Polygon was designed to address speed, scalability and cost efficiency issues within decentralised finance (DeFi). Learn what Polygon is and what makes it unique, and what the future might hold for the price of MATIC.
How does Polygon (MATIC) work?
Polygon is a layer 2 scaling solution built on top of the Ethereum blockchain. As Ethereum faced scaling limitations, Polygon emerged as a timely solution for preserving the security of the Ethereum mainnet, while vastly enhancing its capabilities.
Polygon acts as a bridge, seamlessly connecting different chains, enabling interoperability and fostering collaboration. Polygon uses the “Plasma Bridge” to move MATIC tokens from the Ethereum mainnet to the Polygon chain.
To help scale the Ethereum network, Polygon has integrated a range of different scaling solutions to help it overcome the network’s capacity limitations, while still ensuring compatibility with existing Ethereum-based assets. This includes using zkRollups, a method of bundling Ethereum transactions into batches and executing them off-chain, and sidechains.
Polygon has a vibrant ecosystem and a range of use cases. It enables developers to create decentralised applications (dApps), while facilitating transactions across multiple blockchains and encouraging the growth of decentralised finance (DeFi) protocols.
The Polygon blockchain uses a Proof of Stake (PoS) consensus mechanism to validate the network’s transactions.
What makes Polygon different?
Polygon aims to bring mass adoption to Ethereum and blockchain technology. By offering a scalable, secure and user-friendly platform for building and connecting dApps, Polygon hopes to create a multi-chain system that can support the diverse needs and demands of the crypto community.
Polygon is fully compatible with Ethereum’s tools and standards, including the following:
- Ethereum Virtual Machine (EVM) — software that executes smart contracts on the Ethereum blockchain
- Solidity — a programming language created by Ethereum developers
- MetaMask — an Ethereum-based cryptocurrency wallet
This means that developers can easily deploy their existing Ethereum applications on Polygon, without needing to make any major changes.
What is the MATIC price and forecast for the future
MATIC is Polygon’s native cryptocurrency, and one of the key reasons that investors are interested in the Polygon network.
| Year | Start Price | Mid-Year Price | End Price | Percentage Change |
|---|---|---|---|---|
| 2019 | – | $0.022 | $0.014 | -36% |
| 2020 | $0.014 | $0.019 | $0.018 | 29% |
| 2021 | $0.018 | $1.167 | $2.528 | 13,944% |
| 2022 | $2.528 | $0.478 | $0.759 | -70% |
Prices have been rounded to three decimal places | Past performance is not an indication of future results
Source: Yahoo! Finance
While Polygon certainly had an impressive year in 2021, it is unclear whether its cryptocurrency will be able to stand the test of time. In 2022, MATIC lost 70% of its value, although this price change was also reflected in the wider crypto market.
Past performance is not an indication of future results
Source: eToro
The team behind Polygon has continued to build new applications and create additional partnerships with reputable brands. Moving forward, it is clear that DeFi and NFTs will be key areas of focus for the Polygon platform, thus potentially impacting the price of MATIC. That being said, cryptocurrencies are a volatile asset class, so there is no way of accurately determining exactly what the future price of MATIC will be.
Polygon has evolved into a multichain powerhouse, providing developers and creators with the tools they need to build innovative, secure, and scalable blockchain solutions.
Polygon Wiki
Who created Polygon?
Polygon was founded in India in 2017 by Jaynti Kanani, Sandeep Nailwal, Anurag Arjun and Mihailo Bjelic. Fundamentally, Polygon’s founders understood that congestion on the Ethereum network would eventually hinder the blockchain significantly, so they looked to provide an additional layer for scaling Ethereum-based applications.
Tip: A Plasma chain is a separate blockchain, attached to the Ethereum mainnet. It can execute transactions, thus improving scalability, while still benefitting from Ethereum’s security.
Polygon, and its native cryptocurrency MATIC, rose to prominence during the 2021 cryptocurrency bull market, positioning itself as a cheaper alternative for making transactions on Ethereum. During this time, a number of projects in DeFi and the non-fungible token (NFT) market integrated with Polygon in an effort to lower fees.
Since its inception, Polygon has partnered with several prominent and well-known brands for various crypto projects, such as Disney, Reddit and Starbucks, although Disney has since pulled funding for its metaverse project.
Today, Polygon hosts a variety of dApps in different domains, such as gaming, NFTs, DeFi, identity and social media. Some of the popular dApps on Polygon include Aavegotchi, Decentraland, QuickSwap, SushiSwap and OpenSea.
Final thoughts on investing in Polygon
Polygon is arguably one of the most ambitious projects in crypto, demonstrated by its ability to become such an influential blockchain within just a few years of its launch. The platform’s close ties with Ethereum have proven to be instrumental in helping Polygon gain a significant user base in a short period of time, although there is potential for Polygon to increase its independence in the future, utilising its own gas token, MATIC, rather than Ethereum’s.
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FAQ
- How are Ethereum-based cryptoassets transferred to Polygon?
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There are a variety of ways to transfer assets from Polygon to Ethereum, and vice versa. Two bridges, known as the Proof of Stake bridge and the Plasma bridge, are available to swap assets between Polygon and Ethereum in a decentralised manner. In addition, users can effectively swap between the two chains via some centralised exchanges.
- What is MATIC used for?
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MATIC is the native gas token of the Polygon blockchain. MATIC is needed to interact with Polygon’s decentralised applications and complete transactions on the network. In addition, MATIC can be staked by network validators in order to participate in network consensus and earn rewards.
- Why are Polygon transactions cheaper than Ethereum transactions?
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There are two key factors that cause Polygon transactions to be cheaper than Ethereum transactions. First, Polygon is willing to be more centralised in an effort to increase total transaction capacity. Secondly, there is simply more demand for transactions on the Ethereum blockchain, which increases the gas fees required to complete them.
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