[PDF] [Chains Discovery] Polygon Network (MATIC) by Coin98 Insights
One of the most impressive tokens in Q1 / 2021 is Polygon (MATIC). At the beginning of 2021, MATIC’s price was $ 0.018; then it has increased to nearly $ 0.5, more than 2,700%.
In Research # 1, the Coin98 Insights team will share an overview of Polygon Network. This article is intended to provide some brief information from the full research article.
Our complete analysis & predictions will be presented in a pdf file—the link to download is at the end of the article.
Polygon Network Overview
What is Polygon?
The main idea of Polygon is the “Internet of Blockchain.” Polygon focuses on the Ethereum Ecosystem and connects Ethereum-compatible blockchain networks. This feature makes Polygon stand out from other blockchains such as Polkadot, Avalanche, Cosmos, etc.
Specifically, instead of developing a single scaling solution, Polygon offers:
Framework to facilitate the process of building scaling solutions for Ethereum;
Interaction capacity for networks within Polygon Network;
An ecosystem for Ethereum scaling solutions with Ethereum-centred design, which is Polygon’s final objective.
Polygon Architecture
Polygon Architecture has four layers as follow:
Ethereum Layer (Optional Layer)
Security Layer (Optional Layer)
Polygon Networks Layer (compulsory Layer)
Execution Layer (compulsory Layer)
Ethereum Layer (Optional Layer): This layer is implemented as a set of Smart Contracts on Ethereum, which can be used to harness the power of the high-security feature of Ethereum by Polygon Network.
Security Layer (Optional Layer): This layer provides additional security to Polygon Network, allowing Polygon Chains to use a set of Validators periodically checking the validity of any Polygon Chain.
Polygon Networks Layer (Compulsory layer): This layer includes sovereign Blockchain Networks where each network can maintain specific functions: transaction collation, consensus, and block creation.
Execution Layer (Compulsory layer): This layer’s functions are interpreting and executing Polygon Chain transactions, including Execution Environment and Execution Logic Sublayers.
Generally, Polygon Architecture is highly compatible and customizable.
For example, Networks prioritizing speed over security can solely use two required layers (Polygon Networks Layer and Execution Layer). On the contrary, Networks focusing on high-security can integrate one of the optional layers (Ethereum Layer or Security Layer) or both into the network besides two top layers.
Current state & Roadmap
Eventually, Polygon can become a network allowing a wide range of scaling solutions for Ethereum (Sidechain, Rollups, etc.) to interact with each other and leverage the efficiency of the Network in the future; Polygon’s achievements are currently limited:
Incomplete framework for building scaling solutions (Stand-alone Networks, Secured Chains, Zk Rollups, Optimistic)
There are only two scaling solutions built on the Network, Plasma Chain (Live) and POS Chain (Live).
Lack of active Networks interacting with each other.
In comparison with Plasma Chain, POS Chains are being used more widely because of their EVM compatibility, allowing projects on Ethereum to quickly move their Smart Contracts on Ethereum to POS Chain (or build completely new on POS. Chain).
POS Chain is a Sidechain that uses a Proof Of Stake consensus mechanism with its Validators. One noticeable feature about POS Chain is the reliance on the security of Ethereum when using Checkpoints, which contributes to the security of POS Chain.
Currently, Polygon is attracting projects in the NFT, and DeFi segments moved from Ethereum or built directly on Polygon Network (3 - 10 projects/week).
At the same time, Polygon is also building the Framework to support the development of other scaling solutions (Stand-alone Networks, Secured Chains, Zk Rollups, Optimistic), which are expected to be released at the end of Q3 and Q4, respectively. Once the Network is completed, many chains will be built on Polygon Network. Eventually, Polygon can reach the goal of the "Internet of Blockchain," as mentioned at the beginning of the article.
Polygon Network Ecosystem
After gathering sufficient information and making a thorough, comprehensive comparison, we can finally reach a consensus of:
NFT Projects
DeFi Projects
NFT on Polygon Network
NFT stands for Non-Fungible Tokens. Nowadays, when it comes to NFT, people often imagine a Digital Trading Card, an item in a Blockchain Game, or digital work of art (Digital Art).
Some essential features of the NFT:
Unique: NFTs are unique which can be verified on the Blockchain.
Permanent: The information and data of NFTs are permanently stored in tokens. This information may include messages, pictures, music, signatures, or any other piece of data.
Programmable: NFT is only a piece of code on Blockchain, which means it can be programmed to have various qualities such as ownership, etc.
Permissionless: There are many use cases if they are on a Permissionless Blockchain such as Ethereum (not all NFTs are on Ethereum).
Digital Ownership: Anyone who owns the NFT in their wallet will own and control that NFT.
As for the NFT Projects on Polygon, according to statistics on Dappradar, the number of active projects has been more than 60 projects, not including projects that are inactive (only announced to move to Polygon) and continues to expand at a rate of about 3 - 10 projects per week. Most of them can be divided into the following four categories.
At present, the numbers of the NFT + Gaming Projects on Polygon are pretty significant. There is no shortage of outstanding projects, namely Aavegotchi, Terra Virtual, NIFTEX.
However, most are in the early stages of development: many projects have no products or launches yet, the performance is relatively poor, the number of users and transaction volume of most dapps is also tiny.
DeFi on Polygon Network
In general, DeFi on Polygon is still at the beginning stage. Dex & Lending/Borrowing are the most prominent categories compared to the rest.
Like other ecosystems, AMM is still the model that works the best. The most popular Dex right now is QuickSwap, which is an AMM similar to Uniswap V2. Currently, QuickSwap has the highest TVL and Volume on Polygon.
Lending/borrowing has not received much attention when there is only one project that integrates this model - EasyFI. EasyFi is a lending pool like Compound. Although the Whitepaper mentions many features inside the product, there is only over-collateralized lending launched at present.
Opportunities & Strategies
Basically, users have two ways to earn a profit on Polygon Network.:
● Investing in MATIC.
● Investing in projects on Polygon Network.
Details are clearly presented in the PDF file.
Predictions
Here are some predictions from the research team about Polygon Network in the future:
From now until Q4 / 2021, there will be more projects moving from Ethereum to the POS Chain of Polygon Network (especially NFT and DeFi).
Frameworks that support Zk Rollups and Optimistic construction are likely to be released in Q4 / 2021.
TVL on Polygon will reach $5B in Q1 - Q2 / 2022.
DeFi will become a highly concentrated sector in Q3 - Q4 / 2021.
As the ecosystem expands, more and more projects will be built directly on the Polygon Network to take advantage of Polygon's current existing ecosystem.
Download the PDF file of Research # 1 | Polygon Network here.
Good job!