What is Polygon cryptocurrency?
Ethereum, as we know, isn’t the fastest blockchain. It’s relatively slow, but very secure. Polygon is what’s referred to as a “layer 2” scaling solution for Ethereum. It enhances Ethereum’s performance, while leveraging its security as a settlement layer.
Polygon is widely used, and at the time of this writing, it’s home to nearly 40,000 dApps. Some of the apps hosted on Polygon are some of the most popular in Web3. A few examples would be OpenSea, Aave and Uniswap. There’s currently over a billion dollars of value locked in decentralized finance applications that are running on the network. This goes to show that Polygon is robust and trusted by depositors.
How Polygon Works To Help Scale Ethereum
The Polygon protocol is built on a layer 2 scaling solution, which allows for faster and cheaper transactions compared to the Ethereum mainnet. This is achieved by using a network of sidechains, called “Polygon chains”, that run in parallel to the Ethereum mainnet. These sidechains are connected to the Ethereum mainnet through a process called “pegging”, which allows for the transfer of assets and information between the mainnet and the sidechains.
When a user wants to make a transaction on the Polygon network, the transaction is first sent to the Ethereum mainnet, where it is verified and then pegged to the corresponding Polygon sidechain. Once the transaction is pegged to the sidechain, it can be validated and processed much faster and cheaper than if it were processed on the Ethereum mainnet.
The Polygon protocol uses a consensus mechanism called “Proof of Stake (PoS) based Plasma” that allows for the validation of transactions on the sidechains. This mechanism is similar to the one used by Ethereum, but it is optimized for high performance and scalability. The Polygon protocol uses a unique architecture called “Polygon PoS”, which allows multiple independent chains to be created on the same infrastructure. Each chain can have its own consensus mechanism, and the validators can earn rewards for securing the network.
What partnerships does Polygon have?
As Ethereum’s top scaling solution, Polygon’s partners are starting to look like a who’s who list corporate A-listers. 2022 was a breakout year for the project, as several top tier partnerships were announced. I expect this list to grow rapidly over the coming months and years, but here’s what we have so far..
- Nike: Nike will be leveraging Polygon for what they’re calling .SWOOSH – which is described as “a web3-enabled platform that champions athletes and serves the future of sport by creating a new, inclusive digital community and experience and a home for Nike virtual creations.” It’s essentially going to be used for NFT’s.
- Starbucks: Starbucks will also be using Polygon for NFT’s as part of what they’re Starbucks Odysee experience.
- Reddit: Reddit released a collection of Polygon based NFT’s featuring unique variations of their company avatar.
- Disney: Polygon was one of the 6 companies that Disney included in their “accelerator” program, which, according to this announcement on their website, is designed to accelerate the growth of innovative companies throughout the world. The selections in 2022 were related to Augmented Reality (AR), Artificial Intelligence (AI) and Non-Fungible Tokens (NFT’s). With such a close tie, look for Disney to utilize Polygon in the near future as I think it’s rather likely at this point.
- Instagram: Meta, Instagram’s parent company, announced that “creators will soon be able to make their own digital collectables and sell them to their fans”. These digital collectables will be NFT’s, and they’ll be created on the Polygon blockchain. Here’s a link their official announcement. As of November 2, 2022 – this is in the testing phase.
- Ebay: In May of 2021, Ebay began allowing the sale of NFT’s on their platform. In 2022, they launched a NFT project of their own in collaboration with a web3 platform called “OneOf”, Sports Illustrated and Wayne Gretzky. The collection consisted of 13 3D digital renderings of Gretzky. The NFT’s were created and hosted on Polygon.
- Stripe: Stripe has announced that they’ll be adding cryptocurrency payments within Stripe Connect. Stripe collect is piloting crypto payments with Twitter. While Twitter doesn’t have many monetization options for creators at the moment, that seems like it may change in the near future with Musk at the helm, as he has stated in an interview that he wanted to create something like WeChat – which is a social media platform combined with a payment network (amongst other things). Stripe will initially support payments in USDC, which will take place over the Polygon network.
- Adobe: Adobe owns a social media network catering to designers called Behance. In early 2022, Adobe announced that they were working on integrating Polygon into the Behance platform. The integration will be for the purpose of allowing creators to display their NFT’s while reducing their transaction fees.
- Robinhood: In September of 2022, financial services company, Robinhood, announced that they were going to utilize Polygon to support their web3 wallet.
- Bentley Motors: Dropped a 208 piece NFT collection on the Polygon network. This was announced on June 2, 2022 – here’s the Tweet.
- Adidas and Prada: These two companies teamed up to drop a NFT collection on Polygon. This was announced in April 2022.
- Mastercard: In January 2023, Mastercard launched an incubator for artists and web3 enthusiasts, and they announced Polygon as a technical partner.
Morgan Stanley predicts that the NFT market will grow to over $300 billion by 2030. As you can see from the partnerships listed above, it’s clear that Polygon is a go-to solution for some of the biggest companies in the world. I’d say this trend is likely go continue.
Who Is Behind Polygon?
The project was originally called MATIC, and it was launched in 2017 by 4 Mumbai-based software engineers. Jaynti Kanani, Sandeep Nailwa, Anurag Arjun, and Mihailo Bjelic are the co-founders of the project.
The Polygon headquarters is now in Dubai, and the team consists of approximately 500 members. During the bear market, Polygon was one of the only blockchain companies who was hiring to increase size of their workforce rather than laying people off, which is clearly a sign of strength.
They’re so confident in the future of the project, in fact, that at the time of this writing, Sandeep Nailwa has a Tweet saying that he “will not sleep until Polygon gets its well deserved “top 3″ spot alongside BTC & ETH”.
Whether or not his prediction will come to fruition is yet to be seen, but if you’re an investor, that’s certainly the kind of belief you want the founder to have in the project.
What is the MATIC token used for?
Polygon uses a modified proof of stake consensus mechanism. This means that you can “stake” your MATIC tokens to help secure the network and earn rewards. The reward rate fluctuates, but at the time of this writing, it’s currently at 6%.
The MATIC token is also used to pay the transaction fees on the Polygon network.
Additionally, if you stake your tokens, you’re eligible to participate in governance – which means you’re able to vote on proposals which effect the network.
Benefits of using Polygon
Polygon effectively serves the functions it was designed for. As mentioned above, it helps Ethereum scale while leveraging its security.
- Polygon allows for faster and cheaper transactions, which makes it a better fit for a variety of applications – particularly gaming and decentralized finance platforms.
- Polygon is scalable, and at the time of this writing, it can handle up to 65,000 transactions per second.
- Polygon has a low barrier to entry, and they’ve made building applications easy for developers via their SDK (software development kit).
- Polygon is interoperable. The sidechains created on Polygon can seamlessly transfer assets and information with the Ethereum mainchain.
Polygon is a strong project with big plans. They have delivered on those plans up until this point, and it seems like a new partnership gets announced on a weekly basis.
I do personally think the project will maintain its momentum for at least the next cycle, and I currently hold a moderate position.