Polygon, a project that has been out there for years, 2019, is seeing a change of fortunes after giving us a rare moment in August when its presentation of an open source zkEVM – the first – led to cheers from coders the likes of which hint that something is clearly happening.
That zkEVM is still on testnet, however, with the PoS Polygon instead gaining traction presumably while everyone waits for the zkEVMs to launch.
This delegated Proof of Stake (PoS) network went out in June last year. It has only 100 validators, with everyone able to participate through delegating to them, rather than having their own say.
It also has a 5/9 multisig for upgrades, making this significantly more centralized, and thus potentially less secure, than the ethereum base layer.
However, it being the first and the other second layers (L2s) having their own centralization problems, has allowed PoS Polygon to be adopted by the NFT marketplace OpenSea.
Decentraland uses Polygon if we’re not mistaken, with it very smooth from a usability perspective and as it uses the eth EVM, it is no different than eth itself for coders.
It is a lot cheaper than eth, and it has handled eight million transactions at the peak. Now it processes about 2.7 million transactions. For that, 74,000 Matics – the project’s token – were paid in fees with one matic currently worth 93 cent.
All of that circa $74,000 was given to validators in rewards, with each transaction so being about one cent here.
These transactions are then checkpointed to the ethereum base network. The validators/stakers basically say every 21 minutes that the history so far is correct, we all attest to it, and we now record this fact on ethereum.
For that they pay a bit of gas, with the blocksize here being 75 kilobytes. Blocks run at 2 seconds, so 750k are processed in 20 seconds, and 7.5 megabyte in 200 seconds, that being about three minutes, or 75Mb every half an hour compared to bitcoin’s 3Mb-6Mb.
A 10x, with ethereum, where the blocksize is concerned, also running at the same level as bitcoin, and thus Polygon is currently processing twice the total capacity of eth with a lot more room available still.
They can do this because they’re using ethereum to checkpoint, and thus in theory you can prune – delete – historic transactions though how you really do this in a decentralized way remains for implementation.
Due to its higher capacity and EVM, Instagram has just announced that it is using Polygon to allow for NFT minting. They say:
“Creators will soon be able to make their own digital collectibles on Instagram and sell them to fans, both on and off Instagram. They’ll have an end-to-end toolkit — from creation (starting on the Polygon blockchain) and showcasing, to selling.”
Reddit also recently saw NFTs on their platform take off, and they too run on Polygon though how much staying power these NFTs will have, remains to be seen.
Another development was JP Morgan, alongside two other banks, creating a bond pool on a permissioned Aave fork running on Polygon.
This was enough to send matic up 10%, even though both bitcoin and eth are slightly down, with it anyone’s guess whether we have a bear countertrend.
Their market cap is close to entering top ten at $8 billion, just under Solana’s $11 billion, with Sandeep Nailwal, Co-founder of Polygon, stating:
“I will not rest until Polygon gets its well deserved ‘Top 3’ spot alongside BTC and ETH.”
So no ambition to flippen eth, even though some ethereans are worried they might just rug by removing their checkpoints to create a base layer.
It’s very unclear why they would and arguably it is irrelevant anyway since fees in their network are already in matic, and not eth.
That’s been one key reason why ethereans have not been enthusiastic about Polygon, and some now even see it as a threat.
How we see it depends on how it all develops, but if they successfully launch their zkEVM, which would run on eth, then one can see the PoS Polygon as some sort of subsidizing the real development and even innovation in the zkEVM project.
That zkEVM doesn’t have to conflict with eth because the matic token can have a role in staking in the L2, with some of the eth network fees in the zk evm then given to those stakers.
The matic token holders may however naturally say why not have those fees in matic, which can potentially cause a conflict as ethereans would presumably prefer to use a network that applies eth fees.
Not least because the zkEVM has to gradually work towards becoming part of the base layer. At that point, the use of the token even for staking can no longer apply, but the timeline for such base layer zk would probably be at least five years, and if we look back five years it was a very different crypto world.
That is to say, the… let’s call it pzkEVM doesn’t necessarily have to disappear even if it or something like it is merged because the pzkEVM would always have more capacity and would always be cheaper than what then would be the zkEVM as it would add compression on top of the compression.
Maybe, or maybe not. Who is to know when the base zkEVM is still at the exploratory stage, but the point overall is that L2s and eth don’t have to be in conflict unless L2s want to be in conflict.
As far as eth is concerned right now, it is benefiting from all of them, and especially from them competing with each other.
It is difficult to see that changing when considering all the dynamics holistically, and this paper is the last to pre-empt, especially without evidence.
There are decisions that projects can make which would not be beneficial, but if they are to make such decisions then let them make those decisions first.
Then the rest can make their decisions. The underlying thread however, for Matic or anyone else, is that the prize in all this is of course scaling ethereum, because if that can’t be scaled why should anyone think any other network can in a proper way whereby we can have fully permissionless open source code publishing.
And as such their decisions do have to put eth first when it comes to the real scale and usage. We do not therefore, at present anyway, see Matic as a threat.
To the contrary, right now their zk team may be a real contender. And as such we wish them all the success in all of their projects as long as they deliver on their zkEVM.