What is Polygon? MATIC tokenomics explained

Imagine a layer-2 that saves you money and it’s fast when using the Ethereum network. This is where Polygon comes into play!

Polygon, is a layer-2 scaling solution on the Ethereum blockchain that allows for speedy transactions and low fees when using the Ethereum network.

But what exactly is a layer-2 scaling solution, how does it work, and how does this lead to cheaper transaction costs for Ethereum users?

What is Polygon?

Polygon was founded originally as Matic Network by Jaynti Kanani, Sandeep Nailwal, and Anurag Arjun back in 2017 with its mainnet launching in 2020.

Matic would rebrand to Polygon in 2021, before completing a merger with zk-rollup platform Hermez in the same year.

Although not co-founders of Matic itself, the following have all also been co-founders of various Polygon products, such as Polygon ID and Polygon Zero, and they are: Mihailo Bjelic, David Z, Jordi Bayline, Antoni Martin, Brendan Farmer, Daniel Lubarov, and Bobbin Threadbare.

Together they make up the core founders of Polygon and its various products.

As I mentioned, Polygon is a layer-2 scaling solution for EVM-compatible blockchains. But what does that mean?

Simply put, a blockchain layer refers to a specific level within the architecture of a blockchain network, where different functions and processes occur.

For simplicity, today we’ll just discuss the two layers relevant to us – Layer-1 and Layer-2.

Layer-1 is the foundational base, usually the blockchain itself. In our example, this is Ethereum as it is the base blockchain on which all applications are built on top of.

A Layer-2 on the other hand, is an application that is built on top of the Layer-1. In our example, this is Polygon which was built on the Ethereum network and helps the Ethereum network with a specific purpose.

For clarity, the specific purpose Polygon provides Ethereum is to enable scalability by verifying Ethereum transactions off-chain, which ultimately leads to lower network congestion, quicker transaction confirmation times, and lower costs for the end user.

Secondly, I mentioned EVM-compatible blockchains, so to explain quickly EVM-compatible refers to a blockchain or protocol that can execute smart contracts and deploy decentralised applications to a standard that ensures their compatibility with the Ethereum network.

Ultimately, this compatibility allows developers to deploy and interact with Ethereum-based smart contracts and applications on other EVM-compatible blockchains without modifications to their own platform.

But how does it all work?

How does Polygon work?

As Polygon works on Ethereum, it is a Proof-of-Stake based platform. If you want a quick metaphor, Polygon can be thought of as using the fast lane on a highway.

Metaphorically speaking, Polygon is not the bus that is likely to make many stops between its start and end destination, it’s the coupe with the roof down racing by going from A to B with as few stops as possible.

Technically speaking, it’s not quite as simple as speeding and instead Polygon uses a collection of rollup technologies to achieve this feat.

To keep it simple, rollups work by aggregating and processing multiple transactions off-chain, before then submitting a single, compressed proof of these transactions back to the main blockchain.

By verifying multiple transactions at once it can reduce the workload for the Layer-1 platform, which ultimately means it costs less for users to process a transaction on the network.

What makes Polygon unique?

Polygon is unique because it is not a single product, but rather a whole suite of products, such as Polygon PoS, Polygon zkEVM, Polygon Miden, Polygon ID, and Polygon Zero.

To give a quick summary, Polygon Proof-of-Stake, or PoS, is the EVM-compatible, proof-of-stake side-chain for Ethereum, with high throughput and low costs, as we’ve already mentioned.

It is on this side-chain where Polygon works to bulk process transactions, which saves congestion on the Ethereum mainnet.

Next, Polygon zkEVM is Polygon’s Layer-2 network and a scalability solution which utilises zero-knowledge technology that provides validation and fast finality of off-chain transactions.

Through Polygon zkEVM developers benefit from the seamless deployment of smart contracts, developer tools, and wallets that already work on Ethereum, but in an environment with a significantly lower cost.

Moving on, Polygon Miden is a zero-knowledge rollup for private, high-throughput applications and is a modular execution layer that extends Ethereum’s capabilities through specialist features.

With Miden, developers can create novel, high-throughput, privacy-preserving decentralised applications for DeFi, Real World Assets – also known as RWA, and on-chain games.

In short, the Midan library provides a set of functions for executing transactions, generating proofs, and managing activity on the Miden network.

PolygonID, on the other hand, is a blockchain-based ID for decentralised applications that includes zero-knowledge native protocols for increased user privacy.

And finally, Polygon Zero, formerly known as Mir, claims to be the world’s fastest ZK scaling technology and up to 100 times faster than any alternative on Ethereum.

MATIC Tokenomics

In total, there will only ever be 10 billion MATIC tokens, and like most other Proof-of-Stake cryptocurrencies can be used for the classics of payments, staking, and governance.

Though, it is worth noting that Polygon’s governance isn’t entirely community-led at present. Although there are proposed changes to the network to make it more decentralised in governance, meaning this may change.

Moving on, of the 10 billion MATIC tokens, the initial distribution looked as follows:

23% was allocated to the Ecosystem, 22% went to the Foundation, 19% was allocated to the Binance Launchpad, 16% was given to the Team, 12% was locked as Staking Rewards, then 4% was allocated to Advisors, and the final 4% was allocated to Private Investors.

Originally there was a 6-year vested release schedule for these tokens, however, it is worth noting that this vested released schedule started in 2019, meaning all tokens will be available to the market by around mid-2025.

Given its age and utility, Polygon is one of the most recognised Layer-2s in crypto.

Providing the Ethereum network continues to be one of the world’s largest crypto platforms, it seems likely that a platform like Polygon which enables a better, quicker, and cheaper Ethereum is also likely to see continued gains.

Of course, nothing is ever guaranteed in crypto, and new competitors are always forming. But, Polygon has adapted, rebranded, and purchased useful companies along the way to ensure it has the best possible chance of being as important tomorrow as it is today.

How to create a MATIC wallet

Step 1: Visit https://trustwallet.com If you already have a Trust Wallet, skip to Step 5.

Step 2: Download and install Trust Wallet from your mobile app store or your browser.

Step 3: Open Trust Wallet and create a new wallet or import an existing one.

Step 4: Once your wallet is set up, tap on the “Add Token” button.

Step 5: In the search bar, type “MATIC” to find the token.

Step 6: Tap on the MATIC token and select “Add to Wallet” to add it to your Trust Wallet.

After adding MATIC to your Trust Wallet, you will be able to view your MATIC balance and perform transactions with the token.

If you want to support the blog, please donate $MATIC to this address: 0x926f05Cafd858CA824152dAe62d359cC60e804c5

Polygon FAQ