Polygon is the leading Ethereum scaling solution. It was founded by Sandeep Nailwal, Jaynti Kanani, Anurag Arjun, and Mihailo Bjelic. Polygon has achieved scale by utilizing sidechains for off-chain computation while ensuring asset security using the Plasma framework and a decentralized network of Proof-of-Stake (PoS) validators. ^[1][2] As of August 2022, more than 37,000 dapps already use Polygon architecture. ^[28]
In February 2022, Polygon raised about $450 million through a private sale of its native MATIC token in a funding round led by Sequoia Capital India.^[23]

In June 2022, Polygon was chosen by Disney to participate in the 2022 Disney Accelerator, a business development program designed to accelerate the growth of innovative companies from around the world. 2022 Disney Accelerator class is focused on building the future of immersive experiences and specializes in technologies such as augmented reality (AR), non-fungible tokens (NFTs), and artificial intelligence (AI) characters.^[23]

Shortly after, the Polygon ream revealed zkEVM, the first EVM-equivalent of Layer 2 ZK (zero-knowledge). ^[25]

Overview

Founded in 2017, Polygon (Previously Matic Network) is a protocol and a framework for building and connecting Ethereum-compatible blockchain networks. Polygon solves problems associated with blockchains, like high gas fees and slow speeds, without lowering security.^[5][6]

Matic Network

Initially, the platform was launched as Matic Network in 2017 with a vision to help create a better, open world, primarily by improving Ethereum infrastructure. During three years, the team has implemented and offered Matic Plasma Chains, a production-ready Ethereum Layer 2. They also implemented and offered Matic PoS Chain, a permissionless, EVM-compatible, PoS-secured Ethereum sidechain that relies on Ethereum security for validator staking and checkpoints. During these years, Matic onboarded more than 80 applications, including Polymarket, Aavegotchi, Neon District, SkyWeaver, Cometh, EasyFi with more being added. ^[7]

Polygon

In February 2021, Matic Network revealed it became Polygon, the first well-structured, easy-to-use platform for Ethereum scaling and infrastructure development. ^[8]

Polygon differs from its predecessor in that its approach is now multi-faceted. Polygon seeks to transform Ethereum into a true multi-chain ecosystem that benefits from all kinds of Layer-2 scalability, not just the initial implementations provided by the Matic Network. Polygon presents a suite of solutions to Ethereum’s scalability crisis - hence the ‘poly’ portion of the project’s updated nomenclature. Polygon still deals primarily with sidechain connectivity and runs its main PoS chain as of April 2021, but it has plans to expand its toolbox to include other Layer-2 solutions like zkRollups and Optimistic Rollups, standalone sidechains, enterprise chains, shared security chains, as well as interchain communication protocols. As such, Polygon describes itself as a Swiss Army knife of Ethereum scaling and infrastructure development. ^[9]

In May 2021, blockchain data for Polygon arrived on the Google Cloud Platform. Integration with Google BigQuery enables developers to analyze on-chain data on Polygon in a more simple way. With the BigQuery support, Polygon's datasets have been listed in the Google Cloud Marketplace under the public financial services category. Potential benefits of the integration are said to include the monitoring of gas fees and smart contracts and determining the most popular tokens or applications on the network. ^[10]

In August 2022, more than 37,000 decentralized apps (dApps) have been built on Polygon, according to the most recent data from Alchemy^[29], the world's leading Web3 development platform. That represents a fourfold increase since the beginning of 2022 and almost twice as many as there were in March 2022.^[28]

Tech

Polygon's architecture can best be defined as a four-layer system composed of the Ethereum layer, security layer, Polygon networks layer, and execution layer. ^[11]

The Ethereum layer is essentially a set of smart contracts which are implemented on Ethereum. These smart contracts handle things like transaction finality, staking, and communication between Ethereum and the various Polygon chains. The security layer runs side by side with Ethereum and provides a "validators as a service" role which allows chains to benefit from an additional layer of security. Both the Ethereum and Security layers are optional.

Beyond this, there are two mandatory layers. The first is the Polygon networks layer, which is the ecosystem of blockchain networks built on Polygon. Each of these has its own community and is responsible for handling local consensus and producing blocks. The second is the Execution layer, which is Polygon's Ethereum Virtual Machine (EVM) implementation used for executing smart contracts.

Polygon uses a variety of technologies to achieve this expanded vision, these include:

• POS Chain: Polygon's main chain is an Ethereum sidechain known as the Matic POS Chain, which adds a Proof-of-Stake (POS) security layer to blockchains launched on Polygon.
• Plasma Chains: Polygon makes use of a scaling technology known as Plasma to move assets between the root chain and child chains via Plasma bridges.
• ZK-rollups: An alternative scaling solution used to bundle a large number of transfers off-chain into a single transaction, using zero-knowledge proofs for the final public record on the Ethereum main chain.
• Optimistic rollups: A solution that runs on top of Ethereum to facilitate near-instant transactions through the use of "fraud proofs".

Use Cases

Payments

The Polygon crypto platform is designed to allow decentralized applications (DApps) to speed up payments, enabling nearly instant payment settlement through a specialized application programming interface (API) and software development kit (SDK) integration. This process allows dApps, merchants, and users to instantly accept or pay in any type of cryptocurrency, though usually in ERC-20 tokens or Ethereum (ETH). This system is being rolled out in three distinct phases:

1. Ethereum (ETH) and ERC-20 token payments.
2. Cross-chain multi-asset token transfers and payments utilizing atomic swaps in partnership with liquidity providers.
3. Fiat-based payment system employing fiat liquidity providers. ^[12]

Lending Platform

Polygon is building a mechanism to allow merchants to analyze the credit ratings of users who have signed up to use the platform by assessing their transaction history. This functionality is carried out in partnership with Dharma.io. The leading lending protocol Aave ($AAVE) has more than $1 billion liquidity locked on its Polygon markets with more than 8000 users. ^[13]

Games

Polygon’s Layer-2 sidechain scaling solution stands to make blockchain-based gaming faster and perform better. Blockchain gaming lags behind traditional PC and console gaming systems because of poor transaction speed and high network latency. With Polygon’s Commit Chain scaling technology and the Ethereum network working together, developers and gamers will be able to build and play games more effectively. Polygon's ability to help grow the blockchain gaming industry could not come at a better time, as Non-Fungible Tokens (NFTs) and NFT marketplaces are driving the popularity of the blockchain and crypto industry at large, with many gamers buying, selling, and trading different types of in-game NFTs. Top gaming and NFT dapps like Aavegotchi, Neon District, Zed Run, and Cometh have scaled their user experiences with Polygon. ^[14]

Other Use Cases

Polygon is also built for many other use cases, like helping realize the fast settlement times needed to allow decentralized exchanges (DEXs) to offer users faster and cheaper trading. QuickSwap, Dfyn, and ComethSwap are some of the Polygon DEXs that are witnessing high volumes and user activity. Protocols like Curve Finance and mStable have also ensured low cost and low slippage stablecoin swaps. Additionally, Polygon’s plasma scaling solution is able to expedite cross-chain atomic swaps of tokenized and non-tokenized assets. Most dApps need a way to sign transactions without submitting private keys due to user privacy concerns. Because of its scalability enhancements, Polygon helps enable an open identity framework for dApp design and use. ^[15]

MATIC Token

Although Polygon has dramatically expanded on the vision laid out by Matic Network, it still uses the same utility token, known as MATIC.^[16]  MATIC is an ERC-20 token running on the Ethereum blockchain. The tokens are used for payment services on Polygon and as a settlement currency between users who operate within the Polygon ecosystem.

At its initial private sale in 2017, 3.8 percent of MATIC's max supply was issued. In the April 2019 launchpad sale, another 19 percent of the total supply was sold at $0.00263 per token to generate $5 million.

The remaining MATIC tokens are distributed as follows:

• Team tokens: 16 percent of the total supply.
• Advisors tokens: 4 percent of the total supply.
• Network Operations tokens: 12 percent of the total supply.
• Foundation tokens: 21.86 percent of the total supply.
• Ecosystem tokens: 23.33 percent of the total supply.

According to the release schedule, all the tokens will be released by December 2022. ^[17]

Matic Wallet

MATIC can be stored in the Matic Wallet, instantly giving holders the option to stake their tokens and manage their own investments directly. Matic Wallet is designed using Polygon’s MoreVP technology as an easy-to-use solution for MATIC token holders to securely and simply manage their crypto finances. The wallet is to integrate with WalletConnect to ensure the safekeeping of a user’s private keys, and to provide access to other Polygon features. The wallet also allows users to connect with various dApps, stake their MATIC tokens, and hold other ERC-20 tokens.

Polygon ID

Polygon ID offers advanced privacy that can still run on a user’s device on the blockchain while offering protection from tracking, targeting, and surveillance. Polygon ID is also a complete platform that can be used to construct a variety of identity and trust services, be it birth certificates, driver's licenses or resident permits. Polygon ID has applications for different models of decentralized governance, including sybil-resistant liquid democracies, quadratic voting schemas, and reputation-based governance that encompasses decentralized sybil resistance scoring, improved representation, and domain-expertise reputation. The technology can also be used to power private and censorship-resistant P2P communication and interactions.^[23]

As of April 2022, Polygon ID is still under development. The solution will be structured as a set of tools, platform services and examples for developers to learn, test and integrate with their apps or dApps leveraging Polygon ID’s unique on-chain capabilities.^[23]

Projects

A few of the 37,000 dapps that use Polygon architecture include:

• QuickSwap (QUICK): permissionless Decentralized Exchange (DEX).
• IQ.wiki (IQ): cryptocurrency encyclopedia
• Aavegotchi: DeFi based crypto-collectibles game; players stake NFT’s with interest generating tokens in the Aavegotchi Metaverse.
• Frax Finance, the leading algorithmic stablecoin protocol.
• Decentral Games (DG): Casino-style games built in the Decentraland metaverse, where you can play your favorite card games with your chosen avatar.
• SportX (SX): Place your bets on your favorite sporting events with SportX and earn more with weekly contests on this popular sports betting platform.
• EasyFi (EASY): A fork of Compound that brings multiple DeFi products under one roof with lending, borrowing, staking, and more available in one decentralized application (DApp).
• Neon District: Cyberpunk RPG adventure game that allows players to battle it out in a sci-fi dystopia and win in-game NFT’s.
• Polymarket: One of the most popular Prediction Markets in the blockchain space, Polymarket has redefined the space with its smooth UX.

Some projects utilizing Polygon include OpenSea, Decentraland, 1INCH, Beefy.Finance (BIFI), Atari, Zora (NFT Marketplace) and others. ^[18]

Polygon ZK

Polygon developed a collection of zero-knowledge rollups (ZK rollups) to increase throughput on Ethereum without sacrificing decentralization or security. ZK rollups process transactions off-chain and reduce computation on the base layer to achieve scalability. Polygon has already created four ZK rollups, including Zero, Hermez, Miden, and Nightfall. ^[24]

In July 2022, Polygon announced zkEVM, a proprietary Ethereum-compatible scaling solution. As with any other ZK-based scaling solution, zkEVM is a Layer-2 protocol that rolls up a large batch of transactions and “proves” all of them to Ethereum with a single ZK validity proof. The team has also open-sourced the code for Polygon zkEVM. ^[25]

In March 2023, Polygon announced the mainnet launch for its zkEVM offering after its testnet launch last October. ^[30]

“zkEVM can be recognized as the ‘holy grail’ of blockchain scaling. It offers simultaneously three very important features. First is scalability. The second one is security. And the third one is EVM equivalency, or EVM compatibility. All three are equally important.”- Mihailo Bjelic, Co-founder at Polygon

During the announcement ceremony of the new zkEVM, co-founder of Ethereum Vitalik Buterin initiated the first transaction on the platform, which was broadcast live on ETHGlobal. The transaction was successful, with Buterin sending 0.005 ETH to a random address, accompanied by a message referencing Neil Armstrong's famous first words on the moon. The message read "A few million constraints for man, unconstrained scalability for mankind." The event marked a milestone for the Polygon team and the broader Ethereum community, as the zkEVM promises to greatly improve the scalability and efficiency of the Ethereum network. ^[31][32] Sandeep Nailwal commented on the event on his Twitter:

[email protected] did the symbolic first ever transaction on @0xPolygon #zkEVM and it has a message on it "Millions of constraints for man, unconstrained scalability for mankind". Goose bumps! ^[34]

The project's co-founder, Mihailo Bjelic, commented:

“Today’s launch is an incredible milestone and the beginning of a new chapter for blockchain technology, fulfilling Ethereum’s original promise of becoming a true ‘world computer’ and creating a fairer, more egalitarian internet for all.”^[35]

The launch was congratulated by Charles Hoskinson, the founder of Cardano (ADA). In his tweet, Hoskinson praised the innovation and its potential impact on the wider crypto industry. He also referenced a tweet by Polygon's co-founder Sandeep Nailwal, who had highlighted Vitalik Buterin's transaction on the network as a significant milestone. ^[33]

India's Crypto COVID Relief Fund

Sandeep Nailwal, the co-founder of Polygon, took to Twitter on April 24, 2021, to announce the creation of a crypto COVID-19 relief fund to help those in need.^[19]

On May 13, Vitalik Buterin, the founder of the world’s second-largest cryptocurrency Ethereum (ETH), donated around $1 billion to India’s Covid Crypto Relief Fund. ^[20]

Buterin transferred 500 ETH and 50 trillion Shiba Inu coins into the fund. Besides Buterin, Australian cricketer Brett Lee also donated one Bitcoin (BTC) to India's Crypto Covid Relief Fund on April 28, 2021.

Apart from Ethereum (ETH), Shiba Inu coins, and Bitcoin (BTC), the fund is accepting donations in other cryptocurrencies including Ripple, Dogecoin, and TRON. In a bid to keep the fund accountable and transparent, Nailwal made a Google sheet to maintain a record of those who are donating cryptocurrencies. This, according to him, will be helpful if “needed for regulatory filings.”

The cryptocurrencies received by the fund are being converted to the Indian rupee to buy oxygen, food, vaccines, and other medical kits. To convert these cryptocurrencies into domestic currency, Nailwal has reached out to India’s biggest exchanges like WazirX, CoinDCX, and Bitbns. And to meet regulatory compliance, he has also enlisted the help of top chartered accountants and auditors in India.

Polygon x Disney

On July 14, 2021, Disney announced it had selected Polygon, alongside Lockerverse and Flickplay, to join its Accelerator program — which aims to develop technologies to create new storytelling experiences.
Expanding on this, Disney said the Accelerator program intends to make use of new technologies, including augmented reality, non-fungible tokens, and artificial intelligence characters.^[26]

MATIC jumped 20% on the news to close the day at $0.71 while also lifting its price decisively above the 50-day moving average for the first time since late March.^[26][27]

Funding

In an interview with Mint, Sandeep Nailwal, the co-founder of Polygon, said:

"By April 2018, we set up the company and raised some small funds from friends and family and started building the product. That round was just $150,000. After that, we did another small round of around $500,000. After that, we did an initial exchange offering with Binance, where we raised $5 million." ^[21]

In May 2021, a US-based entrepreneur and tech billionaire Mark Cuban invested an unrevealed amount in Polygon. Cuban's website said,

"Polygon is the first well-structured, easy-to-use platform for Ethereum scaling and infrastructure development. Its core component is Polygon SDK, a modular, flexible framework that supports building and connecting Secured Chains like Plasma, Optimistic Rollups, zkRollups, Validium etc and Standalone Chains like Polygon POS, designed for flexibility and independence. Polygon’s scaling solutions have seen widespread adoption with 250+ Dapps, ~76M txns and ~790K unique users." ^[22]

In February 2022, Polygon raised about $450 million through a private sale of its native MATIC token in a funding round led by Sequoia Capital India with participation from SoftBank Vision Fund 2, Galaxy Digital, Galaxy Interactive, Tiger Global, Republic Capital and prominent investors like Alan Howard (co-founder, Brevan Howard) and Kevin O’Leary (Mr. Wonderful from ABC's Shark Tank). The funds will allow Polygon to continue investing in cutting-edge zero-knowledge (ZK) technology that will be key to onboarding the next billion users to Web3.^[23]

Team

• Jaynti Kanani - Co-founder
• Sandeep Nailwal - Co-founder
• Anurag Arjun - Co-Founder
• Mihailo Bjelic - Co-Founder

Advisory Board

• Hudson Jameson (Ethereum Foundation)
• Ryan Sean Adams (Bankless)
• Anthony Sassano (EthHub)
• Pete Kim (Coinbase)
• John Lilic (ex ConsenSys)