Ethereum is one of the most popular blockchain projects. The number of applications, smart contracts, and other functionality built onto the blockchain right now shows that there is a market for decentralized, programmable money.
However, Ethereum’s popularity has also been a curse for it, leading to increased transaction fees and transaction times across the ecosystem.
To help solve these issues, Ethereum works with other projects to increase the number of transactions that can settle onto the blockchain.
Polygon is one of these projects that looks to utilize multiple blockchains working in tandem to bring more efficient transaction data to Ethereum’s distributed ledger.
Before you decide to buy MATIC, you should understand what Polygon is. Polygon is a cryptocurrency tech platform meant to help other blockchains connect with the Ethereum blockchain.
Specifically, Polygon is a network of blockchains designed with the express purpose of easing the burden on Ethereum’s blockchain by offloading transactions to a faster, cheaper platform that can bundle transaction data into smaller file sizes.
Thus, Polygon has earned the nickname “Ethereum’s internet of blockchains.”
Overall, the network operates Ethereum blockchain projects and connects these projects with less-congested blockchains. This architecture allows a project on Ethereum to increase its scalability, responsiveness, and interoperability with other projects. All of these benefits exist while allowing projects to remain connected to the Ethereum blockchain and its current support.
The MATIC token is an ERC-20 token, making it a functional token on both the Ethereum blockchain and the Polygon network of sidechains. On its network, the MATIC token fills several roles, such as transaction fuel, staking option, and governance token.
The network utilizes a proof-of-stake consensus model where users submit their tokens to validator nodes to ensure valid transactions are verified across the project. For participating in valid transaction verification, users receive MATIC as a financial reward and incentive to not sell their tokens.
Polygon also has a commitment to sustainable ventures, including tracking its carbon usage for maintaining its network. Given the concerns about cryptocurrency’s electricity usage and how that affects the environment, Polygon’s commitment to sustainability shows that this concern is part of Ethereum’s scaling solutions.
Polygon started in 2017 as a joint venture called Matic Network in India. Several talented Ethereum developers, such as Anurag Arjun, Jaynti Kanani, Mihailo Bjelic, and Sandeep Nailwal, all worked to create this project during that time.
After going live in 2020 and attracting names like Decentraland and MakerDAO to its blockchain, Matic Network rebranded to Polygon after a vote decision in February 2021.
The Polygon network is a collection of sidechains to Ethereum, rather than a singular blockchain. These sidechains process transactions and package them into smaller components to send down to the base Ethereum blockchain for reconciliation.
Overall, three components make up the ways Polygon sidechains bundle transactions:
Plasma chains: Sidechains that group transactions together into a single transaction for submission to the Ethereum blockchain.
zk-Rollups: A sidechain protocol that allows more than one transfer to go into a single submission for the Ethereum blockchain.
Optimistic rollup: A sidechain that bundles together transactions and data involving Ethereum smart contracts.
With these three components, Polygon groups together its transactions and sends the compiled data to the Ethereum blockchain. Once on the Ethereum chain, Ethereum verifies the transaction data and settles the data into the distributed ledger.
MATIC is the native cryptocurrency to Polygon, making it the main fuel for development and transactions across the Polygon network. In addition to paying transaction fees, users can stake MATIC tokens to receive a payout for participating in the network’s proof-of-stake consensus model.
Polygon’s MATIC token also works as the governance token for voting on proposals to the Polygon network infrastructure itself. Nodes holding MATIC align with options presented for proposals, with their voting power being proportional to the amount of MATIC they possess.
Polygon wants to be one of the solutions to Ethereum’s scaling issues. Over time, Ethereum has seen massive increases in gas fees and transaction times due to the number of transactions happening on the blockchain.
Because these transactions all fight for space in the block of the distributed ledger, gas fees are increased to incentivize nodes to take their transactions over others.
Rather than focus on a way to process more transactions on the Ethereum blockchain, Ethereum developers looked into sidechains and other Layer-2 solutions to help users find cheaper and faster ways to process transactions.
Polygon’s sidechains cost less money and take less time to process than the main Ethereum chain.
Rather than exist as a singular chain on top of Ethereum, Polygon has taken the approach other blockchain projects like Cosmos and Avalanche did by offering multiple blockchains as a scaling solution.
These multiple chains work together to handle the different kinds of transactions and data sources in the network while providing a central hub for users and developers.
Polygon utilizes the same smart contract language and formatting as Ethereum, allowing Ethereum projects to migrate over to Polygon. Combined with the lower price of the MATIC token and faster processing times, Layer-2 solutions like Polygon have become a popular choice for those working on the Ethereum blockchain.
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