What is Polygon (MATIC)? – Beginners Guide.

Mar 19, 2021 | Community Guides

What is Polygon (MATIC)_ - Beginners Guide.png

Let’s be honest, everyone wants to build their product using Ethereum.

No one likes to use Bing or Internet Explorer, Javascript is the internets programming language for a reason and 40% of all websites are built using WordPress. 

The cream rises to the top.

Ethereum is the gold standard of blockchain, it has handled trillions of dollars worth of transactions, over 3,000 Dapps and around 90% of all protocols are built using Ethereum. 

It is safe to say that it is the blockchain of choice for developers. Their Solidity programming language seems compatible and understood whilst their reputation and thriving community builds reputation and credibility. 

For more on Ethereum head to our article HERE.

So what’s the problem with Ethereum?


Currently, Ethereum works on Proof-of-Work consensus mechanisms, this effectively means for a transaction to be handled on the Ethereum blockchain, lots of computers scattered around the planet known as nodes, will all compete for the transaction. 

To win the transaction fee, they have to be the first miner to solve the cryptographic algorithm and publish their findings to the rest of the network so everyone can continuously update the blockchain to keep an up to date record of what is going on. 

Even to the untrained eye, this may seem a little very labour intensive and it is… 

As all the nodes/validators across the network have to compete and update/align following each new block it creates a very unsustainable network. 

Ethereum network transaction fees AKA Gas, are through the roof, sometimes above $100 for a single transaction making the network exclusionary for many small investors. 

This is caused by a backlog of transactions because the current PoW can only handle around 30 transactions a second. 

This then causes people who are willing to pay more Gas to queue jump and get their transactions pushed through first. The whole thing is a mess and needs sorting out for ETH to be used properly. 

Layer 1 scaling of Ethereum. 

Ethereum is undergoing two phases of scaling. Layer 1 scaling refers to increasing the capacity of the base Ethereum blockchain. 

To do this they will switch from Proof of Work to Proof of Stake. Proof of Stake rewards all ETH holders who stake their tokens in their staking protocol. 

Proof of Stake is a much more scalable and sustainable consensus mechanism that will allow around 100x more transactions on its own. 

ETH is currently undergoing the switch from PoW to PoS and is doing so slowly to allow it to work correctly. 

Isn’t this article about Polygon (MATIC)?

The next phase of scaling is something called… you guessed it Layer 2. 

This refers to scaling and increasing capacity in several different ways, which we will touch upon later. 

Polygon (formerly known as Matic), seeks to provide a plug-in and play framework for existing projects and a new project to be able to build on Ethereum whilst removing the current user issues caused by scaling. 

Matic allows other projects to be interoperable with Ethereum. This removes the need for a project to build its own blockchain which is just ineffective and recreates the wheel. 

Projects connecting and using Ethereum get the added security of the main layer whilst also being connected to the most thriving blockchain in the world. 

Matic was released in 2019 on the Binance initial exchange offering (IEO). The team at the time were focussed on something called plasma chains. 

Plasma chains are effectively smaller chains that can connect to the main Ethereum blockchain. Think branches to a tree…

This way transactions can be handled on these plasma chains to prevent clogging and congestion on Ethereum. The transactions are handled by selected MATIC validators and then a snapshot of what is happening is sent back to the Ethereum mainchain for continuity. 

Validators or nodes on these plasma chains stake their MATIC tokens on each individual plasma chain to validate transactions. 

So if a project wants to use Ethereum but is worried about high fees and slow transactions, it can implement MATIC and run a plasma chain. 

Until recently MATIC was the name… now it is Polygon. 

In February, Matic rebranded to Polygon and made a slight pivot, for the better in my opinion. 

As Matic was previously offering plasma chains as a solution, they are now offering multiple Layer 2 solutions as well as plasma chains. 

Some Layer 2 solutions Polygon will allow users to use and integrate into Ethereum using are:


  • Plasma Chains 

  • Zk rollups 

  • Optimistic rollups 

  • Validium chains 

Judging by a recent interview with the Web3 Foundation, Sandeep Nailwal their co-founder is looking to move with the tide as more Layer 2 protocols become available Polygon will find a way to make them accessible to new and existing projects. 

This *polygon* is an evolving network dedicated to proving the best Layer 2 solutions to the cryptocurrency and blockchain industry and it all ties back to the Ethereum network. 

I will go into Layer 2 solutions in another article or I will be here all day. 

The structure of Polygon connected to the central Ethereum hub looks a lot like Polkadot and its Parachains. These structures often get compared and it is obvious to see why. 


In essence, Polygon is to Ethereum what Parachains are to Polkadot. They are a way to handle off-main-chain transactions which reduce congestion and then settle the transactions back at the hub. 


Polkadot with its relay and parachains

How does Polygon allow projects to connect?

There are technically 4 levels (called layers here) in which a project can choose to integrate into Ethereum using Polygon. 


  1. Ethereum Layer – Extreme security by using Ethereum validators 

  2. Security Layer – Big security and DeFi protocols might want to use both Ethereum and Security layer for added reassurance but fast transactions.

  3. Polygon Network layer – Maybe an NFT market place wants to have quick transaction fees but doesn’t need the Ethereum layer for the added security. 

  4. Execution layer – This could be for a gaming protocol that doesn’t necessarily need the Ethreum or Security layer but wants ultra-quick low-cost transactions, probably what Atari will implement. 

There is always a trade-off between security, sovereignty, transaction fees and transaction speed. With Polygons layers modules, a project can pick which they seem the best fit and integrate this into their architecture.

Both Matic and Execution layers are mandatory. 

MATIC tokenomics

MATIC will still be the native token on Polygon. The plasma chains run on a proof-of-stake consensus so require MATIC to be staked to validate transactions. 

Transactions on the plasma chains will all be paid for using MATIC, so the more projects that integrate Polygon as a scaling solution, the higher the demand for MATIC…

The token also acts as a governance token. If there is a new Layer 2 scaling solution that the community like the look of and would like to see Polygon offer this as a service, those who hold the token could effectively vote on if the solution becomes apart of the products Polygon offer. 

Around 5 billion of the total 10 billion supply is currently in circulation, so it could be something to keep an eye on as effectively the price of MATIC could be diluted by half. 

Although, given the rates of adoption seen and the constant partnership announcements, I see that supply dwindling very quickly. Which is good tokenomics. 

Partnerships and overview. 

Ocean, Chainlink, Atari and more recently Coinbase are all partners of Polygon, although the list grows by the day.

I believe the recent pivot and constant ability to grow and evolve with new solutions is huge.

Looking at the current price of the $2 billion market cap even fully diluted at $4 billion I believe Matic/Polygon is undervalued.

The scope for this project is to allow Ethereum to scale and create flexible interoperability between Ethereum and other projects.

Given the constant partnership announcements and Chainlink integrations, I see this doing very well as the whole space continues to grow. 

Are there any negatives to Polygon?

Well, the initial tokenomics and circulating supply are a little worrying but not too alarming.

The fact the team are from India, I believe caused a slight dump the other day when Indian put out a blanket ban across cryptocurrency… good luck with that one. 

Although the project is global and isn’t registered in India so that was a nice dip to buy IMO. 

It could be argued that projects dedicated to one form of layer 2 scaling i.e. Optimistic roll-ups or zk rollups could just integrate and be adopted.

My response to that argument would be that Polygon is already partnered up and are operational. 

If another project is geared up to produce one scaling solution it removes the ability to pivot as and when new ones are adopted and implemented by the wider community. The recent polygon pivot accounts for such developments. 

As always this is not investment advice and is strictly for educational and entertainment purposes only. DYOR. 

I personally hold a bag of MATIC in my personal portfolio which you can get access to below. 

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