What Gives Polygon (MATIC) Value?

LeoFinance
2 months ago
5 Min Read
1004 Words


Source: @crypto-guides


There is a section in the "What is Polygon (MATIC) crypto? - Polygon Guide" titled "What gives Polygon (MATIC) value?"; with this post I hope to contribute an item or two we don't usually hear about from both legacy media and even cryptocurrency-oriented media. Feel free to adjust as needed for Guide purposes.


What Gives Polygon (MATIC) Value?

The Massive Presence of Ethereum in Cryptospace

According to Emma Newbery for the Motley Fool in her 6 June 2021 article "Why Mark Cuban Likes Cryptocurrency Polygon," 80% of decentralized appliations use Ethereum-- 4 out of 5. Of the 4,288 dApps tracked by dapp.com as of this Guide's posting, close to 3,431 dApps operate on Ethereum. Numbers like those are enough reason to choose Ethereum for dApp development as well as for investing. It's also reason enough to go with Polygon as a Layer 2 solution that takes advantage of Ethereum's ubiquity.

Polygon Shores Up What Ails Ethereum

Given the massive presence of Ethereum in cryptospace, it's no surprise that the sheer number of dApps using Ethereum cause the main blockchain to be prone to traffic congestion and it's associated gridlock-induced high gas fees. While other Layer 2 solutions exist to offload the burden off Ethereum, major investors such as Mark Cuban recognize Polygon as the leader in Ethereum infrastructure development and scaling.

Since Polygon is focused on transaction processing throughput, it can process far more transactions than native Ethereum. This rapid processing allows gas fees to be a fraction of what they would be on native Ethereum.

Short-Term Pain, Then Long-Term Gain

Like Bitcoin before it, Ethereum had been using the Proof of Work (PoW) consensus algorithm to validate blocks to be added to the blockchain. PoW has a reputation for being energy-intensive, so it's no surpirse that Ethereum also gets the same criticism as Bitcoin. Ethereum is transitioning to Ethereum 2.0, which will use he much faster Proof of Stake (PoS) instead of PoW.

For some time after the transition, no one knows how the switch will impact performance and reliability. While investing in Ethereum is as much a no-brainer as is investing in Bitcoin, Ethereum will take some hits in its price around this time. This also means that the sidechains attached to Ethereum will take some hits in their prices-- including Polygon.

However, given Polygon's reputation as the sidechain to form an Ethereum's Internet of Blockchains, Polygon will weather the storm related to the switch to ETH2.0 and prove to be even more valuable. The MATIC utility and governance token used by Polygon will ultimately gain over the longer term one the transition to ETH2.0 is past.

At the end of April 2021, NASDAQ had MATIC at USD 0.86. End of Year estimates for MATIC range from a conservative USD 0.98 to a more bullish USD 1.91.

Polygon Is the Matic Network Taken to a Higher Level

Polygon had been known previously as Matic, and Matic used the MATIC token for staking, security, and governance. When the Matic network was rebranded as Polygon, the token kept its MATIC name.

Matic took Ethereum transactions to process them at its layer before finalizing transaction on Ethereum. Meanwhile, Polygon is designed to be a bridge or conduit for all Ethereum sidechains.

Polygon will allow developrs to launch preconfigured blockchain networks with settings customized for their needs. Additionally, these blockchains can be customized with an increasing selection of modules to allow the resulting blockchains to have more specific functionality.

Polygon as Multitool

Most people think that Layer 2 sidechains for Ethereum handle scaling in one way or another all the time. One way Polygon backs up its claim of being "Ethereum's Internet of Blockcahins" is by using a variety of technologies for scaling and processing.

PoS Chain

For blockchains which are launched on Polygon, a Proof of Stake security layer is added to them.

Plasma Chains

The Plasma technology which had been used in its Matic Network incarnation is used to move assets between the main or originating blockchain and child blockchains by way of Plasma bridges.

ZK-Rollups

Another scaling solution is the technique of bundling a large number of transfers off-chain into a single transaction. Zero-knowledge proofs are what is used to add the final public record to the Ethereum blockchain.

Optimistic Rollups

This is a solution running on top of Ethereum to facilitate near-instant transactions through the use of "fraud proofs".


Due to the ubiquity of Ethereum dApps, Polygon is assured a role as a Layer 2 scaling solution.

As great as Ethereum is for both development and payment processing, its greatest flaws are traffic congestion and high gas fees. Polygon offloads some of the burden onto its Layer 2 placement over Ethereum. This facilitates in faster processing, thus resulting in much lower gas fees.

Ethereum's switch from PoW to PoS in Ethereum 2.0 is anticipated to cause uncertainty in performance and security after the switch is done in either late 2021 or early 2022. If Ethereum goes through a rough patch, so will its sidechains; to some extent, Polygon will be adversely affected as well. Given how Polygon is designed and what it can offer other sidechains, Polygon will do well once Ethereum is back to its winning ways (if not sooner).

As good as Matic Network had been, Polygon takes that network to a higher level thanks to its development and the solutions it offers developers.

While blockchains and sidechains tend to have one way of scaling all the time, Polygon uses various scaling techniques in order to provide faster transaction processing. As a result of the faster transaction processing, gas fees are greatly reduced.

If a Layer 2 sidechain solution is needed for Ethereum, Polygon is the go-to Layer 2 sidechain solution. Mark Cuban is putting his money where is mouth is and investing in Polygon in a major way as his friendly rival in crypto conducts himself like a FUDster.

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