Amid Ethereum set to adopt major reforms such as the adoption of Proof of Stake to improve scalability and reduce the gas fee, Ethereum-based Layer-2 platform Polygon (previously Matic), known for providing scalability at significantly low gas fees has acquired another Ethereum-based layer-2 zero-knowledge rollup (ZK rollup) to strengthen its position in the industry. ZK proofs use mathematical statements without revealing the underlying data.
Polygon has been working on developing ZK proofs for the past many months and has committed $1 Bn, a significant portion of its treasury, to ZK-related efforts. In its blog, the company announced that it will utilise this fund in:
- Acquiring world-class ZK projects and teams
- Designing and developing ZK based solutions
- Hiring premium talent
- Partnering with relevant teams and projects
- Adoption of ZK solutions, and
- Research funding, etc
As part of acquiring ZK projects and minds, Polygon has announced plans to acquire ZK rollup Hermez Network which will now be merged into the Polygon ecosystem. Under the Polygon Suite of solutions, Hermez will then be renamed as Polygon Hermez.
According to the company’s statement, the maximum amount that will be committed for this merger from the Polygon treasury is 250 Mn $MATIC tokens, or roughly $250 Mn based on the price at the time of reaching the agreement (August 4, 2021).
How Hermez Fills The Gap For Polygon
Secured transactions have been the forte of blockchain. Polygon uses layer 1 i.e. Ethereum main chain for the secured transactions. Even if the transactions occur outside the Ethereum Network in Polygon Network layer 2, the transaction data gets printed on Ethereum main chain.
Polygon has thus established a trustless two-way transaction channel between Polygon and Ethereum by introducing the cross-chain bridge with Plasma and PoS security. With this users can transfer tokens across Polygon without incurring third-party risks and market liquidity limitations.
Thus, Polygon network bridge provides a scaling solution that is near-instant, low-cost, and quite flexible. Polygon uses a dual-consensus architecture (Plasma + Proof-of-Stake (PoS) platform) to optimise for speed and decentralisation.
Rollups perform transactions outside the mainnet but post transaction data on layer 1. Unlike Polygon’s Plasma that creates one transaction per transfer, ZK Rollups increase scalability through mass transfer processing rolled into a single transaction. ZK Rollups bundle hundreds of transfers into a single transaction.
The acquisition will not only help Polygon acquire the ZK rollup that is live now, but also the experts behind it.
Polygon Aims To Bring In 100 Mn Users On Ethereum
Initially built to address the scalability issues, Matic Network received tremendous response from developers and founders. Within the first six months, there was incredible adoption with over 80+ Dapps on-boarded and another 100+ on the way to deployment.
The void that Polygon technology filled in the world of blockchain could also be understood by the fact that in just one week of its launch, more than 75,000 active user wallets interacted with dapps from the top 20 Polygon dapps, according to DappRadar. Defi platform Aave that launched its Polygon version in late April witnessed close to $8 billion of TVL (total value locked).
This led us thinking of what capabilities we need to incorporate in order to build the network for the next hundred million Ethereum users, said a company spokesperson.
And, with the grand vision of bringing 100 Mn users to the Ethereum ecosystem, Matic Network was rebranded to Polygon Technology.
In the last few months, Polygon has emerged as an easy-to-use platform for Ethereum scaling and infrastructure development. Its core component is Polygon SDK, a modular, flexible framework that supports building multiple types of applications effectively making Polygon a scaling solution aggregator, with all scaling solutions under one umbrella.
Using Polygon, one can create Optimistic Rollup chains, ZK Rollup chains, stand-alone chains or any other kind of infrastructure required by the developer. Polygon effectively transforms Ethereum into a full-fledged multi-chain system (aka Internet of Blockchains). This multi-chain system is akin to other ones such as Polkadot, Cosmos, Avalanche etc with the advantages of Ethereum’s security, vibrant ecosystem and openness.
The latest acquisition will not only solidify its position in the layer-2 ecosystem and would also help acquire and retain users on its platform, believe experts.
A Polygon spokesperson told Inc42, “Polygon’s Commit Chain helps solve Ethereum’s scaling issues by relying on a Proof of Stake consensus instead of Proof of Work. The block times between consecutive blocks (that contain transactions) are also reduced, allowing for high speed and high volume. The end result is transactions with a fraction of a cent and complete in a matter of seconds.
To put things in perspective, on 17th June Polygon processed 8.8 Mn transactions compared to 1.2 Mn on Ethereum, taking a significant load off the Ethereum mainnet and enabled a scaled execution environment for Ethereum, he added.
Top Projects On Polygon Network
Launched this year, Polygon’s software development kit (SDK) provides a framework for Multi-chain Ethereum to grow further and faster.
Multi-chain Ethereum will be akin to other popular multi-chains (e.g. Polkadot, Cosmos), but with some major upsides:
- Ability to benefit from Ethereum’s network effects;
- Higher security (Polygon SDK chains can inherit security from Ethereum)
- More flexible and powerful
Having been built as an open source platform, hundreds of defi projects have been built on Polygon in the last year. Currently, there are 500+ decentralized applications building on Polygon. More than 100-200 projects are in the pipeline. The list of projects on Polygon as maintained by the Polygon community can be found at https://awesomepolygon.com/.
“Due to the decentralised nature, We are not even aware many of the projects being developed on Polygon. But we see almost 5-6 projects launching every day, and our network has crossed 310M txns from 1.8M+ unique wallets.”
Among the top projects on Polygon are Quickswap, Sushiswap, Curve, Paraswap and Aave.
Polygon Projects In Pipeline
Polygon will continue to focus on developer and user adoption, and bring greater access to DeFi and the power of Ethereum to more users around the world, says the spokesperson. With the recent launch of Polygon SDK, developers, projects and enterprises can now launch Standalone Chains for various application requirements. “We will soon be integrating other scaling solutions like ZK and Optimistic Rollups into Polygon SDK, making it the one-stop shop to launch even shared security chains or chains like Polygon PoS commit-chain, which is backed by the security of Ethereum.”
There are several areas in which decentralized solutions are posting innovative alternatives to their counterparts in the centralized world. Such solutions are at different levels of maturities. Regulatory hurdles are certainly a challenge for certain solutions. However, decentralized solutions have to mature more across a few more dimensions to match the current centralized solutions offerings, such as user experience simplification and integration with other lego components that make a more viable solution. Once that is done we can see greater adoption of PoCs like these.