What Is Polygon Blockchain? Your Guide
Originally known as the Matic Network, Polygon was created to scale Ethereum and improve the infrastructure. It is an India-based project aiming to make transactions cheaper and quicker on the Ethereum blockchain.
What Is Polygon?
Polygon is a layer two blockchain, meaning it is able to process crypto transactions more quickly and at a lower cost. Coinbase compares Polygon to an express train. It is on the same track as all other trains but moves faster and makes fewer stops along the way. In this example, the track is Ethereum, where Polygon does a quicker job of fulfilling transactions than the Ethereum blockchain.
The platform uses a proof-of-stake, or POS, consensus to secure the network and create new currency. Polygon has a market cap of $9.2 billion, and there are 9.25 billion polygon (MATIC) coins in circulating supply.
What Is MATIC?
MATIC is Polygon’s native cryptocurrency — when the blockchain changed its name to Polygon, it kept MATIC for its ticker.
The coin serves a few purposes on the Polygon blockchain:
- Governance: Those who hold MATIC can vote on changes to the blockchain.
- Staking: MATIC holders can stake their crypto on the blockchain to earn returns.
- Fees: Polygon network fees are paid with MATIC.
Polygon Tokens in Circulation
The developers release the token every month. The maximum supply of polygon tokens is 10,000,000,000, and 9.25 billion, or about 92%, are in circulation, according to CoinMarketCap. Polygon has burned, or removed from circulation, over 9.6 million MATIC, and as of April 25, another 3.8 million are in the process of being burned.
Sixteen percent of the tokens are team tokens; advisors hold 4%, 12% are network tokens and 23.33% are in the ecosystem. The remaining 21.86% are foundation tokens.
How Much Does Polygon Cost?
As of April 28, polygon’s price is just under $1, according to CoinMarketCap.
How Does Polygon Work?
Anyone who has ever traded on the Ethereum blockchain would be familiar with the high transaction fees and slow fulfillment times on the network. Polygon solves these problems by providing a decentralized platform that facilitates low-cost transactions.
The network describes itself as a layer two scaling solution. Its unique transaction fulfillment technology allows up to 65,000 transactions per second on each side chain. The system uses proof-of-stake checkpoints that could, in the future, allow millions of transactions on the blockchain. In addition, Polygon’s side chains have been designed to support decentralized finance protocols within the Ethereum ecosystem.
The network has about $4 billion in cryptocurrency assets locked into its protocols, according to CoinTelegraph.
Did You Know?
Currently, Polygon only supports Ethereum as the base chain but plans on extending its support to other base chains, according to the community consensus and suggestions.
Framework for Blockchain Networks
In the future, Polygon wants to offer a framework for blockchain networks that would allow users to create interconnecting blockchain networks — an “internet of blockchains,” if you will.
If this comes to pass, developers will have a lot of liberty for network creation. They will be able to develop standalone, flexible and scalable blockchains.
Ethereum Virtual Machine Compatibility
Many developers use the user-friendly Ethereum Virtual Machine to build decentralized apps.
With its EVM compatibility, Polygon makes it easier for developers to create decentralized apps and port them. Developers have deployed many Ethereum apps onto Polygon, including SushiSwap and Aave.
Polygon isn’t the only blockchain aiming to increase the speed and functionality of crypto transactions — projects like Avalance, Polkadot and Solana are significant competitors.
Solana, for example, has many of the same capabilities Polygon has, including non-fungible tokens, smart contracts and decentralized finance applications. While Polygon still has an edge — it’s a layer two blockchain whereas Solana is a layer one, which has disadvantages in terms of speed and cost — Solana is a strong competitor.
Moreover, Ethereum has upgraded its platform. Initially called Ethereum 2.0 and now referred to as The Merge, the upgrade transitioned Ethereum from a proof-of-work chain to a proof-of-stake chain.
Improvements in speed, “gas” prices and scalability, should they result, could eventually lower Polygon’s popularity.
Is Polygon a Safe Investment?
It is imperative to note that cryptocurrencies are volatile investments. You should be comfortable with a dramatic swing in price without going into panic mode.
The Plus Side of Polygon
As for polygon, some might consider it a safe investment while others do not. For instance, Mark Cuban, the cryptocurrency-enthusiast billionaire, invested in polygon.
Another positive sign is that Polygon went on a hiring spree amid a cryptocurrency bear market that had many companies, including Coinbase and BlockFi, which since has filed for bankruptcy, laying off staff. A slew of high-profile partnerships could be part of the reason. The Draft Kings, Dolce & Gabbana, Macy’s, Adidas, Prada, Stripe, Adobe and Meta — in addition to the NFL — all have launched projects on Polygon.
All told, more than 37,000 decentralized apps had been built on Polygon by August 2022. The sheer volume of dApps it supports should keep the platform relevant for a long time to come.
Negatives Associated With Polygon
The downside of Polygon is its attachment to Ethereum. The network is not only competing with other currencies but also with Ethereum itself, which it also depends on.
Polygon developers argue with this, saying their network will remain relevant despite The Merge because Polygon offers speedier transactions and allows Ethereum’s communication with other networks.
However, another programmable blockchain might take Ethereum’s spot in the future, sending Polygon down with it.
Is Polygon a Good Long-Term Investment?
Polygon is just as volatile as you would expect any other cryptocurrency to be. Its developers might have bigger plans for the future, but there is no way to ensure that other blockchain networks or Ethereum itself would not cause a decline in the coin’s popularity and worth. Besides that, the coin has been unable to sustain its brief rallies so far this year, which means the price might still be falling.
If you want to invest in Polygon, make sure you follow the golden rule of investment by not putting in more than you can afford to lose.
FAQHere are the answers to some common questions about Polygon.
- What blockchain is polygon on?
- Polygon crypto, or MATIC, is the native currency of the Polygon blockchain.
- Is polygon a good crypto?
- Polygon could be a good addition to your portfolio. As a solution to Ethereum's slow speed and high fees, it has served its purpose well so far, and it has partnered with several major brands.
- However, it is reliant on Ethereum – if Ethereum remains strong but doesn't manage to solve its speed and cost issues, Polygon is likely to also remain competitive. But if Ethereum fails, so will Polygon.
- How big is Polygon blockchain?
- Polygon has a circulating supply of nearly 9.25 billion coins and a 24-hour volume of over $442 million. It currently ranks No. 9 in terms of market cap, according to CoinMarketCap.
Daria Uhlig contributed to the reporting for this article.
Information is accurate as of April 28, 2023.
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