, the more you can do once inside.
The Matic Bridge requires a transaction fee paid directly to the Ethereum layer, meaning it’s more expensive and subjective than regular ETH gas fees. However, once you pay this fee and bridge your crypto assets, you’re inside the Polygon layer and can move about cheaply.
The Matic Token
MATIC is the native token within the Polygon ecosystem. It has a few uses, all of which should be familiar to Ethereum users.
- Staking — MATIC is used to stake on the Polygon Network. Staking MATIC decentralizes/secures the network and earns around 18% staking APY.
- Governance — MATIC stakers and delegators are entitled to participate in governance matters that decide the network’s direction.
- Tx fees — Once inside the Polygon layer, transaction fees are paid in MATIC instead of ETH. Fees are so minimal that Polygon gives you free MATIC to pay them.
Conclusion
Polygon is the first Ethereum scaling solution gaining real-world traction. Billions of dollars’ worth of crypto have been bridged into Polygon via some of the biggest names in DeFi, making Polygon a competitor blockchain in its own right.
Even more interesting is the way in which Polygon is helping Ethereum fend off other blockchains by making it more appealing. Polygon lessens the financial barrier for developers and users wanting to get started on Ethereum. With Ethereum becoming more useful as a result, the incentive to use other blockchains might ebb.
