Due to the economic collapse in 2018, the first cryptocurrency, Bitcoin, was created. At that time, the focus of the original developers and investors was on the decentralization of money. In the cryptocurrency sector, Ethereum has introduced many innovations, including smart contracts and high-interest-paying decentralized applications. Unfortunately, it faces three serious challenges. It is expensive, has low processing speed, and has limited options. And to overcome the difficulties faced by Ethereum's technology, another blockchain came into existence, the Polygon.
What is a Polygon?
In 2017, three Indian developers attempted to resolve Ethereum's problems. While doing so, they led to the creation of Matic, which has now been renamed as Polygon network. it is a layer-2 scaling platform that enables Ethereum-based applications to address and overcome Ethereum's problems. However, it does not jeopardize Ethereum's security in the process. In simple terms, it is an Ethereum's Layer-2 solution.
The primary goal of the MATIC network is to increase the use of Decentralized Finance (DeFi) tools and applications. They do this by interconnecting blockchain networks. Over 3000 decentralized apps are already managed on the MATIC network. Furthermore, over 80 significant names are switching from the Ethereum mainchain to Polygon.
It uses an Ethereum Virtual Machine (EVM), just like Binance Smart Chain, Fantom, and other major networks. Since they all use the main Ethereum code, developers may transfer their projects to a different network. In addition, the project will continue to operate as before.
Polygon is basically Ethereum but with super-cheap gas fees, and can handle many more transactions per second. It is also cheap and affordable for the users. The MATIC network is much more than a side chain. It provides developers with user-friendly and adaptable tools. As a result, they speed up Ethereum's development into a multi-chain platform. MATIC network is more than just a single proof-of-stake chain. Whereas, it is a network of blockchains that can help Ethereum grow.
Working of Polygon
Polygon is powered by the layer-2 scaling technology and the proof-of-stake protocol. This PoS acts as a committed chain to the main Ethereum blockchain. This implies that it runs as a transaction network comparable to the main Ethereum chain.
MATIC works jointly and serves alongside Ethereum. Layer-2 creates a communication channel between the two blockchains. It transmits the data (transaction data) from the mainnet to the linear blockchain. It performs the transaction for a fraction of the cost but more quickly and without risking the Ethereum mainnet. As a result, Layer 2 solutions have become critical to the DeFi ecosystem. They improve Ethereum's scalability and speed while retaining its security features.
The MATIC commit chain gathers transaction clusters. It evaluates them before transferring the data back to the main Ethereum chain. Instead of sending complete video clips of every transaction, Polygon just takes a single screenshot from time to time. In this way, the Ethereum chain can still comprehend what is going on without handling massive amounts of data. As a result, the MATIC network can handle up to 65,000 transactions per second.
Polygon's architecture consists of a four-layer structure. It includes the Ethereum Layer, the Security Layer, the MATIC Networks Layer, and the Execution Layer.
- Ethereum Layer: The Ethereum Layer includes many Ethereum-based smart contracts. These contracts handle staking, transaction confirmation, and connection between the Ethereum blockchain and several MATIC chains.
- Security Layer: The security layer combines with Ethereum to provide validator services, providing chains with additional security.
- Networks Layer: It is the Polygon ecosystem of projects or blockchain networks. So each project or blockchain in this ecosystem has its community, where they create blocks and obtain local consensus.
- Execution Layer: This layer's primary function is to perform Smart contracts on the actual MATIC Blockchain.
The first two layers are optional, while the last two layers are compulsory since they perform the Polygon's information transmission. As a result, Polygon can communicate and share data with the Ethereum main chain as well as with one another.
Matic is a native token on the Polygon network. It has been trading roughly at $2, with a market valuation of around 13 billion dollars. Like many other Cryptocurrencies, MATIC tokens have a limited supply. According to the software's limitations, there can only ever be 10 billion MATIC coins in circulation.
Users can earn MATIC tokens by giving computational tools and services to the MATIC network. it requires verifying transactions or even executing smart contracts on the network.
Matic tokens are technically inflationary because stakeholders receive the new tokens as rewards. However, Matic has a limited supply, and they will shortly be applying their version of EIP1559. It indicates that basic transaction fees will burn in the future, making Matic a deflationary token.
How to buy MATIC?
A significant cryptocurrency exchange is the most convenient option to buy Polygon's MATIC tokens. Anyone can open an account with an exchange, such as Coinbase or Kraken. Afterward, they can fund it using their local currency. A digital wallet is also required, which can be self-hosted or hosted by the cryptocurrency exchange.
Following are the steps to buy MATIC on Kraken:
1: Register a Kraken account.
2: Confirm your account.
3: Fund your account or add a payment method.
4: Buy Polygon MATIC
Future of MATIC
Among all the strategies proposed to develop the Ethereum ecosystem, the MATICNetwork has gone the furthest. It addresses the issue of data limits and high gas prices. Furthermore, it also solves the issue of blockchain fragmentation with methods that do not interact properly with one another. This explains the MATIC Network's rapid expansion and increased demand for its MATIC token.
The MATIC coin's future potential is significant, and we may see this currency reaching USD 50 as well. The MATIC coin price is determined by the number of developers that use Polygon blockchain to develop their Decentralized applications.