Polygon is going to take over and change cryptos, and should you buy some? Or is there a project that maybe we should pass on? That’s what I’ve set out to find out in this article, and I think by the end of this article, we’re going to be able to decide if this is an investment you believe is worth pursuing or not.
We’re going to cover everything you need to know, from how this started, which problems it solves, why it’s exciting, and to potential risks that you may want to consider before hopping in. Because, of course, every single investment has potential risks and potential upsides, and it’s essential to know all sides of that equation.
Also, this will be a very non-technical presentation, so if you have zero crypto experience, you should still be able to follow along. I’ve noticed this article on Polygon Matic tends to be very technical, and you pretty much have to be a developer to understand all the terminology. So İ wanted to make sure that this was completely accessible.
Note: This article is not financial advice.
It was launched in 2017 by Jaynti Kanani, Sandeep Nailwal, and Anura Arjun. They had their ico in April 2019, and at this point, it was called the Matic network. They raised 5.6 million dollars on the binance launch pad in 2019 through their initial coin offering.
And then their main net went live in 2020. So really went live at the perfect time because this is right when Ethereum gas fees were getting higher and higher and higher. So there are tons of discussions about how this will even be feasible, and then they went live, and that’s one of the problems than they solve, and they got even more attention because of that perfect timing.
What’s the overarching goal of this project. This is pulled straight from their website. To create a framework for building and connecting Ethereum capable blockchain networks. Don’t worry, we’re going to break that down, so you understand what that means.
Make building Ethereum better; that’s about as simple as we could put it right. But, unfortunately, building on Ethereum or building anything blockchain-wise is very difficult, very technical, and not user-friendly, and they’re aiming to fix that.
So there are three major problems with developing on Ethereum that they aim to fix;
1. Low throughput : which is basically the transactions on the network
2. Not user friendly
3. Lack of choise&option
Not user-friendly and lack of choice in options when building in specific governance issues when building on the Ethereum network. Now they wanted to put this on the Ethereum network because of the network effect of Ethereum. This is a massive network with tons of programs being built on it; they have name recognition.
So they wanted to pull some of that name recognition for their project instead of building their own chain hopes to get users where they already know that there are users on the Ethereum network. And they’re like, hey, we can make this easier.
So how are they going to solve these three issues? We’re going to break down each and every one. We are starting with the first one.
1. Low Throughput Issue
This is solved with their layer two scalings. So with layer 2, they are able to do more transactions per second. There are some other benefits as well. There are some advantages. So you have security and the network effects of the Ethereum network. But you get far more transactions per second because not all the transactions are recorded on the Ethereum chain.
This is already a thing; they’re not the first to do this. They’re not the first to have layer two, not even by any stretch of the imagination. But their goal is to do it best. And especially on the Ethereum network, here’s an example that I like to use when explaining layer two.
So let’s say your boss asks you to do some task. And a part of that task is ten individual tasks before the main task is complete. Now there are two ways that you could report to your boss. You could report to them every single task along the way, each of those 10 tasks or you could just let them know at the end hey the full overarching project is complete, all these ten tasks are done.
So with layer one or on the blockchain, you’re putting every single task on the chain. With layer two, you’re putting all the information on the chain but not all the individual details are on the chain. So it’s more just the final results are put it put on the actual blockchain. And then that way more transactions can be processed.
And this isn’t even a thing that started with blockchains. This is something that you’ve probably used a service like Venmo is technically a layer two of types where you are doing transactions on top of slower-moving transactions, which is also on top of even slower-moving transactions between banks and other banks.
So this is already used, and blockchains are adopting it because the transaction per the second issue is a massive issue if blockchains are going to scale worldwide and be used in everyday transactions.
Polygon not only has layer two as an option, but they also have side chains as an option. You don’t get the same security as the Ethereum network with sidechains, but you get opportunities for even more transactions per second.
2. Not User Friendly
And then, we have the following issue: the Ethereum network isn’t the most user-friendly. And they’re aiming to solve this. And by not user friendly, this is both on the user end using these applications. They’re relatively difficult to use but even more challenging to develop programs on the Ethereum network.
And they’re aiming to solve this. So there are a few ways that they’re they’re trying to solve.
- First, with preset blockchain network one-click deployments. So they have these kinds of defaults for developers to use, and they say it’s just one click, and then it gives you a template to build on. So you can kind of think of it as the difference between having to build a website typing HTML code or using a site like Wix or WordPress or something like that to help make that website for you.
This is something that will inherently happen as blockchains get more popular. Then, someone will do this and make it easier and easier to build blockchains and decentralized applications.
- Second, a focus on documentation and teaching material is significant. If you want developers to build on your network, you have to teach them how to do it, and you have to make it easy for them to look up the issues and problems they’re trying to solve.
- Third built-in interoperability protocols for applications to communicate from Ethereum from the Ethereum network to other blockchain networks. So this is something that’s just built into this ecosystem. The ability interoperability is the ability for blockchains to communicate with one another. And this is a significant issue with cryptos in general. Because right now they’re built in these silos, they may be smart in themselves, but they’re kind of dumb in that they don’t communicate with other cryptocurrencies. And this is something that they’re trying to tackle.
3. Lack Of Choise&Option
The third issue is the lack of choice and options when developing on the Ethereum network. Currently, projects on the Ethereum network share throughput, lack of customization, and rely on Ethereum’s governance structure.
So they’re giving some more options there solved with options:
Ethereum layer :
Ethereum layer chains can use Ethereum directly if they want to this isn’t necessary to use on this network. It’s used for staking and communication between Polygon and Ethereum projects. Polygon does not have any core functionality that relies on Ethereum. So you don’t have to use this if you don’t want to. It’s high security and smart contracts running on the Ethereum network.
Security layer :
Then we have the security layer, and you can think of this as a validator service. So it’s a kind of pay-as-you-go service that regularly checks up on transactions to make sure your program and the transactions on your schedule are on the up and up, and again this is an optional service.
Polygon networks layer :
Then we have a mandatory layer, this is the Polygon and networks layer. This deals with the functionality of a blockchain. So keeping track of transactions producing blocks facilitating the actual blockchain itself.
Execution layer :
The execution layer, which is exactly as it sounds, helps execute transactions on the blockchain. And this is made to be changed and built on. So everything in this network is made to be tinkered with and built on it. So İt’s made to create better things on it’s it’s a template. And they’re trying to be the best template out there.
We have some significant reasons here:
1. Cryptos are still very new, and scaling is a significant issue. So this is an issue that someone will solve and whoever solves it will benefit handsomely from solving it, and they seem to be one of the major players making some headway here.
2. It fills an obvious need in the crypto space, and that’s the ease of building on a network to build these decentralized apps. I’ve talked to a few developers, and they have said it’s so darn hard to make these apps.
These programming language languages are tricky. The documentation isn’t always excellent, and it’s an obvious need for someone to figure this out to make it easier for developers. And whoever has the most straightforward system will have developers gravitate towards that system because they’re not going to want to work hard if they don’t have to.
3. This could be massive in India. Now I say this is because it started in India. The three founders are from India. And India is enormous, so as cryptos get more significant in India. So this is going to be a powerful player, and billions of people in India may invest and want to be a part of this network.
4. Many popular projects are already using their services. So here are some of the projects already using Polygon Matic to help facilitate their apps and utilizing their services.
Of course, we have some risks that we need to talk about:
Other blockchains are trying to do similar things. Polkadot is a major one, a major contender here, and they may not be the winner. We don’t know right now who exactly is going to be, you know they take it all winner, and there’s probably going to be a long tail where the winner gets most of the market share, and then it draMatically dips after that.
Of course, we also have the risk of volatility with these coins. Any given coin, especially an altcoin like this. This is a larger altcoin, but it can still see considerable sways in price. And you could buy today, and it could dip 20 tomorrow, and there’s no way of knowing if that’s going to happen or not.
- Dependence on the Ethereum
Another risk that I see is some dependence on the Ethereum network. Now they do say that they don’t need Ethereum, but there’s a heavy focus on Ethereum. So if Ethereum loses popularity, they could lose popularity as well, and I see that as a potential risk.
In 2019 Polygon was launched with a price of around 0.003 USD, and in a month's time, MATIC reached its first all-time high with a price of 0.03 USD and made 10x.
And following two years, its price kept the same, around 0,02–0.03 USD till February 2021 and reached 0.10 USD as second ATH. After this level, its bull run kept and reached its final ATH again as 2.45 usd.
After this price level, MATIC's price started going down to 1.08 USD. At the time of this article, its price is around 1.00 USD, and it keeps accumulating with this price range.
Even aftermarket crashes, it's keeping its price up to and for a long time, investment is still a good option.
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