Introduce
Until now, when the bottleneck of the Ethereum network could not be completely solved, its second-layer solution came into being and showed its extraordinary advantages.
Polygon, formerly Matic Network, has ambitiously deployed all Layer 2 solutions autonomously, Bridge Smart Contract Development Services making it an all-in-one solution platform for both user and developer services.
What is a Polygon? What is $MATIC?
$MATIC is a token and Polygon was MATIC three years ago. At the time, three groups of developers had an idea to create a second layer (Layer 2) just for the Ethereum layer. They call it MATIC. After a while of hard work, it’s finally live now! However, its name has also been changed to Polygon.
Layer 1
The first layer is the base layer, such as Bitcoin, Ethereum, and Polkadot. They are the core base layer that allows all these different transactions to work properly. All transactions that are going on go into this big database, the first layer.
Layer 2
The second tier is a relatively smaller database that sits on top of the first tier database to enable faster and cheaper transactions. As readers know, transactions on the first layer are very expensive because it is more secure. So if there are more artworks to be processed, or more NFTs to be created, the average person doesn’t want to spend that much money on that all the time. This is where the second layer can fill in because we have faster and cheaper transactions in the second layer, which is a perfect use case for NFTs.
How do polygons work?
Polygon operates in four composable layers:
Ethereum layer
This layer can be regarded as the senior layer. In this layer, the core foundation or basic architecture involved in different transactions is recorded. It’s like a giant core database.
This is where certainty, staking, disputes, messaging, and all of these different verifications related to encryption come in. This layer is very secure, but precisely because it is so secure, sometimes you have to make tradeoffs in its scalability.
security layer
This layer sits above and operates parallel to the Ethereum layer. It’s like a synthetic world, or the game world of The Sims. You exist in real life, and in a computer game, Cross chain bridge development there is a person who lives in a similar way to yours, albeit in a different kind of house.
Again, all these transactions take place on the Ethereum layer, and on the security layer, they run in parallel with each other. You can share different kinds of verification in the Ethereum layer and the security layer.
Polygon Network Layer
In the polygonal network layer, we can view transaction collateral, consensus, ordering, and data. Basically this is where the second layer exists, and you can have your own consensus across various applications.
Suppose I want to create a $LISA token and a LISA network. Ethereum now uses Proof of Work and is changing to Proof of Stake. But I don’t want to use any of them, because I can use delegated proof-of-stake in the LISA ecosystem, which is a different consensus mechanism. I still like a lot of what the Ethereum layer does though, but its consensus mechanism has nothing to do with what I want.
I can still get into that layer because all of this is based on the Ethereum layer, but I can use the Polygon network to create my own ecosystem of sub-blockchains. Polygon allows me to build my own consensus and build my own economic structure.
In this polygon network layer, we can add ZK Roll-up, Optimistic Roll-up and all these different types of second layer scaling solutions. Therefore, the polygonal network layer allows you to create your own logic for your own blockchain, and it is faster and cheaper.
executive layer
At the polygon network layer, I can create my own logic and consensus. But the real added value is execution, because I can code many different economic logics into smart contracts and then execute them. The polygonal network layer allows us to build the execution environment to execute our ideas, so it is basically a smart contract application layer.
Polygons and NFTs
NFT problem
There are two main problems with NFTs, which can be boiled down to the same core problem — high transaction fees. We can view transaction fees in two ways:
Minting: When minting coins, we have to pay a lot of transaction fees. As an artist, it is very expensive to create our own artwork and put it on the market because we are both creating artwork and paying transaction fees.
Buying: When I want to buy art from an artist, I’m willing to go and pay the artist, but I’m also paying a lot of transaction fees to buy that art. One of the reasons NFTs are so expensive is because the cost of minting is added to the cost of the NFT itself. This is not fair because some NFTs are really beautiful and we wish more people could use them. The basic idea of crypto/blockchain and DeFi/decentralization is to make it easier for people to get something. But the current situation of paying so much for a small piece of art to get started is clearly not what Bitcoin or blockchain or decentralized ecosystems were created for.
solution
The main argument is that we want to make minting cheaper because minting is part of the cost price for the artist to create these artworks. If we can reduce the cost of minting coins, it will be cheaper to create these works of art. These works of art will be cheaper, so people will be able to buy them more easily.
The Ethereum layer and security layer are expensive, and it takes time to verify. This process is very expensive because it only involves security, determinism and verification. Can we do something to ensure safety, but make it cheaper to use polygons?
Token Design
The project started about three years ago and currently has 70% of the tokens in circulation with an inflation rate of around 14.2%. Its full circulating supply will end in 2022, so many rewards will be offered to validators and stakers. What we’ve seen with some of the other tokens so far is that they represent some form of structured product — you buy these tokens to gain exposure to some underlying asset.
For NFTs, on the other hand, Build a cross chain bridge the token represents the asset itself, and then there are those tokens in the infrastructure layer. Its transactions are verified by miners in the polygon network (polygon network layer).
14.2% inflation is actually quite high, but with the variety of projects and protocols being built on the polygon layer at the same time, we will need more validators because there are a lot of transactions to run. So this high demand relationship can be well correlated with inflation reaching 14.2%.
