Matic Research
Matic Research
Polygon (MATIC) was formerly known as the Matic Network before rebranding. MATIC is the native
cryptocurrency token that powers Polygon, and the project itself was originally founded in 2017 by Jaynti
Kanani, Sandeep Nailwal, Anurag Arjun, and Mihailo Bjelic.
The Polygon network is developed to essentially be a solution to issues surrounding the Ethereum blockchain,
specifically the Ethereum gas fee issue, which includes its high transaction fees and overall network congestion,
while still maintaining the network’s security. The project aims to incentivize the mass adoption of
cryptocurrencies by solving many of the scalability issues found within many blockchain networks.
However, the Polygon network is unique in the sense that it offers a second-level solution(Layer 2), which
means that instead of conducting transactions within the Ethereum network, Polygon processes them first.
Keep in mind that Polygon is not a separate blockchain network but fills the role of an add-on as it operates on
top of the Ethereum blockchain, which allows users to access its functionality. This results in the network being
able to achieve a speed of 7,200 transactions per second (TPS), which is a tremendous jump when compared to
the 15 TPS achieved by the Ethereum blockchain when used directly.
To power all of this, Polygon leverages what is known as the MATIC token. This is an ERC-20 token that is
based on the Ethereum blockchain, which in other words means that it can be stored within an Ethereum wallet
with ease.
The token can be used as a means for paying for the services offered by the Polygon network as well as for the
settlements between users that work on the Polygon platform. Also, the MATIC token is also used for the
process of governance, for staking, and for the gas fees which occur on the network.
To address all of the issues which have been a limiting factor of Ethereum’s global adoption, Polygon utilizes
what is known as Proof-of-Stake (PoS) checkpoints which are built on Ethereum’s main chain, and More Viable
Plasma, which is a variant of the Plasma Protocol. Polygon supports two types of chains, the standalone chains,
ones that are self-sovereign on the Matic PoS chain and compatible with Ethereum, and the secured chains,
which have a high level of security through professional validators.
The scaling solutions which Polygon offers Ethereum include Polygon Plasma, which is a layer-2 solution that
developers can build decentralized applications (dApps) on top, as well as ZK Rollups. It is the layer-2 solution
that also implements zero-knowledge proof and executes transactions off-chain whilst only submitting proof-of-
validity to the main chain.
Another solution that it implements is called Optimistic Rollups, which is built on top of fraud proofs, executes
the transactions off-chain, and only submits proof-of-fraud to the main blockchain whenever an invalid block
gets discovered. Then there are the Validum Chains, which are similar to ZK rollups except that the data validity
is kept off-chain.
Sidechains are a Layer 2 solution utilizing separate blockchains that run in parallel to the Ethereum main chain
but operate independently, hence increasing its scalability.
Polygon is the most popular sidechain that aims to scale Ethereum by building and connecting Ethereum-
compatible blockchain networks. Polygon operates on its own consensus mechanism and also has its own native
token known as $MATIC.
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Because sidechains run on a separate blockchain, they do not inherit the security of Layer 1. If a sidechain is
hacked or compromised, the damage will be contained within that chain and will not affect the main chain.
Conversely, should the main chain become compromised, the sidechain can still operate.
Sidechains also provide room for a lot of flexibility, allowing developers to experiment with new features or
software updates before pushing them onto the main chain.
Polygon's mission is to create a plasma-influenced Layer 2 scaling solution to "enable throughput capable of
meeting the transaction demand for mass adoption of dApps". Polygon is unique both in terms of its technical
approach towards Layer 2 as well as its potential support for variety of use cases.
Polygon's Layer 2 is an account-based variant of MoreVP (More Viable Plasma). The Plasma
framework is used to guarantee the security of assets on the main chain (such as ERC-20 and ERC-721
tokens for Ethereum), while generic transactions are secured by a Proof-of-Stake network, built on top
of Tendermint. Polygon sidechains are essentially EVM-enabled chains and are conducive to ready
deployment of solidity smart contracts, essentially making it an easy tool for Ethereum Developers to
use it for scaling their dApps/Protocols.
Commercially, Polygon sidechains are structurally effective for supporting many Decentralized Finance
(DeFi) protocols available in the Ethereum ecosystem.
Polygon's core philosophy is to enable dApps to compete with the user experience that is offered by
centralized apps today.
Ethereum is the first basechain Polygon supports, but Polygon intends to offer support for additional
basechains, based on community suggestions and consensus, to enable an interoperable decentralized
Layer 2 blockchain platform.
Within Polygon, the MATIC token has three key use cases:
Participating in the Proof of Stake consensus: Polygon sidechains enforce consensus using a Proof-
of-Stake (PoS) layer in which network participants stake MATIC tokens to participate as validators.
Paying for the transaction fees in the network: The transaction fees on Polygon sidechains are paid in
MATIC tokens. The more users onboard to use the apps on Polygon, the more the transaction volume
and hence the transaction fees. The MATIC token is also used to pay staking rewards to the POS
stakers
Having taken inspiration from Livepeer and its "protocol funding the ecosystem" model, Polygon
intends to enable a separate staking mechanism for supporting the ecosystem projects. This will help
create a fund out of the "block rewards" that can help support developers working on features and
dApps needed by the network to get a part of block rewards. This mechanism is funded by reserving a
percentage of the transaction fees in-protocol to support the projects building for enhancing Polygon's
Ecosystem.
Fun Fact: Did you that there are over 37k+ dApps on Polygon network? The Web3 applications built on
Polygon offer low fees, high scalability, and hold themselves to highest standard of security.
Fact is Polygon isn’t in competition with Ethereum. If anything, it’s reliant on Ethereum and vice versa.
Polygon’s mission is to leverage the Polygon network in order to create infrastructure that can handle the mass
adoption of Ethereum. Consequently, Polygon is more dependent on Ethereum than Ethereum is on Polygon.
This is expected since Polygon is built on top of its blockchain.
The main disadvantage is that switching to Polygon for speed may dilute the value gained by Ethereum. Value
dilution might actually hinder Ethereum’s direct user growth in certain locations.
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To wit, Polygon improves Ethereum and, thus, more people will use the Ethereum blockchain. With more users
locking their capital in the Ethereum blockchain freely, its value will rise, despite the potential for stealing total
value locked (TVL) away from Ethereum.
At first glance, layer-2 scaling solutions may appear to be complex. In simple terms, layer 1 describes the
underlying base blockchain architecture. Layer 2, on the other hand, lies on top of the underlying blockchain as
an overlaying network.
Layer-2 solutions are external protocols that interact with the base blockchain to increase speed and efficiency.
Moreover, with layer-2 solutions like Polygon, protocols that are already running on top of Ethereum can
become even faster and cheaper.
Ethereum was designed with an auction-based model, thus encouraging users to bid for their transaction to be
included in the next block. Therefore, by design, more network congestion leads to increasingly prohibitive
costs.
Polygon has major ambitions for the future, and they don’t just include speed or transaction costs. The protocol
aims to link all Ethereum Virtual Machine (EVM)-compatible blockchains with each other, allowing developers
to access the benefits of other blockchain platforms with minimal friction.
Ethereum 2.0 will be a major upgrade to the Ethereum blockchain, but it will only provide a limited solution to
the scalability challenge. As more and more decentralized platforms and DApps use on-chain solutions like
Eth2, demand may start to creep up against the limits of scalability.
As mentioned, this results in a buildup of network traffic. Gas fees begin to spike and the network ends up under
the same load conditions as before. This is where Polygon comes in by providing the Ethereum blockchain with
an additional layer of scalability.
Layer 2s like the Polygon network will further improve the experience Eth2 will have to offer. Any Ethereum
upgrade can be made even faster with layer 2. In this manner, Polygon ensures that the end-user receives the
best experience.
Before the recent Ethereum 2.0 upgrade, scalability has been an issue that was long acknowledged by Ethereum
founder Vitalik Buterin as the Trilemma challenge. A solution like Polygon brings some of the benefits of Eth2
to users so that they may take advantage of the increased speed and transparency as well as lower costs, all
without having to wait for the release of Eth2.
Polygon isn’t the only project attempting to speed up Ethereum transactions. Network data for Ethereum shows
that the number of transactions per day is steadily increasing. Layer-2 solutions are the best way to handle this
growing strain on the Ethereum blockchain. It’s worth mentioning that the benefits go beyond simply offloading
transactions.
Several competing layer-2 networks also allow transactions to be processed externally and bridged onto the
main blockchain network. Some of the more notable layer 2 alternatives to Polygon rely on zk-proofs, the two
most notable competitors being Arbitrum and Optimism.
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Polygon has a TVL of roughly $4 billion as at May, 2022. There's no doubt that Polygon has some strong
competitors, and all the Ethereum layer-2 projects have the potential to positively impact the blockchain
environment. But, since Polygon has been investing heavily in different types of zk-proofs, this layer-2 solution
has shown great promise as a powerful solution for Ethereum scalability.
What makes Polygon stand out from its layer 2 competitors? Polygon is the only network that allows its
token, MATIC, to be staked on the Polygon blockchain. Staking allows its users to earn interest annually for
helping validate transactions on the blockchain.
Polygon has solutions for everyday users, developers and enterprises alike. Polygon’s primary objective is to
create an Internet of Things (IoT) for the Ethereum blockchain. The project aims to scale Ethereum to one
billion users without sacrificing decentralization or security.
What sets Polygon apart from other L2 solutions is its approach. Polygon offers developers a stack of solutions
on a single network. This approach grants developers higher levels of control and customization when choosing
a scaling solution best suited to their application.
On Polygon, a developer can choose between zk-rollups or optimistic rollups. They may opt to use Polygon
Avail instead, an extremely secure data availability blockchain for standalone chains, sidechains and off-chain
scaling solutions.
Polygon (MATIC) is a token that truly has the potential to increase in value. To see exactly how and why this
can happen; we will go over the top 5 reasons the Matic Crypto is a solid consideration at its current value point.
1. High potential growth from NFTs demand: The first main reason as to why the MATIC token and
the overall Polygon network have the growth potential is due to the explosion in popularity regarding
Non-Fungible Tokens (NFTS). Specifically, throughout 2021, NFTs saw an explosion of use cases such
as NFTs in the fashion and gaming industry, especially with the rise of the metaverse. However, for
these NFTs to be brought into existence, they need to be minted on a blockchain network.
That said, Polygon is much cheaper to mint NFTs on when compared to Ethereum, and because it is a
much more cost-efficient blockchain network, transacting with NFTs is much cheaper as well.
In other words, a user is more likely to buy or sell NFTs on the Polygon network when compared to the
Ethereum network due to the much cheaper fee. This will, in turn, result in a lot more people minting all
of their NFTs within the Polygon network, which leads to a heightened level of popularity as well as
utility.
2. Many DeFi projects are built on Polygon Network: Being an efficient blockchain platform on top of
which cheap transactions can occur, the Polygon network has been a development haven for many
decentralized application (dApp) developers.
What this essentially means is that Polygon is already home to many DeFi projects. However, this list
will likely expand a lot further throughout the following years as many new developers and projects
jump ship and switch to the Polygon Network.
3. Global Partnership opportunities: Due to its efficiency and utility, we can expect Polygon to conduct
a lot of global partnerships going forward. This is highly likely to occur as Polygons offers a much
higher level of flexibility as well as scalability when compared to just using Ethereum.
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One of the largest partnerships worth mentioning here is Zipmex. This is because the Zipmex NFT
platform in Thailand will be built on Polygon Matic Network, and more such partnerships will likely
come in the future as well.
4. Large Ecosystem: There are currently over 700 dApps developed for the Polygon Networks, which
include some of the most popular DeFi projects with over 470,000 users in some of them. You have
projects such as Sunflower Farmers, QuickSwap, Crazy Defense Heroes, KyberSwap, Pegaxy,
ApeSwap, and others. In addition, there have been a lot of Polygon games developed as well.
5. Extremely Scalable: The Polygon network can currently achieve a speed of 7,200 transactions per
second (TPS), which makes it an extremely scalable network—as a point of comparison, using
Ethereum results in 15 TPS, which means that Polygon offers 47,900% more TPS, making it far more
scalable. This development will affect coin prices, specifically within the Matic Network.
Although Arbitrum, Polygon and Optimism all are aimed at providing better scalability to Ethereum, there are
differences in their ecosystems and level of decentralization, as well as the ways they function, including
consensus mechanisms, speed of transactions, and gas fees.
Before reading a more detailed comparison, you can examine the Polygon vs Arbitrum vs Optimism comparison
table below, which displays the main differences between the platforms.
Ecosystem: Established in 2017, Polygon quickly gained trust among companies of all sizes that started
to build dApps on top of the platform. At present, there are 19,000 dApps built on the Polygon
blockchain, with the most popular ones being QuickSwap, Decentralized games, Dfyn Network,
Pegaxy, and Sorbet Finance.
At the same time, Polygon has seen a significant decrease in the total value locked. At the beginning of
2022, the platform had around $5 billion in TVL whereas in May 2022 it was estimated at about $2,50
billion, meaning that the platform lost more than $2 billion. This decrease is generally explained by the
fact that Polygon’s dApps fell to new lows. For instance, Aave has fallen by more than 31% while
Curve has lost more than 30% of its TVL.
Optimism was established in 2021 and currently has 15 dApps, with the most prominent ones being the
Synthetix ecosystem with $147 million in total value locked and Lyra with $67,43 million in total value
locked.
As for the Arbitrum solution, it was introduced to the market in 2021 and now has 228 live projects,
with the most popular categories being swapping and lending. Some of their interesting projects include
Curve, Cream Finance, and Uniswap.
Consensus algorithm: Polygon leverages the Proof of Stake consensus algorithm, which provides
increased scalability and lower gas fees. To participate in the consensus process, users need to stake
Polygon’s MATIC tokens to indicate their commitment to the process. The bridge relay mechanism is
run by the Polygon PoS validators. At least two-thirds of the validators need to agree on the locked
token event on Ethereum in order to go on and mint the corresponding amount of tokens on the Polygon
blockchain.
Neither Optimism nor Arbitrum have their consensus mechanisms. These Ethereum scaling solutions
take advantage of the consensus mechanism of their parent chain instead of providing their own.
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Token withdrawals: If we compare Arbitrum vs Optimism vs Polygon by their token withdrawal time,
we’ll see that the Polygon blockchain is faster than its competitors.
Withdrawal through the Optimism Gateway is a multi-step process, which may take from 7 days or
more. With Arbitrum, the withdrawals can take 2 weeks, while those on Polygon through the PoS
bridge will be completed in just 3 hours.
Decentralization: In terms of decentralization, Arbitrum and Optimism occupy safer positions since
they are secured by Ethereum’s widely distributed network of miners. In contrast, the Polygon
blockchain is secured by MATIC staking, which is a smaller pool of capital if we compare it to the
miners who are securing the Ethereum platform.
Scalability and transaction fees: Ethereum’s slow speed of transaction and huge gas fees were the key
reasons behind the creation of Ethereum Layer 2 scaling solutions. So how do Arbitrum, Polygon and
Optimism deal with these problems?
Based on the PoS consensus algorithm, Polygon is able to process up to 65,000 transactions per second,
while maintaining low fees. They range between $0,1-0,5.
Arbitrum allows for 40,000 transactions per second, with gas fees ranging between $0,5-0,7 according
to Layer 2 data aggregator L2 Fees.
Optimism has the capacity to process up to 2,000 transactions per second. According to L2 Fees data,
Optimism transaction fees are slightly higher compared to Arbitrum and range from $0,6 to $0,9.
Polygon vs. Optimism vs. Arbitrum. What are the key differences?
Although all three layer-2 scaling projects have a common goal of scaling Ethereum, there are some differences,
as highlighted by the table below.
From a developer’s point of view, all three layer-2 scaling solutions have the same two goals: scaling Ethereum
and lowering gas fees. But for someone wishing to optimize functionality, Polygon seems best fitted as it is
faster than the other two and offers more benefits as it can function as a standalone ecosystem.
In addition, token withdrawal on Polygon takes an estimated 3 hours compared to Optimism and Arbitrum,
which take an estimated one to two weeks due to their fraud-proof mechanisms.
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Tokenomics
Token allocation
Polygon has a max total supply of 10 billion tokens, of which only about 7.5 billion are in circulation right now.
The remaining 2.5 billion tokens are unlocked periodically over the next 4 years.
Polygon held its initial exchange offering (IEO) on Binance using the Binance launch pad in April 2019. They
were able to sell 19% of their tokens at a rate of $.00263/MATIC through this launchpad.
Shortly after this IEO, Polygon held 2 additional funding rounds. The first was a seed round where they sold
2.09% of the total MATIC tokens at a rate of .00079/MATIC. The second was a a token sale dedicated to early
supporters, where 1.71% of MATIC tokens were sold at a rate of $.00233/MATIC.
As I mentioned, the remaining 2.5 billion MATIC tokens that aren’t in circulation yet, will be distributed over
the next 4 years according to the following vesting schedule:
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MATIC at a Glance
Information last updated October 10, 2022
Coin symbol Matic
Current Marketcap $ 6,548,686,560
Fully Diluted Market Cap $7,497,651,166
Total supply 10,000,000,000
Circulating Supply 8,042,124,673
Current price $ 0.7559
All time high date December 27, 2021
ATH Price $2.92 (-74.35% since ATH)
ATL Date May 09, 2019
ATL Price $0.003012
Partners
Here are some of the projects already involved in Polygon Studio, you’ll be surprised at some of the names:
Note: There’s also the fact that Draftkingz will be building out their NFT marketplace on Polygon (Draftkingz
will also become a validator on Polygon, adding to the security of the network). Plus there’s rumor of Coinbase
launching their NFT marketplace on Polygon as well (over 70 million users- pretty much set in stone already).
Dolce & Gabanna, and the Adidas/Prada collab will both take place on Polygon also. I mean you get the point,
a bunch of big brands are already onboarding.
Team
Jaynti Kanani. Co-founder and Chief Executive Officer. Contributor to Web3, Plasma, WalletConnect.
Previously data scientist at Housing.com.
https://www.linkedin.com/in/jdkanani/
Anurag Arjun. Co-founder and Chief Product Officer. Previously AVP (Product Management), IRIS
Business. Stints at SNL Financial, Dexter Consultancy and Cognizant Tech.
https://www.linkedin.com/in/anuragarjun/
Sandeep Nailwal. Co-founder and Chief Operating Officer. Blockchain Programmer and Entrepreneur.
Previously CEO Scopeweaver, CTO (Ecommerce) Welspun Group.
https://www.linkedin.com/in/sandeep-nailwal-60709a33/
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Community
Blog: https://blog.polygon.technology/
Twitter: https://twitter.com/0xPolygon (1.6M followers)
Telegram: https://t.me/polygonofficial (64,140 active community)
Reddit: https://www.reddit.com/r/0xPolygon/
Medium: https://medium.com/matic-network
Github: https://github.com/maticnetwork/
Discord: https://discord.com/invite/XvpHAxZ
Roadmap
MATIC had a roadmap, but it ended in Q1 2020. Since then, the project doesn't have an official roadmap,
especially after its name change in 2021. That isn't unusual for crypto projects. That said, it's not like the team is
leaving users in the dark, though. They run a very active Twitter account, and they have an official Telegram
account just for announcements. The detailed page about their technology is regularly updated with ―coming
soon‖ or ―in development‖ projects. Given their track record and their war chest's size, it's likely Polygon won't
fall short on new developments.
It is unique in the market, in that it's the only scalability solution that supports the Ethereum Virtual Machine
(EVM) and enables connected chains to retain self-sovereign security, while also ensuring interoperability
between both one another and the Ethereum mainchain.
Unlike some other platforms, chains in the Polygon ecosystem system are not forced to leverage its security as a
service layer, but can still pass messages between one another thanks to arbitrary message passing capabilities.
This ensures developers can build truly interoperable decentralized applications that can leverage the unique
properties of multiple chains at scale.
Since building on Polygon is very similar to building on Ethereum, the platform is immediately accessible to the
biggest blockchain development community in the world — who are now able to build highly scalable
applications that can fully benefit from Ethereum’s network effects without giving anything up.
As we previously touched on, Polygon is also unusual in that it features support for a variety of different scaling
mechanisms, which projects can implement at their discretion. This makes it well-positioned should any single
scaling solution become dominant in future, or fail to deliver on its purpose.
Cons of Polygon
Polygon is not the only Ethereum scaling solution out there. It has many layer-2 competitors, including
Arbitrum, Immutable-X, and Loopring (LRC). And if The Merge is successful at lowering transaction fees it
may decrease a layer-2’s value proposition.
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My Thoughts
As you can see, Polygon is growing at an extremely fast pace. The more and more research I did on this project,
the more bullish I became long term. Not financial advice obviously.
That being said, there are some risks involved in investing in Polygon, just like there are in any other project.
Here are a few risks in my opinion, excluding the obvious regulation risk for crypto in general of course:
There’s the vesting schedule: There’s still about 4 more years of token unlocks, in which 2.5 billion
additional tokens will be added into circulation. But then again, Polygon did just burn over 500K tokens
in 2 weeks right?
The other issue I want to bring up relates to validator rewards. At some point Polygon will run out of
tokens to reward validators with. Their bet is that transaction fees alone will be enough to incentivize
validators in the future.
Overall I think Polygon has a bright future, and I do think it will continue to be a big player in the space to
come. I think they’re extremely undervalued given the amount of growth they’ve seen, plus the fact that they
play such an important role in the Ethereum ecosystem is huge.
The essence of this chart is to show readers key zones to look out for to help in buying decisions.
This is the Daily TF of the matic coin and as can be seen, it shows areas of key supports and resistance. Price currently is at
a daily support zone which is a good zone for a buy. However, we are in a strong bearish season and with the current world
economy/looming recession, we may see price further trade down to the weekly support and possibly below.
Both zones are valid buy zones but as a wise investor, DCA is best at this juncture. Patience is key in this game, hence it I
expedient to wait for price to come to you and not chase it. Matic with its utilities to the DeFi, NFT, Metaverse and
Blockchain Tech at large, should print $$$ for investors in the next bull run.
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ACTION TO TAKE:
Disclaimer: Please understand that crypto is risky and you can lose it all in one night. Therefore always
INVEST WITH WHAT YOU CAN AFFORD TO LOOSE. No one is responsible for your financial
management. You are responsible for your financial decisions.
Yours passionately,
CryptoCoach
Twitter handle: @WisdomMatic
Join the community: https://t.co/onr1ZClL83
Compiled by JBofDigiTek
Twitter handle:@DigiTekTrades
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