The Polygon network is a layer-2 Ethereum chain solution that has risen in popularity over the past few years to become a leading Ethereum sidechain.

Sidechains are essential to the Ethereum network because they allow for greater innovation. They are also more dynamic when it comes to scaling because of their optimized transaction throughput. As such, they help to diversify the Ethereum ecosystem and are instrumental in decongesting it.

So, read on to learn what Polygon is, what MATIC is, and how it all works together.

Who Created Polygon (MATIC)?

Illustration of the Polygon network relative to the Ethereum chain.

The Polygon network was co-founded by blockchain developers Sandeep Nailwal, Jaynti Kanani, and business consultant Anurag Arjun.

Initially dubbed the MATIC Network, it started as an independent blockchain that supported its own unique projects. Its developers, however, sought to enhance its usability by converting it into an Ethereum sidechain—hence the Polygon network was born.

The Polygon protocol operates using the Polygon SDK, which allows developers to create scalable Ethereum DApps The whole system operates asynchronously using a multi-layered Ethereum Virtual Machine-based (EVM) messaging system to perform inter-rollup transactions. The processes are further bolstered by the chain's asset bridging capabilities.

One of Polygon's biggest benefits as an Ethereum sidechain is its multi-chain scaling consensus model. The system allows for the integration of DApps that are interoperable across different chains. This is achieved through decentralized bridges. Projects supported by the protocol include virtual worlds, blockchain games, non-fungible token (NFT) marketplaces, and more.

To ensure network security, the Polygon Network utilizes the MATIC token (the project's native token), which contributes to network security through staking.

The digital currency is also the primary token for governance voting on Polygon Improvement Proposals (PIPs).

The Future of the MATIC Token

The MATIC token rose in value by over 2,000 percent through 2021. The price hike has been largely instigated by developments on the Polygon Network, which have increased demand for the digital coin.

polygon matic to usd chart 2021

Some of the developments that have led to a price increase over the past few months include the August 2021 decentralized autonomous organization (DAO) announcement. According to the Polygon team, the system will be used to form discussion committees between decentralized projects such as Sushi, QuickSwap, and Aave. The main objective was to initiate dialogue on expanding their reach collectively.

On October 28, the token experienced another spike after Polygon shared an update on its latest growth spurt. According to data presented by the firm, the number of active addresses on its chain had surged to reach 83.14 percent of the addresses on the Ethereum network. The positive news triggered a 27 percent price uptrend within 48 hours.

daily active polygon addresses versus ethereum

Then, on December 1, 2021, MATIC token rates jumped from $1.74 to $2.26 within 72 hours after IDEX publicized its v3 launch on the Polygon network. The move increased investor confidence in both the future of the project as well as Polygon's overall health.

Polygon vs. Ethereum: What's the Difference?

The Polygon network has experienced an influx of projects in recent months. Among the main reasons why it's so popular is its utilitarian architecture, which allows for faster processing speeds when compared to the Ethereum chain.

The cost of transactions is also lower because it utilizes a Proof of Stake validation system as opposed to the slower Proof of Work validation process used by the ETH blockchain.

As things stand, the main Ethereum blockchain on which it's based has been weighed down by the huge number of projects that it hosts. The situation has led to a clogged system that is slow and expensive to use due to high gas fees.

For perspective, the Polygon chain can reach speeds of up to 10,000 transactions per second (TPS). This is blazingly fast when compared to Ethereum's 30 TPS.

This advantage is one of Polygon's biggest draws.

The Rise of the Polygon Network

The rise of the Polygon network has largely been driven by the explosion of DeFi and NFT projects on its chain. Public support, as well as funding from notable investors such as billionaire Mark Cuban, has also helped to affirm the project's growth potential.

Successful projects that currently rely on the Polygon system include the Augur prediction market and the popular OpenSea NFT marketplace. Collectively, they handle billions of dollars in transactions each month.

Other notable projects on Polygon include the Tokenpocket non-custodial wallet, the Beefy.finance yield optimizer, and the Balancer automated market maker (AMM).

Will Polygon Become Defunct After Ethereum 2.0?

An illustration of Ethereum coins.

Many decentralized project users currently rely on Polygon to avoid Ethereum network congestion. However, the Ethereum 2.0 rollout is imminent and is set to increase network speeds while lowering transaction rates. It will accomplish this by transitioning from a Proof of Work (PoW) to a Proof of Stake (POS) protocol. This means that there will be no more mining of Ethereum using machines to reap block rewards.

Instead, rewards under the new PoS system will be based on the number of staked coins. Ethereum 2.0 is expected to support speeds of up to 100,000 transactions per second, which is higher than current Polygon network processing speeds.

Consequently, there have been questions on whether add-on chains such as Polygon will continue to operate after the ETH 2.0 unveiling.

According to Ethereum co-founder Vitalik Buterin, side chains will continue to be supported because they enhance Ethereum chain utility.

Polygon Delivers a Better Experience Than Ethereum

The Polygon network was built to provide a better experience for projects that operate in harmony with the Ethereum chain. Its Ethereum Virtual Machine (EVM) compatibility makes it ideal for developers looking to build efficient and secure projects. It also supports apps built using the Solidity programming language.

Looking at the future of the MATIC token, it is bound to grow over the long term due to the high number of projects that currently rely on it when making transaction settlements on the Polygon chain.