In this article, we examine Polygon (formerly Matic Network), a Layer-2 scaling solution with payment and lending solutions, atomic swaps, and enhanced dApps and DEXs.
Polygon is a suite of projects designed to scale Ethereum.
In this context, scaling means powering lower gas costs and faster transaction times by connecting Ethereum with other Ethereum-compatible chains.
These connections allow Ethereum to mitigate transaction congestion, and thus improve UX, by offloading network traffic to other chains.
Accordingly, Polygon’s various protocols facilitate Ethereum-centric transactions quickly and affordably, and in doing so alleviate pressure on the Ethereum mainnet.
Using the word “various” is to reiterate that Polygon isn’t a singular project. Rather, it consists of a range of different Ethereum scaling solutions housed under the Polygon umbrella.
The project’s ultimate mission? To provide a one-stop modular scaling framework that dApps can pick and choose from as they see fit.
The history of Polygon
Polygon started out under the “Matic Network” brand in 2017. The team’s mission began as it remains today: to provide Ethereum-centric infrastructure that supports mass adoption.
In the project’s earliest days it developed Matic Plasma Chains, a Plasma-based Ethereum scaling solution. (See our beginner’s guide on scaling solutions for more info on Plasma!). The idea with this L2 is to offload Ethereum transactions to special Plasma “child chains” for cheaper and faster transactions.
The Matic developers next launched the Matic PoS Chain, a proof-of-stake sidechain that commits checkpoints to Ethereum. These checkpoints enhance the sidechain’s security, blurring the popular distinction that sidechains are standalone blockchains. While structurally different from a Plasma L2, the sidechain’s goal is similarly aimed at offering cheaper and faster transactions.
In February 2021, the Matic team rebranded to Polygon. This transition was in line with its new goal to become “Ethereum’s Internet of Blockchains” and support a range of scaling solutions, including rollups.
Understanding the Polygon sidechain
While Polygon continues to work toward becoming an Internet of Blockchains, so far the project’s most popular offering has been its PoS sidechain.
Many people refer to the sidechain as “Polygon” for the sake of simplicity. According to block explorer polygonscan.com, the chain has facilitated nearly 1B transactions at the time of this post’s writing. That’s a considerable amount of activity offloaded from Ethereum!
Notably, this chain is compatible with the Ethereum Virtual Machine (EVM) and supports a considerable amount of Ethereum tooling, making it easy for dapp developers to migrate their applications over.
Polygon stands out from other EVM sidechains because it commits checkpoints to Ethereum. Essentially, this means it saves important information on Ethereum for the sake of improved security. Other EVM sidechains, like Binance Smart Chains, don’t make such commits.
The MATIC token
Zooming in closer, the Polygon sidechain is a PoS system, meaning validators stake MATIC tokens (the name leftover from the Matic Network era) to secure the network and earn MATIC block rewards.
In this way, MATIC is to Polygon what ETH is to Ethereum. Polygon users pay their transaction fees in MATIC rather than ETH.
Today, MATIC is among the top 25 largest cryptocurrencies with a market capitalization of $8.4B. The token currently has a 10B max supply and a ~6.7B circulating supply.
The Polygon Bridge
Ethereum is a blockchain, and the Polygon sidechain is external to Ethereum. To move ETH and other Ethereum-based tokens back and forth between these chains, one must use the Polygon Bridge.
This software bridge is operated by Polygon’s PoS validators. The bridging process entails locking up assets in an Ethereum smart contract, at which point associated assets are minted on Polygon.
To migrate these assets back to Ethereum, they would first be “burned” or destroyed on the Polygon side. This burning, once confirmed, unlocks the locked assets on Ethereum.
Bridge withdrawals can take several hours, though a new wave of cross-chain interoperability protocols like Hop Protocol are making “fast withdrawals” a reality.
Meet Polygon Hermez
Stretching back to its Matic days, Polygon has in-house tech for Plasma and sidechains. But the Ethereum ecosystem’s scaling solutions don’t stop there.
With Polygon’s pivot into offering a range of scaling solutions earlier this year, the project announced it was also looking to eventually provide zk rollups and optimistic rollups.
Simply put, rollups are scaling solutions that execute transactions on their own specialized execution layers and then post their transaction data to Ethereum. They’re among the most powerful and practical resources for facilitating mass crypto adoption in the years ahead.
Accordingly, Polygon announced in August 2021 that its team had agreed to a “public network merge” with the builders of the Hermez Network, a flegling zk rollup implementation.
In practice, this entailed Polygon integrating Hermez into its suite of scaling solutions as its first rollup solution, thereafter named Polygon Hermez. To facilitate that, Polygon created a token swap system for HEZ to MATIC migrations and now funds the Hermez team’s development efforts.
What’s next for Polygon?
For now the name of the game for the protocol is expanding and further developing its “Internet of Blockchains” framework.
The very least we know Polygon is interested in offering rollups plus the whole gamut of Ethereum scaling options.
Additionally, Polygon is preparing for the future of modular blockchains by working on its own bespoke data availability chain, Polygon Avail. The protocol will serve as a “common data availability layer” that many blockchains, sidechains, and L2s can use.