What is Polygon? A Guide to the Polygon Ecosystem


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    We're in the middle of a crypto winter where investors worldwide have been preserving their crypto assets. However, one cryptocurrency investment, Polygon (previously known as MATIC), has been doing very well.

    The cryptocurrency market is now in a frenzy due to its broad acceptance. This is most likely due to service providers' widespread use of Ethereum-based blockchain technology. But what is a Polygon, and how does it work? Should it be on your hot list of buys?

    What is Polygon?

    Polygon was released in 2017 to develop a protocol and framework for constructing and interconnecting blockchains compatible with Ethereum. Polygon, previously known as Matic Network, is a layer two (L2) scaling solution for Ethereum and similar blockchains. It enables safe, low-cost off-chain transactions to make payments and deal with off-chain smart contracts. Polygon's current and major product is the Matic PoS Chain, which is a permissionless collection of PoS validators for an EVM-compatible sidechain that can theoretically process 65,000 transactions per second.

    How Does Polygon Work?

    Proof of Stake Consensus

    Tokens of the MATIC protocol are used as incentives in the Polygon PoS ecosystem. Instead of the traditional Proof-of-Work (PoW), which requires a lot of computational resources to build new blocks, the platform uses the Proof-of-Stake consensus, which depends on a group of node validators to check and verify transaction blocks on the network. The primary distinction is that under PoS, token holders are responsible for validating and verifying transactions rather than having to do the work. You can gain MATIC by doing one of the following:

    Participate in the network as a validator by operating a complete node to verify entries in the blockchain. It's possible to earn fees and a share of freshly produced MATIC by acting as a node validator.

    Join the network as a delegator, an open node. Your job as a delegator is to take MATIC from other nodes and use it to help the network validate nodes at the point of sale. The delegator's voting power is proportional to the size of the stake allocated to them. This is less difficult than validating nodes, but still not without its challenges.

    Polygon Bridge

    You'll need a bridge if you have made some cryptocurrency investments on the Ethereum network and are now looking to transfer them to Polygon's network. A bridge is a collection of smart contracts that facilitate funds transfer. To connect with the applications and blockchains in the Polygon ecosystem, users must first move their Ethereum holdings to Polygon over the PoS Bridge. Even though sending and receiving ETH has a high transaction fee, sending and receiving on the Polygon network costs less than a dollar.

    Polygon Protocol

    The Polygon Protocol allows all blockchains based on the Polygon platform to communicate with one another and the Ethereum network. In addition, it facilitates the adoption of Ethereum's security paradigm by other chains.

    Key Features of Polygon


    The Polygon Network relies on a blockchain with high throughput and a consensus mechanism given by a set of block producers that the various participants at each checkpoint choose. Blocks are verified, and evidence of block producers is posted on the Ethereum main net at regular intervals using a Proof of Stake layer. This allows for significant levels of decentralization to be maintained while allowing for very fast block confirmation rates (about 2 seconds).


    Polygon's smart contracts are encrypted using Ethereum's technology. It employs a network of incentivized validators operating Heimdall and Bor nodes and Ethereum's staking management contracts. It uses three essential security concepts to keep the network secure.


    Polygon Network can complete a transaction in under 2 seconds, assuming a single sidechain. By using several sidechains, the network can easily process thousands of transactions per second. Because of this scaling feature, the Polygon network can accommodate more users.

    Popular DApps Using Polygon


    It is a DEX built on Ethereum that uses an AMM strategy to create markets for trading digital assets (AMM).

    Curve Finance

    Using Ethereum as its base, Curve Finance is a liquidity pool for exchanges that facilitates the trading of stablecoins in a risk-free and seamless manner.


    It is a decentralized exchange (DEX) aggregator that provides users access to the most liquid markets across many DeFi protocols, including Ethereum, Binance Smart Chain (BSC), Polygon, and more.


    Aave is a yield aggregating system that enables users to quickly get loans in exchange for crypto that they have borrowed.


    QuickSwap is a low-cost, instant, decentralized cryptocurrency exchange built on the Polygon network.

    Polygon's Impact on DeFi Services

    The DeFi industry as a whole stands to benefit greatly from Polygon's applications. At this time, Polygon is putting the finishing touches on a system that will let retailers check the credit scores of new members. As part of this procedure, users' purchase histories are analyzed to establish their respective credit scores. Polygon also estimates about $5 billion in DeFi TVL, or total value locked. Polygon's popularity has increased because of its usefulness in gaining access to decentralized applications and the DeFi ecosystem. In terms of its usefulness for decentralized finance, it has closed the gap with two other main competitors, such as Ethereum and Binance Smart Chain.

    Polygon's popularity has remained unwavering, and the most obvious explanation for this is the prevalence of Polygon-based content on the most popular DeFi platforms. Polygon has been embraced by the two largest DeFi platforms for DeFi crypto, named Compound and Aave.  Aave, the DeFi lending protocol, has more than one billion dollars parked on Polygon markets in terms of liquidity and includes more than 8000 users. As an infrastructure provider, Polygon's ability to scale and work with other systems makes it easier for users to work together in different DeFi environments.

    Wrapping Up

    There's no doubt that Polygon is one of the most interesting DeFi projects currently in development, with significant potential for the DeFi community in terms of scalability and blockchain compatibility. And since it has such a large set of tools for developers and a forward-thinking mechanism and modules that fully support the Ethereum Virtual Machine (EVM), the Polygon ecosystem could soon be home to many successful projects.

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