It is likely that you’ve heard about Web 3.0 and are aware that the internet is on its way to a new decentralized revolution.
Decentralized apps, or Apps, have a great opportunity to grow in the next few years in this environment. It’s an industry that has already seen tremendous growth in recent years, particularly in 2021, when new use cases like DeFi, NFT, Metaverse, and Gaming have begun to break through to the general public. In addition, the number of users and the amount of money they have locked up on the networks has risen sharply. Ethereum, as the market leader, has more weight than all of its competitors combined, and it appears to be unstoppable.
Ethereum, however, has a major challenge to address, namely the issue of scalability.
The Ethereum blockchain’s capacity does not allow for a high volume of transactions to be processed per second. Networks get overloaded when more decentralized apps try to trade concurrently. Transaction costs, which rise and fall in line with demand, are becoming increasingly expensive, and a single transaction may now cost upwards of $100.
Although various improvements to Ethereum are planned in the next few years, including the transition to Proof of Stake and the deployment of Sharding technology, these changes will help enhance Ethereum’s capacity, but it will not be adequate to operate decentralized apps that would be utilized by millions, even hundreds of millions of users in the future.
In 2020 and 2021, more blockchains, including Solana, Binance Smart Chain, and Avalanche, were launched. To increase the number of transactions per second, they’ve come up with a number of alternative methods, but they have often come at the sacrifice of network decentralization and security.
However, even if these new blockchains can handle up to 100,000 transactions per second, this is not sufficient for large-scale applications. These Blockchains will eventually become overburdened due to an increase in demand.
So, the crypto community has come to recognize that there is likely to be a need to discover a different mechanism for scaling blockchains in the future. It’s at this point that the modular approach and Layer 2 blockchains like Polygon come in handy.
Polygon, previously Matic, emerged as one of the most promising digital assets in 2021. Many Redditors believe that MATIC is a fantastic cryptocurrency that has the potential to develop much further in the future. There have also been several major partnerships with significant corporations, both in the cryptocurrency industry and outside of it. For the most part, Ethereum proponents have their eyes on Polygon. But why?
Before we delve deeper, we must first take a look into why Polygon (Matic) is making headlines. And that’s not because some big celebrity is talking about it, but purely because of its revolutionary use case.
What is a Layer 2 blockchain?
A layer 2 framework or protocol is one that is developed on top of an existing blockchain system. One of these protocols’ key objectives is for major cryptocurrency networks to overcome the problem of transaction speed and scaling issues.
In a broader sense, layer 2 protocols establish a secondary framework in which blockchain transactions and operations can take place independent of the layer 1 framework (main chain). Because of this, these approaches may also be referred to as “off-chain” scaling solutions.
Using this novel sidechain architecture, Polygon was created to address some of Ethereum’s drawbacks, such as low throughput and bad user experience (slow transactions and high speeds).
The Polygon System employs Plasma to process transactions off-chain before executing them on the Ethereum main chain. With this foundation at its core, Polygon is designed to be a full framework for creating interoperable blockchains. Much more than just a layer 2 solution. But that part is for another article.
By using Polygon, programmers may create pre-configured blockchain networks that have their own unique properties. The increasing number of modules makes it possible for developers to create their own blockchains with specialized functions. These can be further modified if desired.
By now, you might be getting an idea about why everyone is talking about Polygon. It had emerged at a time when the industry was desperately seeking a solution to the scaling woes, and it was the answer. As such, it did not take Polygon much time to get to the limelight.
Polygon’s design is best described as a four-tier system comprising the Ethereum, security, Polygon networks layers, and execution layers.
The Ethereum layer is simply a collection of Ethereum’s smart contracts that have been generated on the network. Smart contracts allow Ethereum and various Polygon chains to process transactions, stake, and interact with each other in a secure and efficient manner. Chains may benefit from an additional layer of security by utilizing “validators as a service.” with the security layer. It is not necessary to use Ethereum or Security in any way.
Following that, there are two mandatory layers. All additional blockchain networks created on top of Polygon are constructed on top of the Polygon networks layer. Individually, they each have their own community and are responsible for the generation of blocks and the establishment of a local consensus. The execution of a smart contract is handled by Polygon’s version of the Ethereum Virtual Machine, called the Execution Layer.
Chains built on Polygon can interact with one another as well as with the Ethereum main chain. Polygon’s message-passing capabilities enable this. This would enable a host of new use-cases, such as interoperable decentralized applications (dapps) and easy wealth transfers between platforms.
Some believe Polygon will be an important part of an ecosystem that will allow for a future when numerous blockchains work together to create a bigger, interconnected network.
Over time, it hopes to contribute toward the creation of a society free of borders in which customers may access decentralized goods and services directly, without having to go through intermediaries or gated communities first. It aims to be a hub where different blockchains may easily plugin while also solving some of their individual shortcomings, such as exorbitant fees, poor scalability, and inadequate security.
There are a number of technologies at work here, including the following ones:
POS Chain: Polygon’s primary chain is actually an Ethereum sidechain. This provides Polygon-based blockchains with a proof-of-stake (POS) based security layer.
Plasma Chains: Polygon uses a scaling method called Plasma to exchange assets between the root and child chains via Plasma bridges.
ZK-rollups: This is an alternate scaling mechanism that employs zero-knowledge proofs for the main public record on the Ethereum main chain to combine several off-chain transactions into a single transaction.
Optimistic rollups: This is a blockchain-based solution that allows for near-instant transactions using “fraud proofs.”
According to what you may have seen, Polygon intends to incorporate many scaling options in order to keep transaction costs to a minimum in order to minimize barriers to entry. A variety of scaling options is being used by Polygon as a kind of risk mitigation in the event that any one of them fails to meet its objectives.
Polygon has built one of the most popular blockchain networks in the world. The Satoshi standard’s vision of total and pure decentralization is reflected in this project. It accomplishes this by deploying validators all across the globe, many of whom are security specialists whose job is to monitor and improve the network’s security and robustness. Due to its dynamic nature, Polygon is capable of virtually instantaneous updates.
Because of how it works, teams can quickly import their apps using Polygon’s SDK and make them ready for usage across Ethereum for a fraction of the cost of utilizing Ethereum directly. Because of this, Polygon has been picked by some of the most popular protocols. Among these are SushiSwap, Aave, Gains, and many more.
Polygon’s adaptability to developer demands has aided it in becoming a market standard. Growth in the crypto-currency market and congestion on Ethereum should encourage developers to continue building on top of Polygon. For now, it is a good option for Ethereum users looking for a solution to transact more quickly and cheaply.
In the words of Polygon:
“We envision an open, borderless world. A world in which people and machines collaborate and exchange value globally and freely, without gatekeepers or intermediaries. A world in which communities thrive, unconstrained by artificial borders and archaic regulations. We will strive to empower everyone to effortlessly join this new, better world.”
Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn’t represent any investment advice or WazirX’s official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.