I'm sharing my full review of one of the largest crypto ecosystems, the Polygon Network. Ethereum scalability is one of the most pressing needs for the entire crypto space, and so far, Polygon has established itself as an early leader in getting the job done. But will they stay at the top, or are they going to get lapped by their competitors?So far, in my ecosystem highlight series, I've covered other Layer 2 projects like Arbitrum and zkSync. And, of course, I couldn't leave out the Polygon Network. This is one of the oldest and most popular Layer 2 solutions for enterprise adoption. If you want to check out.where I'll highlight what makes each one special in the overall scalability wars.
Polygon History
Polygon, formerly known as Matic Network, has become a popular project in the crypto space. Its journey began with founders JT Kanani, Sandeep Nailwal, and Anurag Arjun, who established the company in 2017. However, the main figure representing Polygon today is its founder, Sandeep. He serves as the spokesperson for the Polygon Network, akin to figures like Charles Hoskinson and Gavin Wood for other blockchain projects. The company behind Polygon is now known as Polygon Labs and is based in California. It boasts approximately 600 employees, primarily located in India and the United States.
You might be curious about why the Polygon token bears the symbol MATIC. Originally, the network was called the Matic Network, and it functioned as a standalone sidechain with its own validators and consensus mechanism, rather than being an Ethereum Layer 2 solution. In February 2021, they rebranded from Matic to Polygon and expanded their vision to encompass a full suite of Layer 2 scaling solutions for Ethereum.
Polygon's early funding rounds were quite small but incredibly lucrative. The project's early days relied heavily on the token being launched on the Binance Launchpad in April 2019. This launchpad ICO was a massive success, with 19% of the total token supply sold to everyday investors at an astonishingly low price of 0.263 cents per Matic token. As a result, those who invested in Matic through the Binance Launchpad in 2019 saw over 1,000x returns by the peak of the 2021 bull market.
When it comes to securing large VC funding, Polygon attracted significant investments in 2022. They raised $450 million in a private sale of their Matic token, with key investors including Sequoia Capital India, SoftBank, Galaxy Digital, and even Shark Tank's Kevin O'Leary. Notably, Polygon managed to sell most of its Matic tokens to these prominent VC investors during the bull market's peak.
Original Polygon Network
Polygon Network's approach to Ethereum scalability differs from other solutions. While many scaling solutions focus on building a single Layer 2 network, Polygon positions itself as a pluggable framework comprising several Layer 2 solutions. Users, whether public, DeFi enthusiasts, or enterprises, can choose from various options based on their specific needs. Polygon serves as the front-end portal for accessing Ethereum.
Polygon's first product is its proof-of-stake (POS) sidechain, the Matic Network. Launched in 2019, it still serves as the primary network that most users choose when using Polygon. It's important to clarify that Polygon POS is a Layer 1 blockchain running in parallel with Ethereum, with its validator set and consensus mechanism. Currently, it has 100 validators, but this centralized model has some implications, as we'll discuss later.
While the Polygon POS sidechain can theoretically handle up to 7,000 transactions per second, it currently operates at around 33 transactions per second. The transaction finality on Polygon may take one to two minutes, which is noticeably longer than competing networks like Arbitrum or Binance Smart Chain (BSC).
One notable advantage of Polygon's POS sidechain is its low transaction costs. For instance, Uniswap trades on Polygon cost less than one cent in gas fees, making it an economical option for users.
While the Polygon POS network has been the primary choice for users, Polygon has introduced more powerful scaling solutions under its brand. The most significant is the Polygon ZK EVM, launched in March 2023. This ZK roll-up solution fully supports the Ethereum Virtual Machine (EVM). ZK Roll-ups are considered a promising scaling solution for Ethereum, with Polygon's ZK EVM providing a seamless experience and developer environment compatible with Ethereum's mainnet.
Polygon ZK EVM and other ZK roll-ups offer improved security guarantees compared to optimistic roll-ups. Optimistic roll-ups assume the legitimacy of transaction batches, while ZK roll-ups provide cryptographic validation, ensuring security and authenticity.
Polygon transitioned from a legacy sidechain to a leading ZK roll-up layer 2 thanks to the acquisition of teams such as Hermes Network, development of Polygon Maiden, and the acquisition of Mirror Protocol. These moves enabled Polygon to offer a full suite of ZK scaling solutions, enhancing security and usability.
In addition to the ZK EVM, Polygon also offers Polygon on ID, which links wallets to user identities with zero-knowledge proofs for secure verification. Polygon Supernets allow enterprises to run their child blockchains under the Polygon Network, offering solutions for various use cases.
Polygon News and Updates
Polygon Network's partnership with Reddit, where they airdropped Polygon-based collectible avatars, was well-received among Reddit users. Starbucks also announced plans to offer an NFT-based loyalty program using Polygon's blockchain. In a partnership with the Indian police force, Polygon's blockchain was used to record complaints as part of an effort to combat corruption.
In November 2022, Nike launched their Swoosh Web3 platform with Polygon NFTs. This platform was set to launch in April 2023. Polygon partnered with The Graph to bring web3 indexing services to the blockchain, demonstrating their versatility from enterprise adoption to DeFi integration.
Two NFT-related partnerships occurred in January 2023, with wearable and Fractal, both NFT marketplaces announcing their support for Polygon. Notably, by February 2023, OpenSea reported that Polygon's NFT sales had surpassed Ethereum's for the second consecutive month, reflecting its growing popularity for more affordable, retail-friendly NFTs.
While Polygon may not stand out significantly in the crypto DeFi crowd compared to Arbitrum or BSC, it excels in enterprise adoption. Partnerships with Reddit, Starbucks, and Nike demonstrate custom integrations that hide the complexities of crypto wallets from users. This approach aims for mass adoption, with many users unaware they are interacting with NFTs. Polygon's active wallet and transaction counts have consistently increased, and they've added millions of new addresses, reaching a total of 170 million unique addresses. Polygon's diverse scaling solutions and business development capabilities position them as a versatile blockchain in the crypto space.