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Polygon (MATIC) – A Competitor Or A Lifesaver Of Ethereum?

2022-07-27 Investing

You have probably googled the term Polygon before because you want to release your own NFT project. Also, you may have been confused about what it is and why it often goes together with the term Ethereum? Are they competitors or allies? Perhaps you’re just interested in learning more about the subject or maybe you have been hit with a choice to pick between the two. Nevertheless, this article will depict everything you need to know about the Polygon (MATIC).

But first things first, we need to understand the whole concept of and the context behind the Ethereum blockchain.

The principles of Ethereum

Non-fungible tokens get minted on a blockchain, and Ethereum is the leader in the field and the most secure blockchain for it. In fact, a lot of decentralized applications have been built to operate on Ethereum. This blockchain stores and secures NFTs and ensures the safety of it, as well as approves the transactions. Whether it’s an NFT being minted or purchased, approving the transaction requires energy you need to pay for. In the crypto space, this mechanism is known as gas. The gas fee (or the cost of gas) ranges in demand. To explain it simply – the bigger the traffic of transactions is, the higher will be the price for one transaction.

Currently, Ethereum does not provide a superb way to control the congestion, even though it remains the most popular blockchain on the market. By not making any changes, Ethereum has a tendency to be slow and quite costly.

Problems with Ethereum: 

1. Low throughput – this refers to the fact that Ethereum only has the capacity to handle 30 transactions per second. This obviously shows that the speed is way lower than it should be since Ethereum is so popular. 

2. High gas fees – typically, transaction fees on Ethereum range from $50 to $200. Whether it’s a one-time account initialization fee or the transfer of an NFT, the Ethereum blockchain always requires you to have enough ETH in your digital wallet.

3. Lack of user-friendly experience  – though this doesn’t mean that Ethereum is not easy to navigate, there still is a number of delayed (or even canceled) transactions.

Not so long ago Polygon surfaced into the mainstream, and you now have the option to operate on either Ethereum or Polygon.

What is Polygon?

Polygon is the name of the parallel blockchain (sidechain) that works as a solution to the ultimate problems caused by the Ethereum blockchain. Operating as a “layer two” network, Polygon wasn’t created to replace Ethereum. Its purpose is focused more on tackling the issues currently occurring with Ethereum, leveraging and helping the “layer-one” to expand in usefulness and efficiency. If anything, Polygon actively relies on Ethereum and vice versa.

Basically, it runs the same protocol as Ethereum but allows faster transactions with minimal fees for users. Although this blockchain runs alongside Ethereum and its main blockchain, it still leverages the security and structural benefits of Ethereum. Polygon is also sometimes called the Matic network.

MATIC explained

In 2017, J.Kanani, S. Nailwal, and A.Arjun sought to find a solution to the problems and limitations caused by Ethereum. As a result, these 3 Indian developers created a sidechain and called it MATIC Network. By 2020, Matic has already attracted famous DeFi-based software developers, such as MakeDAO and Decentraland. In early 2021, MATIC was rebranded to Polygon. Even though the name of the network changed, its main utility coin remained the same.

The MATIC token is the native cryptocurrency of Polygon. It is utilized for staking, fees, governance, and settlement between users within the network. It is easy to purchase or sell MATIC through exchanges like Coinbase. In fact, users can earn additional MATIC tokens too by staking to earn interest.

Features of Polygon

Through the years, Polygon has evolved from a scaling solution into a more complex and extensive ecosystem. Users now can:

#1 Use Ethereum-based decentralized applications (DApps).

Polygon diminishes the entrance barrier for DApp developers – they can access and interact with markets on the Ethereum blockchain (which otherwise would be isolated from them). Because Polygon operates with Ethereum Virtual Machine (EVM), all current and future infrastructure possibilities for ETH are interoperable with the network. Moreover, users may create their own decentralized applications.

*EVM – Ethereum Virtual Machine is the code that is run by computers around the world to carry out the smart contracts on the blockchain.

#2 Launch blockchains that are compatible with Ethereum.

With Polygon, programmers are able to design and create their own personal and sovereign blockchains. This refers to helping the already existing ones become compatible with Ethereum too. Along with a variety of different modules, these blockchains can be created with great functionality, flexibility, and scalability.

#3 Mint non-fungible tokens.

The Polygon NFT marketplace provides NFT minting services, allowing users to incorporate their digital assets into the Polygon network via minting. Users can buy and trade NFTs for far cheaper gas fees. In comparison to Ethereum-centric networks, Polygon's cost for minting might be roughly 1,000 times lower. It certainly is the cost worth considering while minting a larger amount of NFTS.

#4 Stake MATIC.

Currently, the MATIC token is one of the biggest cryptocurrencies in the industry. It stands out due to its market value and high level of liquidity. In addition, Polygon is the only platform that enables its token to be staked on the Polygon blockchain. The process of staking benefits the users, since they can receive and earn rewards for assisting with the validation of blockchain transactions. This, in fact, can become a way to get a passive income.

Furthermore, because Polygon is a decentralized network, those who use and hold MATIC have a say in the network’s development. This means that they have the power to vote on Improvement Proposals, and the future of Polygon.

How to buy MATIC?

Matic can be bought simply for fiat currency like any other proper coin. You can purchase and trade it on numerous cryptocurrency exchanges, such as Uniswap, Coinbase Pro, Binance, Crypto.com, Poloniex, and others.

What are sidechains (parallel blockchains)?

Polygon contributes to solve the Ethereum’s problems through the use of sidechains. Instead of enlarging the capacity on Ethereum’s blocks, Polygon employs its own blocks.

Sidechain – a chain that operates on a separate blockchain network alongside the main one (often referred to as a parent blockchain or mainnet). The fundamental feature of sidechains is the ability to seamlessly improve transactions between the mainnet and the secondary blockchain. In Polygon’s case, the sidechain proceeds independently alongside Ethereum. But with Polygon, transactions are being processed outside the mainnet, which results in decreased gas fees and a faster speed of the transaction.

Polygon Bridge

So, Ethereum and Polygon can integrate and serve in conjunction. For this reason, assets and data must be moved to the Polygon in order for users to engage with Dapps. This practice is known as bridging, and it enables the conversion of the assets from one chain to another. As a result, it enables Decentralized Finance protocols.

There are two Polygon bridges available: Proof-of-stake (PoS) and Plasma bridge. Both bridges are developed by a set of smart contracts built on Ethereum. They allow tokens to be transferred from Ethereum to Polygon and vice versa, but each bridge takes a different approach to security. 

Proof-of-stake (PoS) BridgePlasma Bridge
As the name suggests this bridge employs the proof-of-stake consensus mechanism, which is driven by external validators. 

As a result – it is not dependent on Ethereum, but fully supports ETH, ERC-20, ERC-721, ERC-1155, and other tokens.

PoS Bridge thus is the most direct method of transferring tokens. While it provides security for deposits instantly, some withdrawals can take up from 30 minutes to 3 hours for confirmation. 
The Plasma Bridge uses the Ethereum plasma scaling solution and its security features. For this reason, it is better suited for developers that want supreme security. Yet, they may need to wait 7 days for the withdrawal to go through.

It enables the transfer of MATIC, and only ETH-based tokens (ERC-721 and ERC-20)

In order to make fast and less pricey transactions it offloads them from the main chain to the child chains of Polygon. Once transactions are processed, they are securely finalized on the Ethereum root chain. This is why transaction costs via Polygon are far less expensive.

Because Polygon and Ethereum are so similar, many developers who create valuable tools will shift from Ethereum to other EVM blockchains like Polygon. By doing that they can increase the reach and usage of their creations more profoundly.

How to bridge tokens from Ethereum to Polygon?

MetaMask is the most popular and reliable crypto wallet out there. So we will provide a quick guide on how to bridge tokens from Ethereum to Polygon with MetaMask.

  • Step 1: Go to Polygon’s Bridge – ( https://wallet.matic.network/);
  • Step 2: Press “Sign” and you should be moved to Polygon’s bridging portal;
  • Step 3: Select the type and quantity of a token you want to send. Click on “Transfer” to confirm and “Continue”. It should not take more than 7-8 minutes for it to go through;
  • Step 4: After this, you will be asked to sign and approve the transaction in your MetaMask account. The cost of the transaction will be displayed, as well as the whole process of the transfer;
  • Step 5: After the transfer is complete, the updated balance will appear on the wallet’s main page.

What are the gas fees of Polygon?

Because Polygon is compatible with the EVM and because transactions on Polygon-based networks require verification and processing, there are additional gas fees. Fortunately, the transaction (or gas) costs on Polygon remain substantially lower than on Ethereum, despite periodic surges induced by strong Dapp use and NFT trading.

Ethereum or Polygon?

Despite the fact that Ethereum and Polygon maintain similar services and strive for an almost identical purpose, there are some differences to consider. In case you still find it difficult to choose between the two, take a look at our discussed blockchains in the comparison provided below.

PolygonEthereum
No directly associated gas feesHigh gas fees (initialization + recurring + one-time fees (e.g. NFT auction approval fee))
~350,000 daily users~551,705 daily users
Less popular and many people are not familiar with Polygon. This may create more friction for potential buyers.Extremely popular – can generate more hype.
Less trafficHigh traffic
Transactions are often cheaper and faster/the fastest in transaction speed
(up to 65,000 transactions per second).
Transactions take some time to go through the blockchain
(roughly up to 17 transactions per second).
Proof-of-stakeProof-of-work
Less secureHas a reputation of security
Does not have auctionsHas auctions

The Ethereum blockchain has more security and is the prevailing network among the users, but they do have to pay high gas fees. Obviously, there are some cases where one can evade it, only paying up to 15$ per mint. But overall, it is a disadvantage if you are planning to mint a number of collections.

Polygon blockchain is very flexible for creators and is a fast and free blockchain. However, there are not a lot of people that use Polygon to buy or sell NFTs, so the market cap might be a little lower. As a result, you might have a harder time selling your art.

Outro

All in all, Polygon is a great alternative blockchain to use for high-frequency and low-value transactions. Polygon does not overcome Ethereum but it rather performs scaling and builds a cooperative alliance with the layer-one. It truly has built a solid reputation for scalability and flexibility and overall seamless usage.

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