Interpreting Polygon 2.0: A New Blueprint for Achieving Mass Adoption
Original Title: "Polygon 2.0: A New Blueprint for Mass Adoption"
Translated by: Deep Tide TechFlow
Main Points
Recently, there has been increasing focus on the improvement of scalability in public blockchains, both vertically and horizontally.
Polygon 2.0 is an L2 chain network supported by ZK technology, aiming to become the value layer of the Internet, achieving scalability and interoperability through ZK technology.
According to the new blueprint, a new token economic model for $POL has been proposed and is expected to play a significant role before the maturity of the Polygon 2.0 ecosystem.
1. The Road to Mass Adoption
1.1 Introduction
Although the price performance of the cryptocurrency market is still far below the highs of the previous bull market, the diversity in the blockchain industry is greater than ever before. In particular, as the previous bull market was mainly driven by favorable macro factors and the lack of meaningful real-world use cases for blockchain, many protocols are now focusing on mass adoption in the current market.
In order to achieve mass adoption, improvement is needed in not just one area but multiple areas. First and foremost, enhancing the user interface and user experience of services such as wallets is critical, as these are often the initial touchpoints for users with blockchain. Secondly, more practical blockchain services need to be provided to users. Lastly, a robust infrastructure needs to be established in order to offer a convenient blockchain experience for a large number of users.
1.2 Different Types of Blockchain Networks and Mass Adoption
This article will explore the concept of mass adoption from an infrastructure perspective, but what should a network designed for mass adoption look like? So far, various blockchain networks have proposed unique approaches and strategies.
The first method is to optimize the single chain. Projects such as Solana, Sei, Aptos, and Sui have adopted this approach. The advantage of a single chain is that various dApps in the chain can seamlessly interact with each other, offering a high degree of composability. However, the downside is that the network's performance is limited by the lowest performing node, and as nodes require higher specification hardware to achieve high scalability, the network may become centralized.
The second method is to build an ecosystem with multiple L1 networks and appropriate cross-chain protocols. Cosmos, Polkadot, and Avalanche are examples of this approach. The advantage of this method is that scalability can be theoretically unlimited through parallel scaling, but the disadvantage is that despite the presence of cross-chain protocols, the asynchronicity of different networks reduces composability, leading to fragmentation of the ecosystem and security.
The third method is to improve scalability vertically, for example, by using roll-up networks based on a single base layer. Optimism, Arbitrum One, and Starknet are examples of this approach. The advantage of this method is that by executing computations off-chain and leveraging the security of the underlying layer, high scalability can be achieved, allowing various applications to interact in a network with high composability. However, the downside is that L1 limits the scalability of L2 to some extent, as Vitalik Buterin has pointed out, using the same vertical scaling structure to vertically improve scalability is limited.
All of the above methods are significant as they provide directions for mass adoption, but they all have obvious pros and cons. Therefore, in recent years, a method combining the above methods has emerged, leveraging the strengths of both, as shown in the figure below.
In addition to the Polygon chain discussed in this article, all leading Rollup networks - Optimsim's OP Stack, Arbitrum's Orbit, zkSync's ZK Stack, and Starknet's Fractal Scaling - are dedicated to improving vertical and horizontal scalability.
In the above methods, multiple L2 or L3 networks share the underlying layer, offering the following advantages:
1) Inheriting the strong security of the underlying layer, eliminating security fragmentation;
2) Achieving theoretically unlimited scalability through parallel operation of networks;
3) Achieving more seamless and secure interoperability and composability through shared settlement or data availability layers.
In my opinion, this is the best model for mass adoption of blockchain because:
1) The security of blockchain networks needs to be unified rather than fragmented to facilitate the flow of large amounts of funds;
2) It needs to provide users with high scalability;
3) Even if there are multiple networks, the transfer and interaction of assets need to be seamless and secure.
2. Polygon 2.0
2.1 Value Layer of the Internet
Recently, Polygon released the blueprint for Polygon 2.0, which is built on the aforementioned approach and envisions a "Value Layer of the Internet". Just as anyone can create and exchange information on the internet, the Value Layer is a protocol that allows anyone to create, exchange, and program value.
The value of Polygon 2.0 lies in "infinite scalability" and "unified liquidity", achieved through a series of ZK-based L2 chain networks. From the user's perspective, despite using multiple ZK L2 chains, the experience will feel like using a single chain.
2.2 Polygon PoS → Validium
Before we delve into the architecture of Polygon 2.0, Polygon's co-founder Mihailo Bjelic presented a proposal at the governance forum to upgrade the existing L1 network, Polygon PoS, to Validium in order to achieve the vision of Polygon 2.0. Polygon already has a ZK-based L2 technology compatible with Ethereum, called Polygon zkEVM, which is currently running smoothly.
Firstly, the introduction of zkEVM allows for a certain degree of reliance on the security of the Ethereum network since the validity proof of computation results on the Polygon PoS network will be verified on the Ethereum network. Secondly, the existing Polygon PoS validators will manage transaction data instead of relying on the Ethereum network, enabling lower fees and faster speeds compared to Roll-up models.
This changes the role of Polygon PoS network validators slightly: firstly, they will continue to ensure the availability of transaction data; secondly, they will act as sorters to determine the order of L2 network transactions.
2.3 Polygon 2.0 Architecture: ZK-based L2 Networks
The structure of Polygon 2.0 for vertical and horizontal scalability improvements is presented as follows. Similar to the Internet having a layered structure called Internet Protocol Suite, Polygon 2.0 consists of layers that perform different roles.
2.3.1 Staking Layer
The staking layer is responsible for validator-related transactions in Polygon 2.0. It exists as a smart contract on the Ethereum network and includes the following two types:
Validator Manager - a smart contract that manages the validator pool in the Polygon 2.0 ecosystem, including the list of all validators, which validators participate in which Polygon chains, their staking size, staking/unstaking requests, penalties, etc.
Chain Manager - for each Polygon chain, there exists a smart contract used to manage the list of validators, the configuration for validating the chain (e.g., maximum/minimum validator count, penalty conditions, token type/scale required for staking), etc.
Validators can join the shared validator pool of Polygon 2.0 by staking tokens and participate as validators in multiple Polygon chains. Validators in Polygon 2.0 are primarily responsible for ordering and validating user transactions to create blocks, along with the generation of zero-knowledge proofs and ensuring the availability of transaction data.
Validators receive compensation for various roles in the following ways: 1) protocol rewards, 2) participating in transaction fees on Polygon chains, and 3) additional rewards (e.g., native tokens) from the Polygon chains.
2.3.2 Interoperability Layer
The interoperability layer enables seamless cross-chain communication within the Polygon 2.0 ecosystem, creating a user experience similar to using a single-chain network, although multiple networks are actually used.
Each Polygon chain manages message queues that send messages to other Polygon chains and contain 1) content, 2) target chain, 3) target address, and 4) metadata. The message queues have corresponding zero-knowledge proofs (ZKP), and if the ZKP for a specific message is verified on Ethereum, the target chain can safely execute the cross-chain transaction.
However, due to the high cost of verifying ZKPs on Ethereum, the interoperability layer also adds an aggregator component to collect multiple ZKPs generated by the message queue in the Polygon chain and allow them to be verified on the Ethereum network at a lower cost. As the aggregator needs to be decentralized to ensure vitality and resistance to censorship, it is managed by the Polygon 2.0's common validator pool.
In fact, cross-chain interaction works in such a way that once the aggregator receives the ZKP, the target chain optimally processes the transaction, giving users a "unified liquidity" experience, enabling transactions to be processed almost instantly even when using multiple networks.
2.3.3 Execution Layer
The execution layer is the level where actual computation occurs in the Polygon chain, and it has components similar to a typical blockchain network such as P2P communication, consensus, memory pools, and databases.
The Polygon chain has high customizability at the client level, including local tokens, transaction fee flows, additional validator rewards, block time and size, checkpoint time (ZKP submission frequency), and Rollup/Validium selection, among others.
2.3.4 Proof Layer
As Polygon 2.0 is a set of ZK-based L2 chains, ZKPs play a crucial role, and the proof layer is responsible for generating a ZKP for each transaction on the Polygon chain. Provers use Plonky 2 developed by the Polygon team.
3. New Token: $POL
3.1 Token Economic Model
While we have been carefully studying Polygon 2.0, it is clear that realizing this vision involves both protocol economics and technology. For this purpose, Mihailo Bjelic, Sandeep Nailwal, Amit Chaudhary, and Wenxuan Deng introduced a new token model called $POL to the Polygon community.
In the whitepaper, they set the design goals of $POL as: 1) Ecosystem Security, 2) Infinite Scalability, 3) Ecosystem Support, 4) Frictionless, 5) Community Ownership, and propose the following use cases:
Validator Staking: Validators in Polygon 2.0 must stake POL tokens to participate in the validator pool.
Validator Rewards: Validators continue to receive predefined rewards. Validators receive protocol rewards by default and also receive transaction fees or additional incentive rewards from the Polygon chain.
Governance: The token will be used for governance, but the governance framework has not been made public. A new community fund will be set up and managed by POL token holders, which will help support the ecosystem.
The initial supply of POL tokens is 10 billion, migrated from MATIC at a 1:1 ratio, with a proposed total inflation rate of 2%:
Validator Rewards: Within the first 10 years, validators will receive an additional 1% share of the total supply, and the community can decide through governance whether to maintain or reduce this share.
Ecosystem Support: Within the first 10 years, an amount equivalent to 1% of the total supply will be provided to newly introduced community funds, which can be used for ecosystem support through community governance. After 10 years, the community can decide through governance whether to maintain or reduce this amount.
Unlike the existing MATIC token economic model, the total supply of MATIC is fixed at 10 billion, while the POL token has an annual inflation rate of 2% for 10 years. This inflationary supply will provide good support for the Polygon 2.0 ecosystem until it is sufficiently mature. Once the Polygon 2.0 ecosystem is well established and sustains itself through transaction fees, the community can reduce inflation through governance. Considering that the current inflation rate of the Bitcoin network is about 1.8%, 2% is not a large number.
3.2 Simulation Assumptions
However, how realistic is the new POL token's token economic model? Is the network secure enough? Do validators have sufficient incentives? Is the ecosystem well-supported? Polygon has simulated these questions and included the results in the whitepaper.
Based on a series of assumptions, it is evident that even in the worst-case scenario, validators can receive incentives of 4-5% per year, and the community fund will receive sufficient funding. (Please note that the scale of the community fund is calculated using an average price of $5 for 1 POL).
Average transaction fee on the Polygon network: $0.01 (current average fee for Polygon PoS), average number of validators: 100, average TPS: 38.
Average transaction fee on the Supernets Polygon chain: $0.001, average number of validators: 15, average TPS: 19.
Each validator's average annual operating cost: $6,000 (based on the improved version of Moore's Law, operating costs are halved every three years).
3.3 Comparison with other tokens
At first glance, the proposed POL token economy model is similar to Polkadot's DOT, Cosmos's ATOM, and Avalanche's AVAX, but there are also some differences.
Firstly, there are significant differences between POL and DOT: for networks built on Substrate to become parachains, a large number of DOT tokens need to be locked into the Polkadot relay chain through a process called parachain auction. However, in Polygon 2.0, anyone can deploy a Polygon chain and validators that meet the validation requirements can participate.
Secondly, there are subtle differences between POL and AVAX and ATOM (with ICS enabled). The commonality among the three is that validators staking tokens can participate as validators on multiple networks, but there are differences in inflation rates, governance, and other aspects.
4. Summary
As the blockchain industry and technology mature, more and more experiments are being conducted to improve the scalability of networks vertically and horizontally, and Polygon 2.0 is moving forward along this path. While other leading L2 projects (such as Optimism, Arbitrum, zkSync, Starknet) are also making similar attempts, what sets apart Polygon 2.0 is:
1) The high compatibility with Ethereum of zkEVM technology,
2) The utilization of ZKP-based cross-chain solutions
Although other projects have mentioned multiple L2/L3 chains and cross-chain solutions, few have provided detailed cross-chain solutions. Recently, cross-chain projects have started to leverage ZK technology (such as zkBridge, Electron Labs, Polymer Labs, etc.), and Polygon 2.0 also has the ability to utilize ZKP in its cross-chain solution, aiming to provide an excellent cross-chain user experience.
Let's wait and see if Polygon 2.0, together with ZK technology, can achieve scalability and interoperability, becoming the value layer of the Internet.
