What is the mystery of Polygon's rise? "Ethereum Guardians" or just a flash in the pan?

Wu said the author | Kafka; editor of this issue | Colin Wu

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Ethereum's Dilemma

As we all know, the majestic development of the Ethereum ecosystem, especially the increasing number of DeFi project users, is facing the problem of congestion and rising Gas fees due to low TPS (processing speed per second). This has also sparked an arms race to find scalable, decentralized, and secure solutions that reduce user costs. Taking advantage of the delay in solving the expansion problem of Ethereum, more efficient layer1 public chains such as Binance Smart Chain (BSC) have seized the Defi market of Ethereum. It is worth noting that the decentralized exchange PancakeSwap on BSC The amount of locked positions has surpassed that of Uniswap.

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The Guardian's Arrival

Although public chains such as BSC, Solana, and fantom have seized part of the market, Ethereum, an ecologically prosperous smart contract platform, still has a group of devout DeFi users and developers who want to help it improve cost efficiency.

In 2017, 3 active participants from the Indian crypto community co-founded Matic to solve the scaling problem of Ethereum. Just on February 10th of this year, the Matic Network team decided to expand the scope of their project and changed its name to Polygon.

The Ethereum expansion solution currently used by Polygon includes two expansion solutions, the Plasma chain and the PoS chain:

Matic PoS Chain, officially called "commit chain". It is different from side chains, although Matic PoS Chain has its own consensus mechanism, it also relies on the security of Ethereum in terms of validator staking and checkpoints. It runs in parallel with the Ethereum chain, and the chain is protected by a proof-of-stake consensus mechanism with its own validating nodes, ensuring its decentralization. In addition, the Matic PoS Chain is compatible with the Ethereum Virtual Machine (EVM), and those projects based on Ethereum can easily migrate their smart contracts to the Matic PoS chain.

Matic Plasma Chain is Ethereum's layer 2 network, which is an EVM-based Plasma solution. Plasma allows users to transfer transactions from the main chain to sub-chains, enabling fast and cheap transactions. One downside 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. Also, Plasma cannot be used to extend general-purpose smart contracts.

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The Future of Polygons

In Polygon's white paper, it is written: "Polygon is a protocol and framework for building and connecting blockchain networks compatible with Ethereum; Polygon's mission is to become an aggregator of Layer 2 solutions on Ethereum and realize Ethereum The construction performance that the network itself has not achieved can make up for the important link missing in the current Ethereum ecology; Polygon is positioned as a scalable solution to accelerate the adoption of the Ethereum ecosystem..."

At the same time, Sandeep Nailwal, the co-founder of Polygon, also emphasized in media interviews that Polygon's mission is always to expand Ethereum and bring the power of blockchain and Crypto to more users, and expressed his respect for the founder of Ethereum. Respect Vitalik. It can be felt that both the founder and the entire Polygon team exude loyalty and admiration for the Ethereum community.

Currently, Polygon's core team has moved on 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 27, aiming to build an Ethereum multi-chain system for creating new fully interoperable DApps, with an option for a second layer: ZK Rollups , Optimistic Rollups, Polygon PoS, State Channels (State Channels) or Validium. Operators will be able to choose whether to fully integrate into Ethereum’s security layer, or run their existing PoS chain solution. Polygon will save development time and cost at this step, while using the security provided by Ethereum.

Polygon will effectively transform Ethereum into a mature multi-chain system in the future. Similar multi-chain systems include Polkadot, Cosmos, Avalanche, etc., but in comparison, the combination of Polygon+Ethereum has many advantages: Strong user base and developer community; low technology development threshold; reliable security, etc.

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Challenges Polygon will face

At present, Polygon has formed a strong ecological community through the mature expansion solution of the Matic PoS chain, the incentive of Token and the outstanding performance in the secondary market. Although Polygon has a large number of DeFi and NFT projects, from the perspective of locked positions, Aave, the leading DeFi lender, accounts for 62.62%, which shows that a leading project can support a huge ecosystem, and the quality of other projects is generally low.

When it comes to the expansion track of Ethereum, we have to mention the popular Optimism and Arbitrum. Like Polygon, Optimism and Arbitrum have also received support from a leading DeFi project (UniSwap). Arbitrum, which was launched on the mainnet on May 28, is also supported by infrastructure such as Metamask, Chainlink, and Truffle, and Optimism, which is about to be launched, has also reached an early cooperation with Synthetic, a leader in decentralized synthetic assets.

Judging from the influence of Aave in the Polygon territory, the ecology supported by leading projects will also attract large-scale lock-ups. Compared with Optimism and Arbitrum, in terms of technology implementation, the progress of Polygon does not seem to be optimistic. It claims to build a variety of layer2 expansion solutions, but it has only launched an SDK (software development kit), and other Layer2 available modules are still available. In development. And its competitors are already gearing up, and are about to start a new round of competition for the ecological territory this summer. At that time, Optimism and Arbitrum are bound to absorb part of the lock-up volume, after all, capital will always flow to profitable places.

In addition, a series of Layer 2 communities such as Optimism and Arbitrum have not yet issued governance tokens. Once tokens are issued, they will definitely attract the attention of the secondary market and have an impact on the market value of projects that provide relatively outdated expansion solutions.

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Post-ETH 2.0 Era

Even ETH 2.0 does not provide the infinite scalability required for high-throughput Dapps. The best case is that there are 64 shards in Ethereum, and each shard has 50 TPS, so the maximum that can be provided is 3200 TPS. Judging from the adoption rate of the application, the demand is expected to continue to rise, and the congestion problem will still exist.

However, after ETH2.0, Polygon's solution will be more robust, because the lower the Gas fee, the Polygon chain can submit nodes to Ethereum in a shorter interval. But it is difficult to determine whether it will be a hundred flowers blooming or a single company that will provide expansion solutions for Ethereum in two or three years. As the blockchain technology becomes more mature, there will be more and more technical teams that can provide mature solutions, and Polygon will face stronger competitors. Whether its ecology is sustainable remains to be observed.

Statement of interest: The author and editor of this article do not hold Polygon-related tokens.