Ethereum is one of the most popular blockchain platforms and is responsible for creating an open economy by providing cryptocurrency and a platform to develop dApps (decentralized applications). However, it faces four significant challenges.
Low Throughput: Ethereum can only handle 15 transactions per second (TPS). However, this number is expected to increase with the upgrade to Ethereum 2.0. Many alternatives like Cardano, Polkadot, and Solana can handle significantly more transactions. For example, Cardano can process around 250 transactions per second, Polkadot can process up to 1,000 transactions per second, and Solana can process up to 65,000 transactions per second.
High Gas Fee: Gas is a fee paid to miners who provide the computing power to run the network. The gas fees vary depending on demand, and the higher the demand, the higher the gas fees.
Network Congestion: During times of high computational demand, Ethereum’s inefficiencies cause network congestion in the communication between nodes, slowing down the execution of smart contracts.
Disk Space Usage: As the size of the Ethereum network increases, it becomes more difficult to run a node due to the history of the Ethereum blockchain taking up more disk space.
Three Indian developers, Jaynti Kanani, Anurag Arjun, and Sandeep Nailwal, found a solution to many of Ethereum’s limitations, such as transaction speed, low throughput, and high gas fees led to the creation of the Polygon Network (formerly Matic Network).
How Does Polygon Work?
Polygon is an Ethereum Layer 2 sidechain designed to solve Ethereum’s scalability problems. The network uses a Commit chain and a Plasma Layer 2 scaling solution to process blockchain transactions off-chain before finalizing on the Ethereum main chain. The Polygon chain can process up to 65,000 transactions per second (TPS). Plasma is a framework for building scalable dApps that offloads transactions from the Layer 1 main chain to the Layer 2 child chains for faster and cheaper transactions and thus throughput.
Polygon’s Proof of Stake (PoS) blockchain works alongside Ethereum as a sidechain. The core component of Polygon is a modular and flexible framework (Polygon Software Development Kit) that allows developers to build scalable and user-friendly dApps (decentralized applications) without compromising security.
The Polygon PoS Chain operates on a Proof of Stake (PoS) mechanism, relying on validators to verify and validate transactions instead of depending on the classic Proof of Work (PoW). You can earn MATIC by becoming a validator or delegator and participate in the network by contributing computing resources and validating transactions.
Validator: You can run a full node to validate transactions on the blockchain, and you receive a cut of fees in MATIC. However, your MATIC rewards will be slashed as punishment if you act maliciously.
Validator Rewards = Staking Rewards + Transaction Fees.
Delegator: MATIC holders who do not want to run their own node can delegate their tokens to validators. Delegation increases the power of validators, and validators can charge a commission in exchange for running a node.
The vision of Polygon is to transform Ethereum into a multi-chain ecosystem by creating an ecosystem of interoperable Ethereum compatible blockchain that can interact effectively with Ethereum’s main chain. Polygon’s other Layer 2 solutions include Optimistic Rollups, ZK (Zero-Knowledge) Rollups, Standalone Sidechains, Enterprise Chains, Shared Security Chains, and Interchain Communication Protocols.
MATIC is an ERC20 token that powers the Polygon network and can be used to pay gas fees, participate in staking, governance, and more. The MATIC token was first launched in 2019, two years after the Polygon network went live, through an Initial Exchange Offering (IEO) hosted on cryptocurrency exchange Binance.
According to CoinMarketCap, 7.96 billion MATIC tokens are in circulation with a maximum supply of 10 billion. The MATIC token supply distribution is as follows:
- Ecosystem: 23%
- Foundation: 22%
- Launchpad Sale: 19%
- Team: 16%
- Network Operations: 12%
- Advisors: 4%
- Private Sale: 4%
Polygon Bridge
Polygon’s PoS chain is Ethereum Virtual Machine (EVM) compatible, allowing Ethereum-based dApps to migrate their smart contracts to the Polygon network. Most importantly, you can transfer funds to and from the Ethereum network and the Polygon PoS chain through the Polygon Bridge.
Let’s say you want to transfer funds from the Ethereum network to the Polygon network. In this case, you need to use a PoS bridge, a set of smart contracts that help you move your assets from the Ethereum mainnet to the Polygon sidechain.
Polygon Scaling Solutions
Polygon is a major driver of ZK expansion in Ethereum and has even committed $1 billion to its ZK-related efforts. Polygon has taken significant steps toward ZK scaling, including Polygon Hermez, Polygon Miden, Polygon Zero, and Polygon Nightfall.
Polygon Hermez is a decentralized, open-source Ethereum Layer 2 scalability solution based on cryptographic zero-knowledge (zk) proofs that offer scalability and low fees with all the security of a Layer 1. The Zero Knowledge SNARK-based architecture delivers up to 2,000 TPS (transactions per second) while keeping costs under 300,000 gas.
Polygon Nightfall combines Zero-Knowledge (zk) cryptography with Optimistic Rollups to enable large-scale private transfers and payments. It supports transfers of ERC712, ERC20, and ERC1155 tokens while keeping the contents of what is transferred remain private. Polygon Nightfall is a privacy-focused rollup that can handle up to 105 TPS (transactions per second) with costs of about 9,000 gas per transaction.
Polygon Miden is a STARK (Scalable Transparent ARguments of Knowledge) based zk rollup scaling solution for Ethereum. Miden leverages zkSTARK technology to rollup thousands of Layer 2 transactions into a single Ethereum transaction, increasing throughput while maintaining the same level of security as Ethereum.
Polygon Zero is a Layer 2 scaling solution for Ethereum powered by Plonky2 that supports efficient recursive proof generation, allowing Polygon Zero to scale horizontally.
Polygon Avail is a commonly available data layer that records transactions on the blockchain and proves that the data is available.
Polygon Edge allows you to build and run your own public or private Ethereum-compatible blockchain network with customizable features.
Polygon is the only scalable solution that fully supports the Ethereum Virtual Machine (EVM), making Polygon accessible and intuitive for use by the Ethereum community. As a result, dApps built into the Polygon network will benefit from Ethereum’s network effects without compromising security. The flexibility of the Polygon network enables developers to build interoperable dApps that can benefit from multiple interconnected blockchains. Many DeFi protocols have switched to Polygon’s Ethereum sidechain to avoid the high gas fees on Ethereum.
