Ethereum has a scalability problem; as we all know, gas fees can get very expensive, reaching into the hundreds of dollars once the network is overrun with transactions.
Here is where Polygon (MATIC) steps in, allowing users to access Ethereum DApps without having to deal with high gas fees and slow speeds.
This post will look at why Polygon (MATIC) is a promising cryptocurrency that should be considered by any serious investor.
If you decide to invest in Polygon (MATIC), I recommend using a cash-based exchange platform like CEX (Worldwide and USA users) or Bitpanda (Europe only) that allows you to easily buy and sell cryptocurrencies for cash.
What is Polygon (MATIC)?
Polygon (MATIC) is a Layer 2 scaling solution for Ethereum. It also functions as a platform for building and connecting Ethereum compatible blockchains networks.
Polygon started out in 2019 as "Matic Network," with its main aim being to scale Ethereum. In 2021 the protocol was rebranded to "Polygon," and its vision expanded to include building and connecting Ethereum compatible blockchains.
Polygon reduces transaction fees on the Ethereum network while also increasing the speed of transactions drastically. The protocol enables instant transactions which cost a fraction of a penny ($0.002).
Polygon's scalability focus is what makes it very attractive for decentralized applications that run on the Ethereum blockchain.
Uniswap, for example, announced that they had deployed Uniswap V3 on Polygon on December 22nd, 2021.
How Does Polygon (MATIC) Work?
Polygon (MATIC) uses a variety of technologies to create a fast and highly scalable Layer 2 blockchain network:
- Proof-of-Stake System - Users validate transactions by staking their MATIC. Users can run a full node as a "validator" or they can delegate their MATIC to a trusted validator.
- Polygon Protocol - The protocol which enables Polygon and Ethereum based blockchains to connect with each other while inheriting Ethereum's security.
- Commit Chains - Transaction networks that run alongside the Ethereum blockchain, bundling transactions together before confirming them and returning the data back to the mainchain.
- Polygon Framework - One-click system for deploying Ethereum compatible blockchains using the Polygon SDK.
Polygon's cryptocurrency MATIC is used for the following purposes:
- Fees - MATIC is used for transaction fees and paid out as staking rewards to validators.
- Staking - Users can stake MATIC to validate transactions or delegate MATIC to validators.
- Ecosystem Staking - Polygon plans to enable staking for projects in the Polygon ecosystem in the future.
Polygon (MATIC) Popularity In Decentralized Finance (Defi)
Defi has emerged as a popular utility for the Polygon network due to its very low fees and instant finality. This can bring a lot of adoption to Polygon, as according to Bloomberg, Defi is now an industry worth over $100 Billion.
Combine this with Polygon's ease of use, speed, and affordability, and you have a potential market leader in the making.
To use Defi apps on Polygon, users need to bridge their Ethereum assets to the Polygon network. If you want details on how to do this, I recommend reading this Polygon (MATIC) investment analysis.
Popular DeFi apps on the Polygon network include:
- QuickSwap - Popular DEX on Polygon
- Aave - Platform to lend, borrow and earn interest on assets
- Curve Finance - Liquidity Pools and Stablecoin trading.
- Adamant Finance - Yield farming optimizer and auto-compounder
- AutoFarm - Yield farming optimizer and auto-compounder
- Beefy Finance - Yield farming optimizer and auto-compounder
- 1inch - DEX with Liquidity Pools to earn interest
- SushiSwap - DEX with Liquidity Pools
- DFYN - DEX with Liquidity Pools
As mentioned earlier in this post, Uniswap V3 has also been deployed on Polygon. This will bring a large number DeFi users to the Polygon ecosystem from Ethereum, where they can take advantage of the drastically lower fees.
Polygon (MATIC) Are Building a ZK-Rollup Solution
Polygon announced on their official blog that they acquired the Zero-Knowledge startup Mir for $400m. The Mir team is joining Polygon and using their technology to build their new project - Polygon Zero, a highly scalable, Ethereum compatible ZK-Rollup.
In my last post about ZK-Rollup cryptocurrencies, we saw how powerful narratives can be for making profits as an investor.
ZK-Rollups are gearing up to be the next big narrative in the cryptocurrency space, and Polygon looks like a great choice for investors in this narrative, and here's why:
- Mir, the company acquired by Polygon, developed the worlds fastest scaling ZK scaling technology.
- Polygon has merged with Hermez Network, an open-source ZK-Rollup.
- Polygon has announced Hermez zkEVM, a ZK-friendly Ethereum Virtual Machine (EVM).
- Polygon announced Polygon Miden, an upcoming a STARK-based, Ethereum-compatible rollup.
- Polygon is working on Polygon Nightfall, a privacy-focused rollup.
Polygon (MATIC) has already positioned itself as a viable scaling solution for Ethereum; adding ZK-Rollups to their arsenal will further increase scalability capacities.
This, in turn, will attract more users to the protocol and increase MATIC's value.
Polygon (MATIC) and Reddit Co-Founder Launch a $300M Fund
On December 17th, 2021, Polygon announced that they had partnered with Reddit co-founder, Alexis Ohanian to launch a $200 million dollar fund to invest in social media, gaming, and Web 3.0 projects.
Polygon will team with Alexis Ohanian’s venture firm, Seven Seven Six, to launch the fund. The venture firm's portfolio already includes Sky Mavis, the creators of Axie Infinity.
As well as being a co-founder of Reddit, Alexis Ohanian co-founded Initialized Capital in 2010 and was a seed investor in projects including Coinbase, Patreon, Instacart, and more.
Seven Seven Six will invest in gaming, social media, and Web 3.0 projects that are being built on Polygon.
Having these platforms built on Polygon will massively increase its adoption, especially if one of those projects goes on to become very successful.
How to Invest in Polygon (MATIC)
If you decide to invest in Polygon (MATIC), I recommend using a cash-based exchange platform like CEX (Worldwide and USA users) or Bitpanda (Europe only) that allows you to easily buy and sell cryptocurrencies for cash.
If you plan to hold your MATIC for the long term, I recommend getting yourself a Ledger Hardware Wallet too.
Final Thoughts
Polygon (MATIC) is a good investment choice for any serious investor, the protocol has established itself as a leading Layer 2 scaling solution and is continuously innovating and making new acquisitions.
I hope you enjoyed this story; feel free to check out the useful resources below
CEX Exchange — Good exchange to buy Bitcoin, Ethereum, Polygon (MATIC), Polkadot (DOT), Binance Coin (BNB), and more from anywhere in the world with cash. Available worldwide, including the USA
BitPanda — If you live in Europe, one of the best exchanges to buy cryptocurrencies with cash, including Bitcoin (BTC), Ethereum (ETH), Polygon (MATIC), and many more. Only available in Europe
Ledger Wallets - Secure, buy and grow your crypto assets with the world's most popular hardware wallet. Buy a Ledger wallet here.
Kucoin - Great exchange where users can trade over 750 different cryptocurrencies, including new, low market cap cryptocurrencies. Available worldwide, INCLUDING the USA.
Binance - Exchange where users can trade over 500 different cryptocurrencies. Available worldwide apart from the US
You can also keep up with me on Twitter and if you need a content writer for your website, publication, project or campaign, contact me on cryptonitewrites@gmail.com.