What is Polygon (MATIC) and Is It Profitable?

A layer-2 answer is a blockchain that runs parallel to a mainnet — in Polygon’s case, Ethereum — however approaches transactions outside of the mainnet, ensuing in an improved throughput (transaction velocity) and decrease gasoline charges.

In other words, what layer-2s do is they build a communication channel between the two blockchains and ship the facts package deal (the transaction statistics) from the mainnet to the parallel blockchain to execute the transaction for a fragment of its value and at a much better velocity, all without compromising the Ethereum mainnet.

As we recognize, Ethereum is the go-to environment for most software program builders looking to release their dApps (decentralized programs) because of its significant and secure infrastructure and innovative tooling.

However, the high demand for dApps and the following supply clogged the network, and its throughput has considerably downgraded — it’s now not uncommon to look gas costs rising up to two or 3 digits in USD equivalent, which can be pretty high-priced depending on how plenty you interact with the community, leaving the Ethereum blockchain handiest for the ‘huge gamers.’ You can use Etherscan’s gasoline tracker to check the modern-day gas expenses.

This is why Layer 2 answers have come to be important to the DeFi atmosphere as they decorate Ethereum’s scalability and throughput at the same time as nevertheless profiting from its safety properties.

How Does Polygon Work?

Polygon works further to different Proof of Stake (PoS) protocols in terms of community nodes, governance, staking, and different functionalities.

Proof of Stake Consensus

The platform leverages the Proof of Stake consensus, which relies on a set of node validators to confirm and validate transaction blocks at the network, in place of relying on the traditional Proof of Work (PoW), which consumes an great amount of processing power to create new blocks.

The important distinction is available in that alternatively of having to do the work (computing paintings in PoW algorithms), in PoS, token holders validate and verify transactions.

The PoS ecosystem of Polygon works by way of rewarding users with MATIC, the protocol’s native token. To earn MATIC, you may select one of the following options:

Become a validator and decide to the network by way of jogging a full node to validate transactions on the blockchain. As a node validator, you obtain a cut of expenses and newly created MATIC. However, if you act maliciously, make a mistake, or maybe in case your net connection is slow, your MATIC rewards can be slashed as punishment.

Become a delegator, which is a type of public node. As a delegator, you get hold of other people’s MATIC and use it to help the community conduct PoS validation. The large the delegated stake, the better the delegator’s balloting power. This is less complicated than being a node validator, but it also comes with its challenges.

Polygon Bridge

If you need to switch budget from the Ethereum community to Polygon’s, you need to use the PoS bridge, which is a set of smart contracts that help to behavior belongings from the Ethereum mainnet to the Polygon sidechain.

The PoS bridge is the backbone to switch assets from Ethereum to Polygon after which use these funds to interact with the apps and blockchains at the Polygon environment. You’ll need to pay a transaction rate in ETH, of direction, which can be high priced, but after you’re in the Polygon network, transactions are very reasonably-priced — much less than a greenback.

Polygon Protocol

The Polygon Protocol connects all Polygon-based blockchains with every other and the Ethereum community. It additionally permits chains to tap into Ethereum to inherit its protection model.

Polygon’s Software Development Kit (SDK)

In May 2021, Polygon announced the Polygon Software Development Kit (SDK), a set of plug-and-play software gear that permits developers to release their own fully customizable blockchains and DeFi apps.

The primary idea is to make Ethereum a totally-fledged multi-chain device, which it already is, but the present day barriers and the lack of shape at the Ethereum atmosphere makes it more difficult for builders to paintings on their initiatives.

Polygon goals to give the environment a lift with Polygon SDK, based on 3 major concepts: Ethereum-compatibility, modularity, and extensibility, making it a flexible framework for builders eager to paintings on Ethereum scaling and infrastructure answers.

Polygon SDK is divided into two iterations. The first version helps Ethereum-like minded stand-on my own chains, which can be sovereign blockchains in charge of their modules and safety. These chains can use the Polygon bridge to communicate with Ethereum (e.G., transferring property or sending arbitrary messages) while retaining their independence.

On the second one model, we’ll see assist for different styles of chains, including Layer 2, with their personal set of modules and equipment to in addition empower developers.

Utility: What Can You Do on Polygon?

Polygon lets in you to do quite an awful lot the whole thing you do on Ethereum, but without the excessive gasoline prices or the low throughput.

Polygon went from being a easy scaling solution to turning into a more huge and complicated environment wherein customers and developers alike have a extensive set of use cases, which includes launching Ethereum-like minded blockchains, use Ethereum-primarily based decentralized programs (DApps), mint non-fungible tokens (NFTs), emerge as node validators, delegators, stake MATIC, and lots extra.

There are numerous successful tasks that work on Polygon, including yield generating protocols like Aave or Curve Finance, decentralized exchanges together with SushiSwap, and the most famous decentralized NFT (Non-Fungible Token) market, OpenSea.

You can use Polygon because the base blockchain on those protocols in place of Ethereum. For instance, OpenSea lets in you to choose Polygon instead of Ethereum as the primary network and use it every time you trade NFTs — you simply want to have a Polygon-like minded pockets like MetaMask or Coinbase Wallet and join it to OpenSea.

It’s additionally really worth noting, even though, that now not all protocols which might be built on Ethereum have their Polygon iterations, and to this extent, there are certain barriers.

The MATIC Token

The MATIC token is an ERC-20 token that powers the entire Polygon atmosphere. It’s used to pay for gasoline costs, for staking, and for governance. As according to CoinMarketCap, there’s a modern circulating supply of 7.48 billion MATIC tokens, with a max deliver of 10 billion.

After being rebranded to Polygon and imposing new functions for builders and customers at the ecosystem, the MATIC token noticed explosive growth in charge because of an accelerated use case. At the time of scripting this, in February 2022, it’s the 16th biggest cryptocurrency by total market capitalization.

The MATIC token deliver distribution is as follows:

• Advisors: 4%
• Private Sale: four%
• Network Operations: 12%
• Team: sixteen%
• Launchpad Sale: 19%
• Ecosystem: 23%
• Foundation: 22%

Meet the Team Behind Polygon

Polygon turned into created by way of 4 software program engineers with a sturdy historical past in software improvement:

• Jaynti Kanani: co-founder, CEO, and Senior software engineer.
• Sandeep Nailwal: co-founder and CEO.
• Anurag Arjun: co-founder and Chief Product Officer.
• Mihailo Bjelic: co-founder and software program engineer.
• Popular DApps Using Polygon

SushiSwap: an Ethereum-based decentralized exchange (DEX) that works as an Automated Market Maker (AMM).

Curve Finance: an change liquidity pool on Ethereum that provides seamless stablecoin trading at a low hazard.

1inch: a DEX aggregator that acts as a liquidity bridge between several DeFi protocols, presenting customers with the satisfactory liquidity on Ethereum, Binance Smart Chain (BSC), Polygon, and greater.

Aave: a yield aggregating protocol that lets in customers to borrow crypto to apply it as collateral to take out flash loans.

QuickSwap: a decentralized alternate walking on the Polygon community that offers lightning-speedy transactions at a cheap price.

Closing Thoughts

Polygon is one of the maximum interesting DeFi projects in existence, with a promising destiny for the DeFi community concerning scalability and blockchain interoperability.

And with its good sized set of gear for builders, its progressive mechanism and modules, and full guide for the Ethereum Virtual Machine (EVM), we ought to quickly see an significant influx of tasks thriving at the Polygon ecosystem.