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Polygon Matic Layer 2 Explained 2021

Simplifying The Complexity Of The Polygon Matic Layer 2

A simplyfied explanation of how Polygon Matic Layer 2 works

Polygon Matic Layer 2 Explained 2021

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What is Polygon (MATIC)? Ethereum’s Helper Network Explained


Table of Contents

While many blockchains attempt to become the next “Ethereum killer”, Polygon aims to become an “Ethereum saver”. Polygon is an independent protocol that has its own decentralised blockchain network. However, it connects to Ethereum to provide the legacy blockchain a Layer-2 solution without harming the network at all.

Through Polygon, other decentralised networks or apps (DApps) that are compatible with Ethereum can make use of Ethereum’s robust and secure network without suffering from high gas (transaction fees) and network congestion.

Polygon is sometimes called “Ethereum’s Internet of Blockchains”. Find out more about Polygon in this guide.

Related: What is Ethereum (ETH)?

Polygon and Matic: What is the difference?

Polygon and Matic are two terms that seem interchangeable. However, Matic is the original name of this blockchain network. On February 2021, the team behind Matic assumed a new name and brand — Polygon. 

Because the network has been around for quite some time, Polygon’s ticker name MATIC remains unchanged. Apart from the rebranding and the direction to which the team was taking Polygon, how the protocol works also remains unchanged.

The “MATIC token” is actually a cryptocurrency in its own right. Like Ethereum’s ETH, the MATIC token is used to pay for transaction fees. In addition, MATIC is used for staking and governance — two functions that ether currently lacks.

Since Polygon is a decentralised network, decisions concerning the development of the network lie in the hands of MATIC holders. They have the right to make or vote on Improvement Proposals in a democratic system. 

What is Polygon Matic Layer 2

How Polygon (formerly Matic) works alongside Ethereum. Source: Matic Whitepaper.

Staking is an important component for any network that uses the Proof of Stake consensus protocol. In Proof of Stake (abbreviated PoS), network participants called validators are assigned randomly to produce new blocks. 

In contrast, Ethereum’s Proof of Work demands validators to solve energy-intensive computer puzzles, and the fastest solver wins the right to produce blocks. Check out these articles on Proof of Stake and Proof of Work if you’d like to know more about them.

How can Polygon help Ethereum?

Ethereum is currently the world’s most secure blockchain-powered platform, upon which hundreds of applications have been built. However, the platform seems to have suffered from its own success, as the platform cannot scale efficiently to meet the unexpected level of demand. 

Polygon’s aim is to help Ethereum scale without interfering with its core network functionality. It does not even try to ‘steal’ network participants from Ethereum. Just like the shark and the remora fish, Polygon seeks to create a symbiotic relationship with Ethereum.


Polygon Matic Layer 2
Like these fish, Ethereum and Polygon are in a symbiotic relationship. Source: Wikimedia Commons.

Although Polygon is a self-sovereign blockchain, it connects to Ethereum as a “side-chain”. This means that Polygon’s blockchain will run in parallel with Ethereum’s, and communicate with it when necessary.

Any DApp developer who wants to deploy an Ethereum-dependent application but also wants to avoid Ethereum’s network congestion can build on top of Polygon. DApps built on top of Polygon can interact seamlessly with DApps built on top of Ethereum. 

Polygon also gives Ethereum some additional advantages that can prove invaluable to Ethereum’s network. It allows Ethereum to connect with other blockchains. So, DApps built on Ethereum can also interact with DApps that are built on other blockchains (which are also connected to Polygon as its own side-chain).

How does Polygon work? 

Polygon operates on four layers — the Ethereum layer, the security layer, the Polygon layer, and the execution layer.

The Ethereum layer

Polygon has a set of Ethereum smart contracts that can help pass data from Polygon to Ethereum. Think of them as Polygon representatives on Ethereum. These smart contracts handle transaction finality, staking, and resolving transaction disputes. The Ethereum layer is an optional addition to Polygon’s services. 

The security layer

A second optional layer, the security layer can serve connected blockchain networks with additional security. By offering “validators as a service”, Polygon can delegate its network of validators to help its clients’ blockchain to achieve consensus in a decentralised way.

The Polygon layer

This layer is made up of essentially a collection of blockchains, forming an ecosystem that interconnects. Neither the official website nor the whitepaper mentions any limit to how many blockchains can connect to the Polygon layer ecosystem.

The execution layer

This layer is one of the core layers that all connected blockchains and DApps rely on. The execution layer interprets and executes transactions that have been agreed upon through the network’s PoS consensus protocol.

Together, these layers implement a few of these state-of-the-art Polygon technologies:

  • PoS Chain, which is the main blockchain that adds the scalable proof-of-stake to Ethereum’s bustling network.
  • Plasma Chains, which allow the seamless movement of assets between Ethereum, Polygon and other blockchains.
  • Zk-rollups that provide additional privacy using zero-knowledge proofs.
  • Optimistic roll ups that facilitate near-instant transactions on Ethereum’s chain.

All these will ensure that Polygon is one of the fastest networks in existence, and is the only stand-alone blockchain to expand on Ethereum’s existing ecosystem.


Polygon technologies that support Ethereum.
Schematic of how Polygon’s technologies support Ethereum. Source: Polygon

What are the use cases of Polygon (MATIC)?

As prefaced above, Polygon aims to become a hub for different projects and blockchains that enables them to easily and seamlessly plug into the Ethereum ecosystem. A number of decentralised finance (DeFi) projects that are already familiar with Ethereum have even reserved their own place on Polygon. 

The most notable DeFi projects are the decentralised exchanges (also known as DEXs) 1Inch Exchange and SushiSwap. Although both were built on top of Ethereum, both strive to become a multichain automatic market maker (AMM). Having an access point on Polygon allows the two DEXs to bring in more liquidity.


Polygon and AAVE joining up

Transferring onto the Ethereum blockchain from other networks has been known to be a costly activity. The incredibly low-cost transfers on the Polygon network encourage more people to make deposits into the liquidity pools.

When Aave decided to switch over to Polygon, the DeFi lending platform saw deposits continue to reach $12 billion in June 2021. At that time, the transaction volume reached $256 million as traders saw the opportunity to escape high gas fees on Ethereum. 

On the business side of the spectrum, Polygon has attracted ParcelMoney, a crypto payroll and treasury management service that could use the network’s potentially extensive coverage area to serve a high number of blockchains and the businesses that they support.

The company that has created so many great childhood pastimes, ATARI, partnered with Polygon in order to further explore the realms of NFTs. ATARI needed a low-cost and scalable network for their minted Atari tokens and an environment where transactions can occur within seconds 

Speaking of NFTs, the virtual world sandbox game Decentraland has opened an “account portal” to move MANA (an ERC-20 token) between Ethereum’s and Polygon’s network. This will greatly simplify auction processes whenever content creators decide to sell some of their NFTs on Ethereum or off the chain.

Who created Polygon (MATIC)?

Polygon is founded by a team of experienced blockchain developers and business consultants, namely Jaynti Kanani, Sandeep Nailwal and Anurag Arjun. All three launched Polygon in October 2017 (the network was called Matic at the time). 

Before founding Polygon, Jaynti Kanani was involved in implementing the Plasma technology, among others, on Ethereum. Sandeep Nailwal is a blockchain developer and entrepreneur, who was also the CEO of Scopeweaver. Anurag Arjun is the product manager who has experience working with IRIS Business, SNL Financial, Dexter Consultancy, and Cognizant Technologies. 

From the start, the team has had some important collaborations with big names in the tech industry. Infosys, Ltd. was among the first to support Polygon, and now runs a validator node. 

Google’s BigQuery project was also involved to provide accurate on-chain data for Polygon, to support greater transparency of Polygon, such as monitoring transaction fees, smart contract activities, and the overall health of the network.

Polygon (MATIC) — the verdict

Polygon operates with a humble goal in mind, which is to leverage rather than replace an existing infrastructure as extensive as Ethereum. Polygon’s Layer 2 solution lowers the barrier of entry for DApp developers to access markets on the otherwise isolated Ethereum blockchain.

In a symbiotic relationship, Ethereum could also offer the same level of security to DApps and networks that exist outside of it, if they are connected to Polygon. The more connections made on Polygon, the more secure the network becomes as shared security in a decentralised network is a natural consequence of interconnectivity.

Samuel Hamilton, Community and Events Lead at Decentraland, praised Polygon for providing an important key component to blockchain, which is speed. “Games and virtual worlds especially benefit from the higher throughput of side chains… we are on the way toward PoS [Ethereum 2.0], but Layer 2 solutions still have a role to play.”

Now that you’ve got the basic fundamentals down for Polygon, it’s safe to say that it’s definitely got a promising future as the technology continues to mature and become more adopted.

With that said, Polygon (MATIC) would make a fine addition to anyone’s crypto portfolio – especially if you’re looking to diversify your crypto assets.


Polygon Matic Layer 2 Explained 2021

Polygon Matic Layer 2 Explained 2021


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