Ethereum problems
During its existence, Ethereum has proven itself as a reliable blockchain and an alternative to the first cryptocurrency. Thanks to this network, users received smart contracts, decentralized applications (dApps), exchanges (DEX) and much more. However, Ethereum has faced some problems over time.
- high commissions. Due to poor scalability and resulting frequent network congestion, Ethereum gas fees are among the highest in the industry. This makes it expensive for users to execute transactions or deploy smart contracts. In addition, it can become a barrier for new users with limited funds, which reduces the accessibility of this blockchain;
- low throughput. At the time of writing, it is around 15 transactions per second, which limits scalability and leads to congestion. This limitation is related to the block size and block time, which are designed to maintain the security and decentralization of the network at the cost of speed;
- security risks . Writing secure smart contracts on Ethereum can be a daunting task. Even small coding errors can lead to vulnerabilities;
- complexity of development. The Solidity programming language can be difficult for new developers to learn.
Existing scaling solutions
Various solutions have appeared to solve these problems:
- sidechains are independent blockchains with their own consensus mechanism. The main principle of their work is to block assets in the main chain and release wrapped assets in theirs. Sidechains can also be used to develop new features or capabilities that are not yet available on the main network;
- plasma chains are small copies of the main network. These are as separate blockchains as sidechains, but they rely on the security of the Ethereum network. This makes them less vulnerable to hacker attacks, but at the same time their operation depends on the main network;
- state channels are another Ethereum scaling solution. The way it works is that both parties to a transaction block assets on the main network to create a payment channel and conduct off-chain transactions. To make a transfer, you only need to provide evidence of several off-chain transactions to a special smart contract that verifies the validity of all data;
- rollups are a technology for scaling and improving blockchain performance, which is used in second-layer networks by executing and processing transactions outside the main network. The data is processed outside the blockchain, after which it is grouped and transmitted in “packets” to the main network for fixation.
There are two types of this solution: Optimistic Rollups and Zk-Rollups . The former uses fraud proofs to validate off-net transactions, while Zk-Rollups is based on a Zero-Knowledge Proof protocol, whereby transactions are verified confidentially within the main network.
Although these technologies have their advantages, they represent disparate systems of local solutions that solve narrow problems and are not capable of creating a full-fledged ecosystem. One example of a project that solves this is Polygon.
What is Polygon and how did it come about?
Polygon is a second-tier blockchain for scaling and evolving the Ethereum infrastructure. The project provides tools and an environment for creating decentralized applications with increased speed and reduced transaction costs.
The network was created in 2017 by three Indian developers Sandeep Nailwal, Jayanthi Kanani and Anurag Arjun (they were later joined by the fourth – Mykhailo Belich). Their goal was to solve Ethereum’s scaling problem. They created the Matic project, which was later renamed Polygon.
In April 2019, Matic raised $5.6 million through an initial coin offering. First, the team developed the so-called Plasma, a second-level scaling solution that runs on the Ethereum mainnet. However, due to technical problems, the project team focused on creating a separate PoS (Proof-of-Stake) blockchain.
What problems does the Polygon blockchain solve?
Polygon’s goal is to create an ecosystem where any Ethereum scaling solution can be used. Polygon is focused on increasing the use of DeFi tools and decentralized applications (dApps) by integrating different blockchains. At the time of writing, more than 50,000 dApps are already working on the platform .
Polygon uses various L2 solutions to create a fast parallel blockchain and connect it to the main network. Some of these solutions include plasma chains, sidechains, and rollups, which provide a framework for building dApps and conducting transactions outside of the main Ethereum network. Compatibility with the Ethereum virtual machine allows Ethereum-based dApps to transfer their smart contracts to the Polygon network.
The Polygon ecosystem consists of two main blockchain networks:
- Polygon PoS is the most widely used L2 scaling solution for the Ethereum network. To improve scalability, Polygon PoS uses a “plasma” structure to create a sidechain that runs parallel to the Ethereum network;
- Polygon zkEVM is an EVM-equivalent L2 scaling solution that uses Zk-Rollups to merge transactions off-chain only to later batch verify them on the Ethereum network.
The polygon consists of four different layers, each of which performs a specific function:
- The Ethereum layer uses Ethereum security protocols to execute any critical components using a set of smart contracts.
- The security level provides the ability to verify transaction data in Polygon networks and manages validators. Security layers can be deployed in multiple iterations on the Ethereum blockchain as well.
- The networks layer is responsible for the block production and local consensus of each Polygon blockchain.
- The execution layer interprets and executes the agreed transactions included in the Polygon network chains. The two sub-layers consist of the virtual machine implementation environment and the transaction logic function of a specific Polygon network.
MATIC cryptocurrency — what is it for?
MATIC, the native cryptocurrency of the Polygon network, operates primarily as a unit of exchange on the Polygon PoS sidechain. It should be noted that the MATIC offering is limited to 10 billion tokens.
The coin has two main roles: first, it is used to cover transaction fees on the PoS chain, and second, it acts as a governance token for both the Polygon PoS sidechain and zkEVM. MATIC holders have the opportunity to contribute the asset to staking.
In addition, the token can also be used for management. This gives MATIC owners the ability to influence and vote on Polygon’s development. MATIC is an ERC-20 token. This means that it meets clear technical standards and exists as a digital asset created on the Ethereum blockchain.
Users can deposit a minimum of 1 MATIC to earn interest. But most people delegate this process to validators, who can take a small share, usually 1% to 10% of your staking reward, as a commission.
What products are part of the Polygon ecosystem?
In addition to the Polygon PoS and Polygon zkEVM networks, the following products form the basis of the platform ecosystem:
- Polygon Nightfall is a hybrid scalability and privacy solution that combines Optimistic Rollups and Zk-Rollups. It is designed to ensure transaction privacy by hiding transaction details from third parties.
- Polygon Miden is a modular execution layer that extends the capabilities of Ethereum with parallel transaction execution and client-side validation features. With Miden, developers can build new, high-performance, privacy-preserving DeFi applications using programming languages such as Rust and TypeScript.
- Polygon Wallet Suite is a platform that allows users to securely and efficiently exchange, transfer and manage all their digital assets in one place, regardless of where they are stored. The product was developed with community participation with the ultimate goal of bringing the benefits and incentives of blockchain technology to the Web3 community with minimal hassle.
- The Polygon Chain Development Kit (CDK) is a modular, open-source toolkit that allows blockchain developers to launch new zero-knowledge proof-of-concept L2 chains on Ethereum. All networks deployed with the Polygon CDK are interoperable, with automatic access to the pooled liquidity of all Polygon chains and access to all Ethereum liquidity.
- Polygon ID’s decentralized identification system allows users to store and manage their personal data. Supports integration with various decentralized applications and services that require identity verification.
- Polygon Avail is a data storage solution that ensures data availability and integrity for dApps. It supports various usage scenarios, including scaling and data management, and provides reliable data storage and fast access to both developers and users.
How blockchain is developing and what awaits it in the future
Polygon’s list of partners is growing rapidly, including well-known companies such as Ocean, Chainlink, Coinbase and many others. This indicates significant support and trust from major market players. Many investors believe that Polygon’s potential has not yet been fully appreciated.
Compared to the competition, Polygon stands out as one of the most promising tier two solutions. It shows significant potential for successful scaling of Ethereum. Polygon provides the ability to support decentralization while scaling without compromising security, making its role in the development of the blockchain ecosystem very important.
In the future, the Polygon team will likely continue to expand its ecosystem. With the increasing number of decentralized applications and tools running on the platform, Polygon has the potential to become one of the leading Ethereum expansion platforms in the industry.
Conclusion
Polygon is an important solution to Ethereum’s scalability problem, offering different methods to develop its infrastructure. Thanks to its technologies and partnerships, the project has significant potential for further growth and development.
While there are many competitors in the market, Polygon continues to stand out due to its ability to effectively solve existing blockchain problems. The future of this platform looks promising, and it has every chance to become one of the leading ecosystems for creating decentralized applications and tools based on Ethereum.
