What Is Polygon (MATIC)? Definition, Strengths, and Weaknesses

What Is Polygon (MATIC)?

Polygon is a cryptocurrency, with the symbol MATIC, and also a technology platform that enables blockchain networks to connect and scale. Polygon—"Ethereum's internet of blockchains"— launched under the name Matic Network in 2017.

The Polygon platform operates using the Ethereum blockchain and connects Ethereum-based projects. Using the Polygon platform can increase the flexibility, scalability, and sovereignty of a blockchain project while still affording the security, interoperability, and structural benefits of the Ethereum blockchain.

MATIC is an ERC-20 token, meaning that it's compatible with other Ethereum-based digital currencies. MATIC is used to govern and secure the Polygon network and to pay network transaction fees.

Key Takeaways

  • The Polygon platform, powered by the MATIC token, was launched to connect and grow Ethereum-compatible projects and blockchains.
  • MATIC tokens are used to govern and secure the Polygon network and pay transaction fees.
  • Polygon uses a modified proof-of-stake consensus mechanism to efficiently operate the platform.

Understanding Polygon

Polygon uses a modified proof-of-stake consensus mechanism that enables a consensus to be achieved with every block. (Achieving consensus using traditional proof-of-stake requires processing many blocks to achieve consensus.) The proof-of-stake method requires network participants to stake—agree to not trade or sell—their MATIC, in exchange for the right to validate Polygon network transactions. Successful validators in the Polygon network are rewarded with MATIC.

The Polygon network, as a secondary scaling solution, aims to address the limitations of the Ethereum platform—namely high transaction fees and slow transaction processing speeds. Polygon can:

  • Deploy existing blockchain networks and develop custom blockchains
  • Enable communication between Ethereum and other blockchains
  • Help existing blockchain networks to become compatible with Ethereum

Polygon has committed $100 million to projects enabling the transition to decentralized internet, otherwise known as Web 3.0.

Polygon was co-founded by Jaynti Kanani, Sandeep Nailwal, Anurag Arjun, and Mihailo Bjelic. The platform now supports over 7,000 blockchain-based projects.

Advantages and Disadvantages of Polygon

You may be wondering about the major strengths and weaknesses of Polygon. Especially if you are considering buying MATIC, keep reading to understand Polygon's advantages and disadvantages.

Polygon's strengths include:

  • Ability to process transactions quickly: By using a consensus mechanism that completes the transaction confirmation process in a single block, Polygon can maintain fast transaction processing speeds. Polygon's average block processing time is 2.1 seconds.
  • Transaction fees are consistently low: Polygon keeps its fees to use the platform low, with a typical transaction fee of around $0.01.

Polygon's weaknesses include:

  • Not an autonomous blockchain: Polygon is a Layer 2 solution that works atop the Ethereum platform. If the Ethereum platform experiences serious disruptions or ceases to exist, then Polygon would likely lose its value.
  • Limited use cases for MATIC: The MATIC token is designed to govern and secure the Polygon platform and pay transaction fees. Unlike some digital currencies, MATIC is not generally used for everyday purchases.

Polygon vs. Ethereum

Polygon is a secondary scaling solution that is compatible with and complements the Ethereum blockchain. Polygon aims to improve upon Ethereum as a blockchain development network. Polygon complements Ethereum by providing additional features relating to security, blockchain sovereignty, user and developer experience, and modularity.

Both Ethereum and Polygon use a modified proof-of-stake mechanism that enables transactions to be processed quickly and cheaply. (Ethereum officially switched to a proof-of-stake consensus mechanism in 2022.)

Future of Polygon

Polygon launched Polygon Studios, a subsidiary of Polygon that focuses on blockchain gaming and non-fungible tokens (NFTs), in 2021. Polygon Studios, if successful, could establish Polygon as a leading technology provider for decentralized gaming and NFTs.

In Jan. 2022, Polygon got a new chief executive officer (CEO). Ryan Watts has joined Polygon from YouTube, where he was the head of gaming.

How Much Are MATIC Coins Worth?

For most of their history, Polygon's MATIC tokens have traded for less than 5 cents. MATIC's price has appreciated significantly but has remained below $3.00. MATIC was trading for around $0.75 as of September 22, 2022.

How Many Polygon Coins Are There?

The maximum supply of MATIC is 10 billion tokens. The majority—8.73 billion MATIC—have already been issued.

How Can I Buy MATIC?

The easiest way to buy Polygon's MATIC tokens is through a major cryptocurrency exchange. You can establish an account with an exchange like Coinbase or Kraken, and then fund the account with your local currency. You also need a digital wallet, which can be self-hosted or hosted by the cryptocurrency exchange.

The Bottom Line

Polygon (MATIC) is a cryptocurrency and a technology platform that was launched to connect and grow Ethereum-compatible projects and blockchains. MATIC tokens are used to govern and secure the Polygon network and pay transaction fees and investors can buy MATIC tokens on exchanges such as Coinbase or Kraken.

Article Sources
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