Northcrypto | A Finland based cryptocurrency exchange (2024)

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Polygon (POL) is one of the most popular scaling solutions in the cryptocurrency market. Polygon’s goal is to provide Ethereum and other platforms faster and cheaper transactions. This is possible by using side chains running alongside the main blockchain. Indeed, a Polygon can best be described as an ecosystem compatible with several different blockchains. In the Polygon ecosystem, it is possible to either build applications or move applications from Ethereum or other similar platforms to achieve faster transactions and lower transaction costs.

Polygon provides a solution to the Ethereum's scalability challenges. Over the years, the incredible popularity of the Ethereum blockchain has led to the limits of Ethereum’s capacity beginning to come to fruition. Scalability challenge has been shown to Ethereum users by increased transaction fees.

Polygon users can transfer Ethereum-based cryptocurrencies to the Polygon ecosystem using the Polygon bridge (an application that combines two blockchains) and, if desired, return them to the Ethereum blockchain. Polygon also has its own cryptocurrency called POL, which is used as a governance token for Polygon’s ecosystem, payment of transaction costs on Polygon’s network, and staking according to Polygon’s Proof of Stake algorithm.

Building new applications on top of Polygon is very similar to Ethereum. Ethereum has the largest developer community in the world of cryptocurrencies. Using a Polygon, they can build more scalable applications than ever before. Thanks to better scalability, transactions in the Polygon network are significantly faster and cheaper than in the Ethereum network. This is one of the main reasons why many applications, especially those running on the Ethereum network, are currently being migrated to Polygon’s network. With Polygon’s solution, transaction costs are no longer barriers to using the world’s most popular decentralized peer-to-peer loan service, Aave, or other Ethereum-based DeFi services.

The history of Polygon

The story of Polygon began in 2017 when a project formerly known as Matic was founded to solve Ethereum’s scalability problems. Matic’s token called MATIC was launched in 2019 with the IEO (Initial Exchange Offering) on the cryptocurrency exchange Binance.

In the summer of 2020, Matic took a significant step forward when its mainnet was released. The release of Matic network took place at best possible time, as the transaction costs of Ethereum network increased with the DeFi hype of summer 2020. Increased transaction costs showed that there was a real need for a scaling solution like Matic.

At the beginning of 2021, Matic changed its name to Polygon. In addition to the rebranding, Polygon announced at the beginning of 2021 that it would continue to offer a scaling solution not only for Ethereum but also for other blockchains and for a wide range of needs. The project name change was not the only change, as in autumn 2024 Polygon's MATIC token was migrated to POL token.

Polygon operating principle

Polygon’s goal is to be a blockchain concentration that allows blockchains and distributed applications to customize the scaling solution that best suits their needs. Polygon enables blockchains and distributed applications can also be interconnected to form an extensive network of blockchains and distributed applications.

The scaling solutions offered by Polygon are based on layer 2 solutions and sidechains. Layer 2 is a general term for various solutions designed to handle transactions outside the mainnet. Layer 2 solutions utilize a distributed network security model to ensure their security. The sidechains work alongside the main blockchain, enabling better scalability for the main network. Polygon’s sidechain utilizes staking according to the Proof of Stake algorithm in its operations. Staking allows anyone who owns POL tokens to lock the POL tokens they own for the network maintenance. Compensation paid for blockchain maintenance work is, of course, also paid in POL tokens.

Polygon has created an entire ecosystem designed to make it easier to combine several different scaling solutions. Currently, the scaling solutions offered by Polygon are Polygon’s sidechain, as well as a technology called Plasma. Plasma is a technology designed to improve the scalability of Ethereum, which includes several child chains outside Ethereum’s main network. Plasma makes it possible for each application to create its own Plasma subchain, freeing up the capacity of the main chain for other uses. In addition to side chains and Plasma, Polygon also aims to enable various Rollup scaling solutions (Optimistic rollups and ZK rollups) where transactions are verified outside the blockchain before they are recorded in the blockchain.

Polygon’s versatility allows new projects to choose the scaling mechanism that suits best for their needs. Several different scaling solutions also enable that if one solution becomes dominant in the future, all the applications built on top of Polygon can be easily modified to support this dominant solution.

Polygon is fully compatible with Ethereum Virtual Machine (EVM). Distributed applications and smart contracts built on top of Ethereum can be easily transferred directly to Polygon. Polygon’s Ethereum compatibility has enabled numerous projects running on Ethereum to take advantage of Polygon's scaling solution in their operations.

Polygon as an investment

Polygon is one of the most popular ecosystems in the cryptocurrency market, offering various scaling solutions. Polygon is compatible with several different blockchains, but its primary focus has been on solving the scalability problem of Ethereum. The popularity of Ethereum’s ecosystem also affects Polygon’s success.

With Polygon´s solution, ecosystems can scale better than before. The massive growth in users and applications over various blockchains has shown a real need for a scaling solution like Polygon.

Polygon’s development work is active, and its use is constantly growing. Polygon’s numerous different scaling options make Polygon a very versatile scaling solution. Polygon has been especially popular with Ethereum-based applications. More and more applications built on top of Ethereum have taken advantage of the scaling solutions offered by Polygon to achieve faster and cheaper transactions.

It is possible to invest in Polygon by purchasing Polygon's own token called POL. If there is a demand for the scaling solution offered by Polygon and the popularity of Polygon increases, this will naturally have a positive impact on the price of the POL token. It is possible to invest in Polygon's POL token on Northcrypto.

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