What is the mystery of Polygon’s rise? The “Guardian of the Ether” or a flash in the pan?

Polygon’s Token matic peaked at $2.70 on May 18, surging more than 10 times in the last month and jumping into the top 15 in total market cap ranking, leading the pack in the last 90 days of gains.

Matic’s surge attracted a lot of investors’ attention, after all, the secondary market price performance also reflects its value to a certain extent, but what is the mystery of what is commonly known as the “horseshoe”? Will it be just a flash in the pan?

What is the mystery of Polygon's rise? The "Guardian of the Ether" or a flash in the pan?

The dilemma of Ether
As we all know, the mammoth growth of the ethereum ecosystem, especially the growing number of users of the Defi project, is facing congestion and rising Gas fees due to low TPS (processing speed per second). This has also triggered an arms race to find a scalable, decentralized and secure solution to reduce user costs. Taking advantage of the delay in solving the scaling problem of Ether, more efficient layer1 public chains like Coin Smartchain (BSC) have captured the Defi market of Ether, and notably, the decentralized exchange PancakeSwap on BSC has surpassed Uniswap in terms of lock-in volume.

The impossible triangle problem of blockchain (decentralization, security, performance) is always there, often being able to sacrifice one to achieve the other two. Neither Ether nor the current BSC can solve it. The BSC is only a temporary alternative to achieve in terms of speed and transaction costs, and because it has only 21 nodes it cannot achieve decentralization. The recent hot public chain Solana is even more extreme in terms of speed and transaction cost, and the number of verifiable nodes (594) is also far less than Ether (11,000+), which also fails to achieve complete decentralization.

The arrival of guardians
While public chains like BSC, Solana, fantom have captured part of the market, Ether, an ecologically thriving smart contract platform, still has a devout group of DeFi users and developers who want to help make it more cost-efficient.

In 2017 three active participants from the Indian crypto community co-founded Matic to solve the scaling problem of Ether. Just this year on February 10 the Matic Network team decided to expand the scope of their project and changed their name to Polygon.

Polygon’s current use of Ether scaling consists of two scaling solutions, the Plasma chain and the PoS chain.

Matic PoS Chain, officially known as the “commit chain”. It differs from the sidechain in that although Matic PoS Chain has its own consensus mechanism, it also relies on the security of Ethernet in terms of verifying node staking and checkpoints. It runs in parallel with the Ethernet chain, and the chain is protected by a proof-of-stake consensus mechanism with its own verification nodes, ensuring its decentralized nature. In addition, Matic PoS Chain is compatible with the Ether Virtual Machine (EVM), and those projects based on Ether can easily migrate their smart contracts to the Matic PoS Chain.

Matic Plasma Chain is the Layer 2 network of Ether, which is a Plasma solution based on the EVM. plasma allows users to move transactions from the main chain to a sub-chain, enabling fast and cheap transactions. one drawback of Plasma is the long wait time (7 days) for users to withdraw funds from the Layer 2 network, while PoS Chain only takes about 3 hours. In addition, Plasma cannot be used to scale generic smart contracts.

Overall, Polygon uses a combination of Plasma and PoS in a scaling solution that hopes to increase efficiency yet ensure security, while sharing security with Ether. Currently, Polygon can handle 65,000TPS on the chain, far surpassing the 14TPS Ether. In terms of transaction fees, Polygon’s transaction fees are around $0.00004-$0.00012, which is also far lower than the prohibitive gas fees currently charged on Ether.

The Future of Polygon
In the white paper of Polygon, it is written that “Polygon is a protocol and framework for building and connecting to Ethernet-compatible blockchain networks; Polygon’s mission is to become an aggregator of Layer 2 solutions on Ether, to achieve the building performance that the Ethernet network itself fails to achieve, and to make up for the important missing link in the current Ethernet ecosystem; Polygon is a protocol and framework for building and connecting to Ethernet. Polygon is positioned as a scalable solution to accelerate the adoption of the Ethernet ecosystem…”

What is the mystery of Polygon's rise? The "Guardian of the Ether" or a flash in the pan?

Meanwhile, Polygon’s co-founder Sandeep Nailwal also emphasized in media interviews that Polygon’s mission will always be to extend Ether and bring the power of blockchain and Crypto to more users, and expressed his respect for Ether founder Vitalik. What is palpable is that both the founder and the entire Polygon team exude loyalty and admiration for the ethereum community.

Currently, Polygon’s core team has turned to all the tools and infrastructure needed to create all EVM-compatible Layer 2 solutions. Their first product SDK (Software Development Kit) was released on May 27th and is designed to build an Ethernet multi-chain system for creating new fully interoperable DApps with a choice of Layer 2: ZK Rollups, Optimistic Rollups, Polygon PoS, State Channels, or Validium. Polygon will save development time and reduce costs at this step, while taking advantage of the security offered by Ethernet.

Polygon will effectively transform Ether into a full-fledged multi-chain system in the future, similar to Polkadot, Cosmos, Avalanche, etc. But the Polygon+Ethernet combination has many advantages: a strong user base and developer community; a low technology development threshold; reliable security, etc. .

The expansion generation of Ether is not a winner-takes-all game, and different projects will have different needs in the future, so all kinds of expansion solutions will coexist for a long time. Polygon’s proposal to build a multi-chain system for Ether is a reliable guardian solution for Ether on its long road to 2.0. In the future, Polygon’s community-driven support and first-mover advantage will be enough to give Ether an edge over new entrants.

The challenges Polygon will face
Currently Polygon has formed a strong ecological community through the landed Matic PoS chain’s proven scaling solution, through Token incentives and outstanding performance in the secondary market. Although Polygon has numerous DeFi and NFT project versions, but from the lock-in volume, among them, DeFi lending leader Aave accounts for 62.62%, which shows the supportiveness of a head project to a huge ecology, and the quality of the rest of the projects is generally low.

When it comes to the expansion track of Ether, we have to mention the very hot Optimism and Arbitrum. like Polygon, Optimism and Arbitrum are also supported by DeFi head project (UniSwap). Arbitrum, which went live on the main site on May 28, is also backed by infrastructure such as Metamask, Chainlink, and Truffle, while Optimism, which is about to go live, has also partnered early on with Synthetic, a decentralized synthetic asset leader.

Through Aave’s influence in the Polygon landscape, an ecosystem backed by headline projects will likewise attract massive lock-in volumes. Compared to Optimism and Arbitrum, Polygon’s progress in terms of technology implementation does not seem optimistic, as it claims to build a variety of layer2 scaling solutions, but has only launched the SDK (Software Development Kit), and other layer2 available modules are still under development. Its competitors have already been rubbing their hands together and will start a new round of ecological map battle this summer. By then, Optimism and Arbitrum will have siphoned off some of the lock-in volume, as capital always flows to where it is profitable.

In addition, a series of Layer 2 communities such as Optimism and Arbitrum have yet to issue governance tokens, and once they do, they will certainly attract secondary market attention and impact the market capitalization of projects offering relatively outdated scaling solutions.

Polygon will respond to the competition with accelerated iterations. It is reported that the Polygon SDK will undergo two iterations, with the first version allowing developers to create standalone chains with full interoperability with the ethereum network. In the second Polygon SDK iteration, development teams will be able to create actual Layer 2 protocols that connect directly to the Ethernet mainnet.

The Post-ETH 2.0 Era
Even ETH 2.0 does not offer the infinite scalability required for high-throughput Dapps. The best case scenario is that the 64 shards of Ethernet, each with 50 TPS, will provide a maximum of 3,200 TPS. in terms of application adoption, demand is expected to increase and congestion will remain a problem.

However, after ETH 2.0, Polygon’s solution will be more robust, as the lower the Gas cost, the shorter the interval between Polygon chains submitting nodes to Ether. However, it is difficult to determine whether there will be a blossoming or a dominant solution for Ether in two to three years. With the increasing maturity of blockchain technology, there will be more and more technical teams that can provide mature solutions, Polygon will face stronger competitors, and it remains to be seen whether its ecology is sustainable.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/what-is-the-mystery-of-polygons-rise-the-guardian-of-the-ether-or-a-flash-in-the-pan/
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.

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