Ethereum expansion: exploring the Polygon ecological empire

Introduction

In recent months, Ethereum has seen a large influx of new users. In the past 30 days, more than 3 million unique addresses have been created . Although the growth of the Ethereum ecosystem is positive for the market as a whole, it also proves some obvious shortcomings of Ethereum. First, decentralized applications or Dapps have become significantly expensive. According to data from ethgasstation.com, the average cost of a DEX transaction exceeds 100 Gwei or $10, and for many people around the world, the barriers to entry have become higher and higher. Although one possible solution, the Ethereum main chain upgrade, has received a lot of attention in recent months because the Ethereum 2.0 upgrade will be carried out later this year , but another possible solution, the Ethereum side chain, May provide a more effective solution. The side chains of Layer 1 (L1) platforms such as Ethereum are collectively referred to as Layer 2 (L2) extension solutions. These L2 platforms are built on top of the existing L1, and hope to add side chain functions to reduce transaction costs and increase speed.

What is Polygon ( Matic ) network?

Polygon ($MATIC) is an L2 scaling solution built on Ethereum. The purpose is to compensate for some of the most important obstacles to Dapp adoption: speed, scalability, and availability. Polygon calls itself “Ethereum’s Blockchain Internet” because users on Polygon can create off-chain transactions to pay and interact with smart contracts. Polygon has adopted a unique L2 extension method affected by plasma, involving the creation of a tree-shaped “sub-blockchain”, using the Ethereum blockchain as a trust and arbitration layer. The sub-blockchain helps reduce transaction costs by allowing many transactions to be processed in batches before being sent to the Ethereum blockchain.

Ethereum expansion: exploring the Polygon ecological empire

Source: https://polygon.technology/stats/

Matic uses a component called MoreVP (More Viable Plasma), which allows assets on the Ethereum blockchain to stay in place, while transactions on L2 can be conducted on a separate proof-of-stake (Pos) network. Matic has multiple side chains, each of which supports EVM, allowing the deployment and interaction of smart contracts at a much lower cost than the Ethereum main chain.

How exactly does Polygon work?

When studying Polygon, the first thing to understand is that Polygon is actually separate from the original MATIC blockchain launched on Ethereum. Polygon’s new blockchain is built as a “Commit Chain” rather than a “side chain”. The main difference to note here is that side chains usually rely on their own validators to ensure security. In contrast, submission chains like Polygon can internalize Ethereum’s network security by using Ethereum validators. The commit chain allows developers to take advantage of the expansion of the side chain while gaining the security of Ethereum.

Ethereum expansion: exploring the Polygon ecological empire

Source: https://finematics.com/polygon-commit-chain-explained/

In the Polygon ecosystem, two different types of chains can be established; Stand Alone Chain and Secured Chain. The independent chain can have its own consensus model, so it is not as secure as the network using the Ethereum consensus model, but it is more flexible. Security chains can be directly guaranteed by Ethereum or by validators in the Polygon ecosystem, which makes them more secure than independent chains, but they are less flexible. Polygon’s network architecture is unique. It gives developers the ability to mix and match different extensions instead of just choosing one.

Ethereum expansion: exploring the Polygon ecological empire

Polygon Matic protocol architecture (Source: https://finematics.com/polygon-commit-chain-explained/)

Ethereum layer -The Ethereum layer simply uses Ethereum as the base layer of the Polygon chain, which has high security but low flexibility. As a project on Polygon, you don’t need to build on this layer.

Security layer -The security layer is where Polygon provides the “validator as a service” function, allowing the Polygon validator to act as a consensus mechanism on the chain. This is more flexible than using the Ethereum layer, but slightly less secure. As a project on Polygon, you don’t need to build on this layer.

Polygon network layer -The Polygon network layer is composed of independent blockchain networks, each of which can maintain central functions such as block production and transaction sorting. As a Polygon project, you need to build on this layer.

Execution Layer -The Execution Layer is responsible for executing transactions issued in the Polygon ecosystem. As a project of Polygon, you need to execute on this layer.

Polygon can overcome many obstacles to the expansion of Ethereum because its unique structure includes scalability and backward compatibility, while retaining security and user experience.

MATIC Token Economics

The distribution details of MATIC are as follows:

MATIC’s seed round of financing ended in April 2019, raising approximately $165,000 from institutional investors (including Coinbase Ventures and ZBS Capital). In the seed round, 1 MATIC is priced at US$0.00079.

Next, early supporters have the opportunity to invest at a price of $0.00263 per MATIC (more than 3 times higher than the seed round price). The early supporter round raised $450,000 at a price of $0.00263 per MATIC.

The next round of fundraising includes a public sale on Binance Launchpad, which raised $5 million at a price of $0.00263 per token (equivalent to the price of early supporters at the time of launch).

The remaining funds, equivalent to more than 75% of MATIC’s circulation, are dedicated to maintaining the operation of the MATIC mainnet team, consultants, foundations, ecosystems and network operations.

Ethereum expansion: exploring the Polygon ecological empire

PolygonToken distribution

Although there are more than 10 billion MATIC Tokens, the circulation is less than 6.4 billion, or about 64%. Although investors who bought MATIC through Launchpad sales can get their tokens immediately, the rest of the groups have been locked in different lengths. Seed investors and early supporters can get half of the token immediately, and the rest will be released in October 2019. Tokens dedicated to teams, consultants, foundations, ecosystems, and staking rewards will be distributed over time. It is estimated that 100% of Tokens will be distributed by the fourth quarter of 2022.

Ethereum expansion: exploring the Polygon ecological empire

Polygon Blog

Polygon ecology

Polygon Ecosystem The most active Dapps on Polygon in the past 24 hours, calculated by the number of users

Ethereum expansion: exploring the Polygon ecological empire

dappdar

Although many top projects on Ethereum, such as Sushiswap, Curve, 1inch, and Balancer, have been ported to Polygon, there are also some native Polygon projects that are gaining popularity and bringing people to the Polygon ecosystem.

Briefly introduce some of the most active native Dapps on Polygon:

Ethereum expansion: exploring the Polygon ecological empire

https://cryptoslate.com/coins/quickswap/

QuickSwap

Quickswap is a next-generation DEX built on Polygon, allowing users to conduct fast and cheap transactions on more than 100 trading pairs. Quickswap was originally forked from the Uniswap protocol and powered by QUICKToken. Quickswap has quickly become the Polygon project with the most active number of users, with more than 225,000 users and more than $4.5 billion in transaction volume in the past 30 days. At the time of writing this report, there is more than $1 billion in liquidity on the platform, making it one of the most liquid DEX on the market, although it was only launched in March 2021.

Ethereum expansion: exploring the Polygon ecological empire

Defipulse.com

Polycat Finance

Polycat Finance is a yield aggregator. DEX describes itself as a “value-oriented, economically sustainable hybrid yield aggregator on Polygon.” Polycat Finance is supported by FISH Token, which is an ERC20 Token with a maximum supply of 3 million FISH. FISH is also Polycat’s governance token. FISH owners can get a “dividend” (a percentage of transaction fees on the platform), and now it has reached the maximum supply of 3 million FISH in August. Polycat Finance also has a unique mechanism to support early projects, allowing them to raise funds through IFO (Initial Farm Issuance). Users can buy their fish into shares, and once the FISH Token in the pool is burned, they can receive new Tokens (and the additional benefits they receive).

Ethereum expansion: exploring the Polygon ecological empire

An example of IFO description about PAW Token on Polycat (polycat.finance)

Although TVL exceeded US$284 million in June, at the time of writing this report, Polycat Finance’s current TVL is less than US$130 million. The number of daily users of the platform dropped from more than 15,000 at the peak in June to 900 at the beginning of August. In the past 24 hours, as the annual interest rate on the platform began to rise, the number of users has risen to more than 5,000.

Ethereum expansion: exploring the Polygon ecological empire

https://www.dapp.com/app/polycat-finance

Upcoming updates:

Ethereum expansion: exploring the Polygon ecological empire

https://docs.polycat.finance/roadmap

Aavegotchi

Ethereum expansion: exploring the Polygon ecological empire

https://blockonomi.com/aavegotchi-guide/

Aavegotchis is an NFT game avatar that complies with the ERC721 standard on the Ethereum blockchain . The Aavegotchi universe is driven by the $GHST Token, which allows users to upgrade their Token through Aave and earn revenue. By gamifying the revenue experience, it bridges the gap between blockchain games and DeFi. Aavegotchi ported their code from the Ethereum mainnet to Polygon in March 2021. Due to the low barriers to entry, this allowed the game to grow significantly. A team member of Aavegotchi, Nick Mudge, tweeted on March 17, 2021, that within 15 days after the Polygon upgrade was deployed, the upgrade has saved users more than $14 million in gas fees on the platform, showing Polygon Powerful use cases for.

Ethereum expansion: exploring the Polygon ecological empire

Twitter @Mudgen

Upcoming updates:

Ethereum expansion: exploring the Polygon ecological empire

https://aavegotchi.medium.com/

PolyMarket

PolyMarket is a decentralized information market built on Polygon, officially launched in June 2020. PolyMarket allows users to trade binary contracts on countless real-world events, from elections to celebrity court cases. On this platform, users can make market recommendations for a particular event, and other users can place binary bets on the outcome of the event. Events on the platform are traded between $0.00 and $1.00, representing the collective belief in the possibility of the event. For example, if the “yes” value of a contract is $0.82, it means that the market believes that the probability of the event is 82%. However, unlike traditional gambling, users have liquidity on their bets and can trade like assets, making this process more flexible and efficient. By allowing users to create unique markets and have real-time liquidity, PolyMarket becomes an extremely accurate forecasting model by leveraging the wisdom of the crowd. Currently, there is no native PolyMarket Token, and users can use USDC to place bets.

Ethereum expansion: exploring the Polygon ecological empire

Ethereum expansion: exploring the Polygon ecological empire

Polymarket.com

0xUniverse

0xUniverse is a Polygon-based game powered by 0XE Token. Users can build spaceships and explore a vast universe. 0XE Token is used as a practical token in the game, which is used as “energy” to participate in battle and build in the game. 0xUniverse also involves NFT through planetary NFT, which is an important part of the game. Each planet is unique, the rarity (that is, value) of the planet is determined by the design and resources of the planet, and the player hopes to obtain benefits by colonizing the planet. 0xUniverse also has an embedded storyline. Players can build up’knowledge’ by searching for ancient artifacts hidden on their planet, thereby participating in the storyline. 0xUniverse is a Polygon-based game where users can build spaceships and explore the vast universe.

Ethereum expansion: exploring the Polygon ecological empire

0xuniverse.com

In order to start playing this game, you first need to have your own planet and spaceship. Spaceships can be built after accumulating “knowledge” on your home planet. Planets can be purchased on sites such as Opensea. At the time of writing, the cheapest planets can be purchased for only 0.0009 ETH.

Ethereum expansion: exploring the Polygon ecological empire

opensea.io

Upcoming updates:

Ethereum expansion: exploring the Polygon ecological empire

OxUniverse Blog

Market statistics

On-chain data

In 2021, the number of unique addresses on the Polygon network has doubled, from approximately 120,000 addresses to more than 35,000,000 addresses in 8 months, an increase of approximately 28,000%.

Ethereum expansion: exploring the Polygon ecological empire

The number of daily active users on the Polygon network is a good indicator, which has grown exponentially over a period of 8 months. Polygon’s daily active users increased from approximately 750 in early 2021 to 192,000 on August 1, an increase of 250,000%.

Ethereum expansion: exploring the Polygon ecological empire

According to Nansen’s data, the daily transaction volume on Polygon surpassed the Ethereum transaction volume in May. Since then, the daily transaction volume of Ethereum has been dwarfed. At the time of writing, the daily transaction volume is almost 4 times that of Ethereum.

Ethereum expansion: exploring the Polygon ecological empire

Nansen.ai

Despite nearly four times the transaction volume, Polygon’s gas fee is significantly cheaper than Ethereum’s gas fee in total, equivalent to slightly less than 40,000 US dollars, while Ethereum’s daily fee is 21 million US dollars.

Ethereum expansion: exploring the Polygon ecological empire

Nansen.ai

The result of this difference in fees is that starting from 2021, the ratio of Token deployed on Polygon to Ethereum has increased dramatically, from 0 (without Polygon deployment) to more than 73% in August 2021. This upward trend represents a seismic shift in the cryptocurrency community to L2 solutions. This shift occurred at the beginning of the year when the price of Ethereum rose, indicating that developers are using Polygon as a legitimate alternative to Ethereum.

Ethereum expansion: exploring the Polygon ecological empire

Nansen.ai

Derivatives data

Ethereum expansion: exploring the Polygon ecological empire

https://www.binance.com/en/futures/funding-history/4

Binance futures is currently the most active polygon market, with more than $360 million in trading volume in the past 24 hours. According to Binance futures data, the current long-short ratio of MATIC exceeds 4:1, and 82% of traders choose to go long MATIC, indicating that investor sentiment is very bullish.

Ethereum expansion: exploring the Polygon ecological empire

https://www.binance.com/en/futures/funding-history/1

At the time of writing this report, the funding rate of MATIC on Binance is a good sign of bullish or bearish, and recently reached a peak of around 0.075%. A positive funding rate means that the bulls are currently more active than the shorts (because they are willing to pay fees to take on the longs, which is bullish). When the funding rate is negative, such as 7/22, the market is generally bearish because traders must pay fees to short the market.

Github data

Ethereum expansion: exploring the Polygon ecological empire

Binance research

Github data shows that the number of developers entering the Polygon network continues to grow, albeit at a slow rate, with an average of 10 contributions per day in July, with only 5 stars. There are currently 61 repositories on Polygon’s Github, of which the repository with the highest star rating is the Matic smart contract repository.

Ethereum expansion: exploring the Polygon ecological empire

https://github.com/maticnetwork

Sentiment data

Recently, on August 9, 2021, Poly Network, a multi-chain yield aggregator, was used and lost more than $600 million. Although the vulnerability has nothing to do with the security flaws of Polygon’s core infrastructure, the sentiment of the token has dropped significantly, from 58 to a low of 34. Due to the community’s reaction to this news, the price of MATIC Token fluctuated by 6%, which shows that sentiment played a role in Polygon’s price fluctuations.

Ethereum expansion: exploring the Polygon ecological empire

Picture from TheTie’s proprietary Sigdev platform

Recent development: Polygon’s involvement in Zero-Knowledge (ZK) solutions, acquisition of Hermez Network $HERMEZ

Zero-Knowledge (ZK) proof is a technology used to prove a statement that protects the privacy of both parties to a transaction. This means that the sender, recipient, amount, and transaction content can be blocked while still allowing the transaction to be verified. ZK does not require all parties to see the content of the transaction, but instead focuses on providing only the necessary information to process the transaction without disclosing any other details. ZK can function through an automatic verifier, which acts as an encryption intermediary between two parties. In order to verify the information, Party A waits for confirmation from the verifier to evaluate the accuracy of Party B’s information, instead of directly verifying the information. This allows the privacy of both parties to be protected, because independent verifiers only allow both parties to obtain the necessary information, not their complete wallet history. Polygon believes that ZK proof is the answer to the privacy issues surrounding the Ethereum blockchain. In order to achieve the goal of transition to a ZK-based platform, Polygon announced on August 13 that they have allocated $1 billion to focus on the implementation of the ZK solution. Funds will be used to make acquisitions, hire talent, and encourage the adoption and establishment of innovative solutions. The first step in this process is to acquire Hermez, an EVM compatible extension solution based on ZK technology, traded on $HERMEZ.

Conclusion

In general, since network congestion is still a problem for the Ethereum blockchain, scaling solutions like Polygon may gain huge appeal. With its multi-layer system, Polygon is able to verify transactions in just a few seconds while also uploading to the Ethereum blockchain, combining scalability and security. Polygon’s advanced Dapp infrastructure makes it easy for new projects to be launched on-chain and also enables existing Ethereum projects to port their code. In the next few months, we may see most of the existing projects built on Ethereum begin to completely migrate to secondary solutions like Polygon to reduce transaction prices and increase speed.

Since network congestion is still a problem for the Ethereum blockchain, scaling solutions like Polygon may gain huge appeal.

 

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/ethereum-expansion-exploring-the-polygon-ecological-empire/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

Like (0)
Donate Buy me a coffee Buy me a coffee
Previous 2021-08-20 12:17
Next 2021-08-20 12:19

Related articles