Polygon

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Discover Polygon's fundamentals and latest news.

This content was generated by Whalee (BETA), an AI crypto assitant that analyses cryptocurrencies. Informations can be incomplete and/or erroneous. Please always double check and DYOR.

What is Polygon?

Polygon (MATIC) is a Layer 2 scaling solution that runs alongside the Ethereum blockchain, providing faster transactions and lower fees. It uses a proof-of-stake consensus mechanism and has its own cryptocurrency, MATIC, which is used for fees, staking, and governance. Polygon connects and grows Ethereum-compatible blockchain networks, enhancing flexibility, scalability, and sovereignty while maintaining the security and interoperability of the Ethereum blockchain.

How is Polygon used?

Polygon (MATIC) is used in various ways within the Polygon network:

  • Transaction Fees: MATIC is used to pay for transaction fees on the Polygon network, which are significantly lower compared to the Ethereum blockchain.
  • Staking: MATIC is used for staking, which involves locking up tokens to participate in the network's proof-of-stake consensus mechanism. This helps secure the network and allows users to earn rewards.
  • Governance: MATIC holders have a role in governance, allowing them to vote on changes to the Polygon network.
  • Bridging: MATIC is required to bridge assets between the Polygon network and the Ethereum mainnet, enabling users to transfer assets between the two blockchains.
  • Decentralized Applications (DApps): MATIC is used to interact with DApps on the Polygon network, which includes a wide range of applications such as decentralized exchanges, lending protocols, NFT markets, and more.

Overall, MATIC is the native cryptocurrency of the Polygon network and plays a crucial role in its operations, security, and governance.

How do I store Polygon?

To store Polygon (MATIC) tokens, you can use various methods depending on your needs and preferences. Here are some options:

  1. Hardware Wallets:

    • Trezor: You can store MATIC tokens on Trezor hardware wallets using the Trezor Suite. This allows you to buy, receive, and send MATIC tokens securely.
    • Ledger: Ledger hardware wallets are also compatible with MATIC tokens. You can use the Ledger Live app to manage your MATIC tokens, including buying, transferring, and swapping them securely.
  2. Cold Storage:

    • Cryptotag Thor: This is a cold wallet seed phrase backup device. You create a paper wallet for your MATIC tokens and hammer your seed phrase into aerospace-grade titanium for safe storage. This method is highly durable and resistant to damage.
  3. Software Wallets:

  • MetaMask: You can store MATIC tokens on MetaMask, a popular software wallet. This allows you to interact with the Polygon network and perform transactions.

Each method has its pros and cons, and the choice depends on your specific needs, such as whether you want to HODL your tokens or engage in regular on-chain transactions.

How to buy Polygon?

To buy Polygon (MATIC) tokens, you can follow these steps:

Using Binance
  1. Create an Account: Open a free account on the Binance website or app. Verify your identification to use the platform.
  2. Choose a Payment Method: Select how you want to buy MATIC. Options include credit/debit cards, bank deposits, and third-party payment channels.
  3. Check Payment Details: Confirm your order within 1 minute at the current price. After 1 minute, the order will be recalculated based on the current market price.
  4. Store or Use Your MATIC: Once purchased, you can store your MATIC in your personal crypto wallet or hold it in your Binance account. You can also trade for other cryptocurrencies or stake it on Binance Earn for passive income.
Using MoonPay
  1. Enter Purchase Amount: Specify the amount of MATIC you want to buy in fiat currency or MATIC.
  2. Enter Wallet Address: Provide your MATIC wallet address.
  3. Verify Email and Information: Verify your email and basic information.
  4. Buy MATIC: Complete the purchase using a credit/debit card, bank transfer, Apple Pay, Google Pay, or other methods. You can buy MATIC in small or large quantities, starting from $30.
Using Coinbase
  1. Create a Coinbase Account: Download the Coinbase app and sign up. You will need a valid ID and may be asked for proof of address.
  2. Add a Payment Method: Connect a payment method such as a bank account, debit card, or initiate a wire transfer.
  3. Select Polygon: Search for Polygon on the app or website and select it.
  4. Enter Purchase Amount: Input the amount you want to spend in your local currency, which will be converted to MATIC.
  5. Finalize Purchase: Preview and confirm your purchase.
Using BitPay
  1. Enter Purchase Amount: Specify the amount of MATIC you want to buy.
  2. Buy MATIC: Complete the purchase using a credit/debit card. You can buy MATIC online or through the BitPay app.
Using Kraken
  1. Create a Kraken Account: Open a free account on Kraken's crypto exchange.
  2. Connect a Funding Method: Add a payment method to buy MATIC and other cryptocurrencies.
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History of Polygon

Polygon, formerly known as Matic Network, was founded in 2017 by a group of experienced Ethereum developers, including Jaynti Kanani, Sandeep Nailwal, Anurag Arjun, and Mihailo Bjelic. The project aimed to solve Ethereum's scalability problems by providing faster and cheaper transactions through the use of side chains running alongside the main blockchain.

In 2019, Matic Network launched its token, MATIC, through an Initial Exchange Offering (IEO) on the cryptocurrency exchange Binance. The mainnet was released in the summer of 2020, which coincided with the DeFi hype and increasing transaction costs on Ethereum, highlighting the need for a scaling solution like Matic.

In early 2021, Matic Network rebranded to Polygon, expanding its vision from a single Layer 2 scaling solution to a comprehensive platform integrating multiple Layer 2 scaling solutions and standalone blockchains. This rebranding aimed to create a multi-chain ecosystem, allowing different blockchains to interconnect and communicate seamlessly, fostering greater interoperability and collaboration across various blockchain networks.

Polygon's rebranding included efforts to forge new partnerships and expand its ecosystem. By collaborating with various projects and developers, Polygon aimed to accelerate the adoption of its scaling solutions and broaden its impact on the Ethereum ecosystem and beyond.

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How Polygon works

Polygon, formerly known as Matic Network, is a "layer two" or "sidechain" scaling solution designed to improve the efficiency and scalability of the Ethereum blockchain. It operates alongside Ethereum, allowing for faster transactions and lower fees. Here's how it works:

Key Components
  • Polygon Network: This is a separate Ethereum-compatible blockchain that handles transactions, reducing the load on the main Ethereum blockchain. It processes transactions rapidly and returns them to the main Ethereum blockchain after processing, thus lowering the network load and costs.
  • MATIC Token: This is the native cryptocurrency of the Polygon network, used for various purposes such as paying transaction fees, staking, and governance. It is an ERC-20 token created on the Ethereum blockchain.
Functionality
  • Transaction Processing: Polygon handles transactions on its separate blockchain, which allows for faster processing speeds compared to Ethereum. This is achieved by reducing the number of stops, much like an express train compared to a local train.
  • Staking and Validation: Polygon uses a proof-of-stake consensus mechanism, where validators stake their MATIC tokens to validate transactions. Validators are rewarded with MATIC tokens for their work, and delegators can also stake their tokens indirectly through trusted validators.
  • Bridging: Users can "bridge" their crypto assets from the main Ethereum blockchain to the Polygon network, allowing them to interact with a wide range of decentralized applications (dApps) without worrying about network congestion.
Advantages
  • Faster Transactions: Polygon can process up to 7,000 transactions per second, significantly faster than Ethereum's 14 transactions per second.
  • Lower Fees: Transaction fees on Polygon are often a fraction of a cent, making it more cost-effective compared to Ethereum.
  • Scalability: Polygon's design allows it to handle a higher volume of transactions, making it more scalable than Ethereum.
Usage
  • Accessing dApps: Users can interact with various dApps on the Polygon network, including decentralized exchanges, lending protocols, NFT markets, and more.
  • Staking: Users can stake their MATIC tokens to earn interest and participate in the governance of the network.
  • Bridging: Users can bridge their crypto assets between the main Ethereum blockchain and the Polygon network to take advantage of faster transactions and lower fees.

Overall, Polygon provides a scalable and cost-effective solution for developers and users, enhancing the functionality of the Ethereum ecosystem without replacing it.

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Polygon's strengths

Polygon (MATIC) has several strengths that contribute to its popularity and adoption:

  • Fast Transaction Processing: Polygon can process transactions quickly, with an average block processing time of 2.1 seconds. This is achieved through a consensus mechanism that completes transaction confirmation in a single block.
  • Low Transaction Fees: Polygon maintains consistently low transaction fees, typically around $0.01. This makes it an attractive option for users who want to minimize costs.
  • Scalability: Polygon is designed to accelerate the scalability of the Ethereum mainnet, addressing issues like high gas costs and low processing capacity. It allows developers to create user-friendly dApps with low transaction fees.
  • Compatibility and Interoperability: Polygon is built as an integral part of the Ethereum ecosystem, enabling it to leverage Ethereum's network effects and easily incorporate scalable solutions from the Ethereum ecosystem. This facilitates communication between Ethereum and other blockchains, making it a robust platform for blockchain development.
  • Security: Polygon uses a modified proof-of-stake consensus mechanism, which enables efficient and secure operation of the platform. Successful validators are rewarded with MATIC tokens, ensuring the network's security and governance.
  • Adoption and Partnerships: Polygon has significant adoption, regularly ranking in the top five in metrics like transactions, wallets, and daily active users. It has also secured substantial investments from prominent funds and collaborated with notable projects, solidifying its position in the cryptocurrency world.

Polygon's risks

Polygon (MATIC) carries several risks that investors should be aware of. Here are some of the key risks associated with MATIC:

  1. Centralization: Polygon is a centralized cryptocurrency, which goes against the decentralized nature of traditional cryptocurrencies. This centralization can lead to security concerns and potential manipulation.

  2. Competition: Polygon faces stiff competition from other Layer 1 and Layer 2 providers, including Polkadot, Cosmos, Avalanche, and others. This competition can lead to a decrease in Polygon's market share and value.

  3. Regulatory Risks: Strict regulations, especially in the wake of global cryptocurrency crackdowns, can negatively impact Polygon's value and adoption.

  1. Security Risks: The Polygon blockchain has experienced unexpected hard forks without notice, which can cause disruptions and loss of trust among users.

  2. Volatility: MATIC's value can be significantly affected by speculative trading, hedge funds, and institutional investors, leading to potential losses for investors.

  3. Validator Risks: When staking on the Matic website, there is a risk that a validator might take the coins and run, or lose the funds due to mismanagement.

  1. Technical Risks: The Polygon network is not an L2 but a monolithic L1 chain, which makes it vulnerable to the same inefficiencies as other L1 blockchains.

  2. Reorganization Risks: The network can experience reorganizations due to communication issues between validator nodes and backup nodes, which can impact the stability of the network.

  3. Market Risks: The value of MATIC is dependent on market conditions and can be affected by the performance of Ethereum, as Polygon is a scaling solution for Ethereum.

  1. Risk Score: According to InvestorsObserver, Polygon has a medium risk score, indicating that it is a relatively moderate risk investment.
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Did Polygon raise funds?

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Polygon’s team

  • Jaynti Kanani: Co-founder of Polygon Labs.
  • Sandeep Nailwal: Co-founder of Polygon Labs.
  • Anurag Arjun: Co-founder and current Chief Product Officer of Polygon.
  • Mihailo Bjelic: Co-founder of Polygon Labs.
  • David Z: Co-founder of Polygon Labs.
  • Jordi Baylina: Co-founder of Polygon Labs.
  • Antoni Martin: Co-founder of Polygon Labs.
  • Brendan Farmer: Co-founder of Polygon Labs.
  • Daniel Lubarov: Co-founder of Polygon Labs.
  • Bobbin Threadbare: Co-founder of Polygon Labs.

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