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Polygon Overview: Everything You Need to Know About MATIC
Polygon (MATIC) is a layer 2 blockchain network built on top of Ethereum that processes transactions on sidechains to avoid the high gas fees associated with the main Ethereum network. Originally called Matic Network, the project rebranded in 2021 to focus exclusively on building Ethereum’s “Internet of Blockchains,” attracting major DeFi protocols like AAVE to migrate to its low-fee infrastructure.
In this article, we’ll explain how Polygon works, why it’s become a popular Ethereum scaling solution, and where you can buy MATIC tokens.
Polygon Pros & Cons
Pros
Low transaction fees
Extremely fast transactions per second
Can scale and offers staking rewards
Great for decentralized finance apps
Cons
Market Cap/ Total Value Locked Ratio is high (asset may be overvalued when this occurs)
Competition from other scaling solutions will arise
Our Favorite Exchange for Buying MATIC
Social trading platform where you can trade crypto alongside stocks and assets.
Polygon Ratings
Supply
- Max Supply: 10 Billion MATIC
Network Speed
Rating: High
Reason: Currently estimated to enable 65k transactions per second, and theoretically capable of millions of transactions per second. Block confirmations are every 2 seconds or less, meaning transacting can be done extremely quickly on the network.
Disbursement
Rating: High
Reason: When looking at the spread of holders of MATIC, it can be seen that there are no whale wallets. All large holders are smart contracts and exchange accounts. There is seemingly no holder of more than even 0.2% of the entire supply, and many of the large amounts are staking pools as well.
Developer Engagement
Rating: High
Reason: Partnerships with many other blockchain projects, and the success of the network launch has attracted new developers looking to either create new dApps on Polygon or import/scale their existing project.
Liquidity
Rating: High
Reason: MATIC has burst into the top 20 assets by market cap and is available on almost all major cryptocurrency exchanges, with daily trading volume in the multi-billions.
What is Polygon?
Polygon was originally launched in 2017 as Matic Network but rebranded in early 2021. It was co-founded by Jaynti Kanani, Sandeep Nailwal, and Anurag Arjun. The original Matic Network, while built on Ethereum, was meant to eventually be a scaling solution for any blockchain project looking to improve its throughput. With the rebrand, MATIC became focused on becoming Ethereum’s Internet of Blockchains, rather than becoming a widespread solution for multiple chains.
Now, with a focus on Ethereum, Polygon has exploded since its mainnet launch in early 2021, with projects like AAVE and 1Inch launching versions on the Polygon network with much lower fees than their Ethereum versions. The price of MATIC has matched the hype, reaching all-time highs and vaulting the digital asset into the top 15 by market cap.
How to Buy MATIC
Polygon (MATIC) can be purchased on almost all major centralized crypto exchanges and decentralized crypto exchanges, including, but not limited to:
Advantages of Polygon
Polygon boasts many advantages over Ethereum. Its transaction speeds are faster, with an estimated 65k transactions per second. These transactions also come with lower costs than a transaction on Ethereum, which makes it an attractive chain to use for decentralized finance applications.
You can stake MATIC to earn rewards. The platform has a much lower barrier to entry than staking on Ethereum.
The platform has also been built to scale as user volume increases, making it suitable for mass adoption. Projects have already begun migrating.
Disadvantages of Polygon
While Polygon itself has few disadvantages, it is at risk of competition from other scaling solutions, whether for Ethereum or other blockchains.
The only true disadvantage is that the current Market Cap to Total Value Locked ratio is also quite high (over 1). The value of the asset outweighs the value of assets locked into the network. If the ratio remains higher than 1, this can lead to assets being overvalued later on.
Polygon FAQ
Due to the lowered transaction fees and ability to interact with Ethereum Decentralized Finance through Polygon (MATIC), it is certainly possible to earn high yields on MATIC. It is important to remember that many yield returns you see are based on current deposits into the contract, meaning that as more funds get added, the contract becomes diluted and returns become lower/more realistic.
No, Binance does not own MATIC, however, MATIC Initial Coin Offering (ICO) for the project was done through the Binance Launchpad program. 19% of the 10 Billion total supply was sold during this ICO.
Yes, Polygon (MATIC) can theoretically scale to millions of transactions per second.
Yes, Polygon (MATIC) is based on a proof of stake consensus algorithm. You can stake your MATIC to earn staking rewards either by delegating to a validator or becoming a validator yourself.
Currently, the top transaction speed of Polygon (MATIC) is 65 thousand transactions per second.
Yes, Polygon (MATIC) is available on most crypto exchanges including Binance, Coinbase, KuCoin, Kraken, and Crypto.com Exchange.
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