Polygon is one of the many blockchains developed to scale Ethereum. The network has gained popularity within the crypto sphere in recent months, with several projects being launched on it. This guide discusses all you need to know about Polygon. Keep reading to learn more.
Understanding Polygon
Polygon is Ethereum’s sidechain. This means it is built atop the Ethereum blockchain to improve its performance. That said, Polygon executes transactions faster and quicker than Ethereum.
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The sidechain was founded in 2017 by blockchain engineers Anurag Arjun, Jaynti Kanani, and Sandeep Nailwal. At the time, the trio raised over $5.5 million through two Initial Coin Offerings (ICOs). Before launching Polygon, the engineers had been massive contributors to the Ethereum ecosystem.
Polygon’s native token is known as MATIC. It was created to serve several purposes, including paying gas fees and allowing holders to participate in the governance of the protocol.
Due to Polygon’s ability to facilitate fast and cheap transactions, the network has attracted multiple Web3 developers who have built or plan to build decentralized applications. Several popular NFT collections also live on the Polygon blockchain.
How Polygon Works
Polygon adopts the Proof-of-stake consensus mechanism to validate transactions. Moreover, it uses a technology called Plasma to communicate with the Ethereum blockchain, enabling decentralized applications on the two protocols to connect seamlessly. This also means Ethereum users can transfer tokens to a Polygon-based app and vice versa.
Polygon is attempting to solve the issue of network incompatibility by becoming interoperable with other blockchains. If Polygon achieves this goal, it may see significant growth over the coming years.
Polygon’s Competitors
While numerous blockchains have been developed to compete with Polygon, Polkadot remains the biggest rival. Although the two aim to become compatible with other networks, the difference between them is that Poldakot is a layer-1 blockchain, meaning it operates independently, unlike Polygon, which is linked to Ethereum.
Other Polygon’s competitors include Arbitrum, Cosmos, and Kusama.
What is MATIC?
As mentioned, MATIC is Polygon’s native token. Besides being used to pay gas fees and serve governance purposes, the token can be staked on the Ethereum network for rewards. MATIC holders who do not want to participate actively in securing the Polygon network can delegate their tokens to validators using their MetaMask wallets.
As more Web3 developers continue to create decentralized applications and NFT projects on the Polygon blockchain, MATIC use cases will likely increase.
The crypto asset has a maximum supply of 10 billion. 41.8% of that figure has been allocated to founders, 35.3% for airdrops and pre-mined prizes, and 22.9% to investors. As of this writing, data from CoinGecko indicates that the number of circulating MATIC tokens stands at 9.3 billion.
It is worth mentioning that 22.8% of the total supply was sold through ICOs in 2017. At the time, each token was priced at $0.0026. Polygon developers ended up netting $5.5 million, as stated earlier.
MATIC Price Prediction
Although the market is currently on a downtrend, crypto analysts are convinced that MATIC will see its value grow to $1.4 by the end of 2024 and even shoot to $5 by 2027. The token trades at $0.546 as of September 19, 2023, according to CoinGecko data.
All said, price predictions may be wrong. So, always do your own research before investing in any token.
How Do You Stake MATIC?
Being a Proof-of-Stake blockchain, Polygon relies on validators to check transactions on the network. These validators receive rewards in the form of new MATIC tokens. To become a validator, you will need to stake your MATIC. However, you can also become a delegator. This means entrusting your tokens to validators so that you can get a portion of their rewards.
Conclusion
Polygon’s capabilities of executing transactions at cheaper costs and faster speeds than most blockchains are a sign that more Web3 projects will adopt the network in the future. The increased adoption may be good for MATIC, enhancing the chances of the token hitting the analysts’ price predictions.