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Altcoin Review

What Is Polygon (POL)? All You Need To Know

Author

Rickie Sanchez

Tags

Reading time

6 mins
Last update

Author

Rickie Sanchez

Tags

Category

Altcoin Review

Reading time

6 mins
Last update

Author

Rickie Sanchez

Tags

Reading time

6 mins
Last update


Polygon (POL)

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Key Takeaways

  • Polygon (POL) is a Layer-2 scaling solution that enhances Ethereum’s performance by offering faster and cheaper transactions.
  • Additionally, the project is also attracting a growing number of decentralized applications (dApps) across various sectors, such as DeFi, NFTs, and gaming.
  • MATIC tokens were migrated to a new token called POL on September 4th, 2024.

Imagine a blockchain that combines Ethereum’s security with lightning-fast transactions and cheaper fees. Polygon is a game changer in the crypto realm, perfectly connecting these two domains.

This article will help you understand about Polygon (POL), its history, its features, its advantages, and how it works in the constantly changing landscape of digital currencies. Whether you are new to cryptocurrency or an experienced enthusiast, knowing the project’s influence is critical for navigating the future of decentralized technology.

What Is Polygon (POL)?

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Polygon (POL) is a Layer-2 scaling solution for Ethereum that enhances the network’s performance by improving transaction speed and reducing costs. It does this by building on top of Ethereum’s blockchain, creating side chains that allow for faster and cheaper transactions while maintaining compatibility with the Ethereum ecosystem.

Polygon’s scalability makes it ideal for decentralized apps (dApps), DeFi projects, and NFTs, addressing Ethereum’s limitations in handling high transaction volumes. Its flexibility and low fees have made Polygon a popular choice for developers and users alike in the blockchain space.

History

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Jaynti Kanani, Sandeep Nailwal, Anurag Arjun, and Mihailo Bjelic founded Polygon, formerly known as Matic Network, in 2017 to address Ethereum’s high gas fees and sluggish transaction times. It began as a Layer-2 scaling solution using Plasma technology and PoS side chains but has since expanded into an all-encompassing Internet of Blockchains that works with various scaling solutions.

This has made Polygon popular among Ethereum scalability developers since it offers rapid transactions at reduced prices while also growing the ecosystem. This platform’s evolution from a simple scaling technique to a fully functional multi-chain platform has propelled it to the top of the list of decentralized applications.

How Does Polygon (POL) Work?

Polygon works by enhancing Ethereum’s scalability and performance through a multi-layered approach. Here’s a breakdown of how it functions:

Sidechains And Plasma Chains

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Polygon utilizes a network of separate blockchains running parallel to the Ethereum mainnet. These can process transactions independently, significantly reducing congestion on the main Ethereum network. 

Polygon also leverages Plasma, a scaling framework that allows for batching transactions off-chain before periodically submitting them to the Ethereum blockchain for final settlement. This ensures the security of Polygon transactions while enabling faster processing times.

Validators And The POL Token

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Polygon utilizes a Proof-of-Stake (PoS) consensus mechanism to secure the network and validate transactions. Validators stake POL tokens to participate in the validation process and earn rewards. 

ZK And Optimistic Rollups

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Supported by Polygon, zk-rollups and optimistic rollups are modern methods for collecting multiple transactions into a single batch before submitting them to Ethereum. In terms of security and scalability, zk-rollups employ zero-knowledge proofs, while optimistic rollups take transactions as valid unless contested.

Polygon SDK

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Through the Polygon Software Development Kit (SDK), developers can build their own sidechains or layer-2 solutions with customizable features, such as consensus algorithms and virtual machines, that suit different application needs.

POL Token Migration

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The migration from MATIC to POL tokens was a significant event in Polygon’s history. The goal of the migration was to align Polygon’s governance structure with its decentralized ethos and empower the community to play a more active role in the network’s development.

The migration process involved a series of steps. First, the Polygon community voted on a proposal to approve the migration. Once the proposal was approved, a snapshot of MATIC token holders was taken. This snapshot determined the distribution of POL tokens among the MATIC holders. After the airdrop, the MATIC token was gradually phased out. Over a period of time, MATIC tokens could be exchanged for POL tokens at a fixed rate.

The migration was met with positive responses from the Polygon community. Many users saw it as a step towards greater decentralization and community involvement. However, there were also concerns about potential technical challenges and the impact on the network’s ecosystem.

Despite these concerns, the migration was ultimately successful, and POL became the primary token of the Polygon network.

Polygon (POL) Token And Tokenomics

Polygon’s economic structure centers on POL, which is used for transaction fees, staking, and governance within its network. The total supply is capped at 10 billion, with much already in circulation. POL secures the network through its Proof-of-Stake (PoS) system, where validators stake tokens to validate transactions and earn rewards. 

Transaction fees are paid in POL, further incentivizing participation. The token also plays a key role in governance, allowing holders to vote on protocol upgrades. This structure encourages long-term holding and fosters network growth, ensuring security, flexibility, and active involvement in Polygon’s development.

Tokenomics

The POL token is Polygon’s native cryptocurrency. It is used for:

  • Transaction Fees
  • Staking
  • Governance

Token Details

Total Supply: 10,264,044,460 POL

Circulating Supply: 7,393,287,111 POL

Current Price: $0.4039

Market Capitalization: $2,986,434,701

This information is current as of October 1st, 2024, and the token’s price, market value, and available supply may fluctuate.

Distribution (Before Token Migration)

  • Staking Rewards (12%)
  • Foundation (21.86%)
  • Ecosystem (23.33%)
  • Team (16%)
  • Advisors (4%)
  • Private Investors (3.8%)
  • Binance Launchpad (19%)

Where Can I Buy Polygon (POL)?

Binance – Binance is a major exchange offering a wide range of cryptocurrencies. It offers multiple ways to buy crypto, including credit cards, debit cards, and peer-to-peer (P2P) trading.

Bybit – This exchange is known for its derivatives and margin trading features, but you can also use the platform for spot trading.

Coinbase – Coinbase is an American-based cryptocurrency exchange that allows you to buy cryptocurrencies using various payment methods, including bank transfers, debit cards, and wire transfers.

Is Polygon (POL) A Good Investment?

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Due to its strong position as a leading Layer-2 solution for Ethereum, Polygon can be an attractive investment option as it provides faster and cheaper transactions. Its scalability and low fees make it appealing to decentralized applications (dApps), DeFi, and NFTs, which gives it an increasing use case in the crypto world.

Polygon has proved to be resilient and has promise for long-term growth owing to developer adoption growths and partnerships with key projects. However, like all cryptocurrencies, this has risks such as market volatility and competition from other blockchain solutions resulting in the need for investors to assess their risk appetite.

Pros

  • Strong Ecosystem Growth – The Polygon network is attracting many decentralized applications (dApps) in various fields, such as DeFi, NFTs, and gaming.
  • Interoperability With Ethereum – Polygon is designed to be interoperable with Ethereum, meaning assets and data can move seamlessly between the two networks. This is a significant advantage for developers building applications on Polygon.
  • Scalability – Polygon’s architecture allows it to handle a much higher volume of transactions than Ethereum’s mainnet. This is essential for broader adoption of blockchain technology.

Cons

  • Bridge Risk – Moving assets between Polygon and Ethereum involves bridges, which have been exploited by hackers in the past. This introduces an element of risk when transferring funds.
  • Reliance on Ethereum – While interoperable, Polygon still depends on the underlying security of the Ethereum blockchain. Any issues with Ethereum could impact Polygon.
  • Token Migration – MATIC tokens were migrated to a new token with the ticker symbol “POL” on September 4th, 2024, adding some uncertainty to investors.

Final Thoughts

To wrap up, Polygon (POL) is a strong Layer-2 scaling solution for Ethereum that solves the issues of high fees and slow transactions on the network. It enables scalability cost-effectively and securely through a series of periodic interactions with the Ethereum mainnet using sidechains, plasma chains, and roll-ups.

Whether Polygon (POL) is a good investment depends on your risk tolerance and goals. Remember, this guide only provides a starting point for your research. Always conduct your due diligence before making any investment decisions.

Rickie Sanchez

About the Author

Rickie is a seasoned blockchain and cryptocurrency enthusiast with extensive experience dating back to late 2017. His crypto journey has taken him across the globe, where he has worked with clients from diverse backgrounds. Notable collaborations include ghostwriting for a media startup, contributing to a blockchain blog based in Zurich, managing a weekly newsletter for a client in Japan, and serving as a token review writer for a crypto blog headquartered in the Netherlands. He will not rest until every individual is empowered with the knowledge and insights needed to thrive in the crypto landscape.