Understand Polygon and its ecology in one article

With the implementation of Ethereum EIP-1559, the price of Ethereum rose strongly and ushered in its own bright moment. When everyone was discussing when Ethereum will surpass Bitcoin, there is a fact that we have to admit: Interaction on the Ethereum chain is still slow and expensive.

The high cost and slow speed prompted people to find alternatives, so side chain solutions came into being. As of now, Polygon is undoubtedly the biggest winner among all side chain solutions, and it is foreseeable that even in Ethereum After the launch of 2.0, Polygon still has a lot to offer.

Let’s first look at the basic data of Polygon.

At present, Polygon’s market value ranks 19th in the entire digital currency market value, with a market value of about 7.2 billion US dollars. The amount of locked up is USD 6 billion, which is the largest amount of locked up among all side chain projects. At the same time, the number of active wallets of Polygon exceeds that of Ethereum every day, an increase of 13,000% over the previous year.

Understand Polygon and its ecology in one article

Many well-known projects in the Ethereum ecosystem, such as Aave, Curve, Sushiswap, 1inch, Opensea, Zapper, have deployed their own versions of Polygon, and have accumulated considerable lock-up funds. As of the publication, the funds locked on the Polygon version of Aave have exceeded US$2.2 billion; the funds locked on Curve and Sushiswap have also exceeded the US$500 million mark. It seems that when people give the nickname “Ethereum” to India, it is not a vain name.

Understand Polygon and its ecology in one article

Why can Polygon attract so many heads of DeFi projects to deploy on it?

The main reason is that as the native Layer 2 of Ethereum, Polygon’s good EVM compatibility allows DeFi projects built on the first layer of Ethereum to easily migrate to the network with simple adjustments. At the same time, Polygon can also provide much higher Performance and almost negligible on-chain operating costs. Messari researcher Mira Christanto previously pointed out that the transaction volume of the Polygon network has reached three times that of the first layer of Ethereum, but the total gas fee of the entire network is only 0.01% of the former.

Performance and cost advantages have become the cornerstone of Polygon’s rapid ecological expansion, supplemented by the subsidies of MATIC, and the advertising effect brought by the deployment of DeFi head projects, for a while, a large number of projects began to flood into Polygon. Awesome Polygon data shows that the number of Dapp hours in the current Polygon ecosystem has reached 273, and the number of infrastructure and development tools has exceeded 60. 

So let’s take a look at the current ecological situation of the Polygon network. In order to help understand, I will also list its benchmarking projects.

1. QuickSwap: (Compared to Uniswap)

The lock-up volume exceeds 1.2 billion U.S. dollars, and the number of 24-hour users exceeds 20,000. At the same time, SushiSwap’s lock-up volume, which adopts a multi-chain deployment strategy, follows closely behind.

2. DinoSwap (a bit imitating PancakeSwap on the BSC chain)

The lock-up volume is 350 million U.S. dollars, and the number of 24-hour users is about 4,000. The concept of “Extinction Pool” has been introduced, and DINO entering the extinction pool will be destroyed. The project previously announced the completion of US$4.7 million in financing. Investment institutions include DeFiance, Hashed, Spartan Group, DFG, Linkpad, ClusterVC NeptuneDao, Coin 98, Cinchblock, SVC, AngelDao, OKEx (Blockdream), Kosmos, Synaps and Pluto VC, in addition to Polygon Co-founder Sandeep Nailwal and Terra co-founder Do Kwon also participated in this round of financing as angel investors. Although the financing amount is not large, the endorsements of many institutions and investors are worthy of attention.

3. IRON V2 (algorithmic stable currency and lending, a bit similar to Curve)

The locked position is USD 400 million, and the number of 24-hour users is about 1,200. Since it is V2, there must be V1. Iron Finance’s V1 version can be said to be well-known. In the V1 version, due to a run, its governance token TITAN dropped from a maximum of $60 to almost zero. Subsequently, the team took a series of measures, including locking the total amount of TITAN and giving up the control of TITAN’s smart contract. As a result, TITAN changed from the previous algorithmic stable currency governance token to a complete decentralized project. In the current V2 version, the name of the governance token is ICE. Whether the V2 version can regain trust is still unknown.

Understand Polygon and its ecology in one article

In addition to AAVE, SushiSwap, Curve, Balancer V2 and the 3 projects mentioned above, there are many other projects on the Polygon network, such as DEX and DFYN, revenue aggregator Beefy, Polycat, etc.

Moreover, unlike the Solana public chain, which focuses on high-performance transactions, Polygon ecological projects mostly focus on Web3 applications such as social networking and NFT. At present, the prototype of Polygon’s ecosystem has also been formed. It is foreseeable that with the vigorous development of Polygon’s ecology, more and more native applications will appear.

Even ETH 2.0 does not provide the infinite scalability required for high-throughput Dapps. The best case is Ethereum’s 64 shards. Each shard has 50 TPS, so the maximum that can be provided is 3200 TPS. From the perspective of application adoption rate, it is expected that demand will continue to rise, and congestion problems will still exist.

However, after ETH2.0, Polygon’s solution will be more robust, because the lower the Gas fee, the Polygon chain can submit nodes to Ethereum in a shorter interval. But it is difficult to determine whether the expansion plan for Ethereum will flourish in two or three years, or whether it will be the only one. As the blockchain technology matures, there will be more and more technical teams that can provide mature solutions. Polygon will also face stronger competitors. Whether its ecology is sustainable requires continued observation.

Finally, the evaluation of each agreement in this article only represents personal views and does not constitute investment advice. In addition, the development and changes of blockchain projects are very rapid, and we should not completely judge the future development of the current product form and progress.


Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/understand-polygon-and-its-ecology-in-one-article/
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