CoinMarketCap Alexandria covered Polygon
in a deep dive into Polygon
in 2021. A lot has happened since, so it is time for an updated ultimate guide to the Polygon ecosystem. With over 19,000 decentralized applications
(DApps) built on Polygon, it has one of the most vibrant ecosystems in the nascent crypto space — across popular verticals like DeFi
and non-fungible tokens
This Ultimate Guide will cover:
- What is Polygon
- How Polygon works
- Polygon’s team, investors and its roadmap
- The MATIC token
- How to use Polygon
- The Polygon ecosystem
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Polygon is a layer-two (L2) blockchain for Ethereum
that uses different scaling technologies to improve the scalability of the Ethereum mainnet
. It will connect Ethereum-compatible blockchains
in an internet of blockchains, similarly to the mechanism used by Polkadot
. It uses a modular “security-as-a-service” approach that builds on Ethereum’s security, or uses its own pool of professional validators
Polygon is working on different scaling solutions for Ethereum, namely:
- Polygon PoS: its Commit Chain, a proof-of-stake EVM-compatible sidechain already live.
- Polygon Miden: a zero-knowledge rollup based on STARK.
- Polygon Hermez: an open-source zk-rollup.
- Polygon Avail: a standalone chain focused on data availability
- Polygon Zero: another zk-rollup chain.
- Polygon Nightfall: a privacy-focused rollup chain.
Ethereum’s success is its main problem — the more people use Ethereum, the more congested it becomes. However, scalability is necessary
to compete with or provide services to payment processors, or run applications which require high throughput
, like blockchain games.
The biggest problem blockchains run into is the blockchain trilemma
. It posits that blockchains cannot maximize decentralization
, security and scalability all at once.
To solve this problem, many players in blockchain ecosystems like Ethereum have been working on layer-two
solutions that scale the main blockchain (Ethereum in this case). With more seven scaling solutions live or in development, Polygon posititions itself as a L2 solution
for Ethereum far along in its development.
Polygon consists of four layers:
- Ethereum layer: execute tasks like transaction finality, dispute settlement, staking and relaying messages.
- Security layer: responsible for managing validators and checking the validity of Polygon blockchains.
- Network layer: each blockchain has its own consensus mechanism and block production.
- Execution layer: this final layer is responsible for executing all transactions agreed upon by the other layers.
Polygon uses several approaches to scaling. The current Polygon chain is a proof-of-stake
chain called the Commit Chain
, which operates adjacent to the Ethereum mainchain. It batches transactions and submits the transaction data to Ethereum, thereby profiting from the security provided by the layer-one
chain. This is what Polygon calls a secured chain
since it uses Ethereum validators and benefits from a high level of security.
In the future, Polygon will also make use of other L2 scaling mechanisms like optimistic rollups
. This makes Polygon stand out from other L2 ecosystems, which usually focus on one scaling mechanism only.
In addition, Polygon also provides standalone chains
, which are side chains
with their own pool of validators. These can be enterprise chains or application-specific blockchains. Polygon released a software development kit in May 2021, enabling developers to customize their own blockchain in a plug-and-play manner with custom consensus mechanisms
and synchronization schedules.
Using both these solutions, Polygon aims for Ethereum to become a multichain ecosystem, with Polygon as the main scaling option at its center.
Based in Mumbai, Polygon was founded in October 2017 by a team of four: Sandeep Nailwal, Jaynti Kanani, Anurag Arjun, and Mihailo Bjelic.
It is furthermore supported by several highly reputable advisors like Hudson Jameson (Ethereum Foundation), Ryan Sean Adams (Bankless), Anthony Sassano (EthHub) and Pete Kim (Coinbase). Its investors include some of the biggest funds in the industry, like Binance Labs, Alameda Research and Coinbase Ventures. It also raised $450 million in a round led by Sequoia Capital in February 2022.
Polygon’s 2022/2023 roadmap sees continuing deployment of capital out of its $100 million ecosystem fund to grow the next generation of Web3
DApps. Furthermore, Polygon continues to hire and plans to increase its internal security team to 20 world-class engineers in the near future. On the environmental front, the company released its Green Manifesto in mid-April 2022, pledging $20 million to sustainability initiatives, and reaching network carbon neutrality
is the native utility token
of Polygon used to pay for gas
. It allows developers and contributors to build DApps by paying in MATIC to use the blockchain and its development tools. MATIC is emitted monthly and has a circulating supply
of 8.01 billion with a total supply
fixed at 10 billion. The MATIC token is allocated as follows:
- Private Sale: 3.80%
- Binance Launchpad Sale (IEO): 19% of the total supply.
- Team: 16%
- Advisors: 4%
- Network Operations: 12%
- Ecosystem: 23.33%
You can use Polygon following these steps:
- Connect your browser-based wallet to the official MATIC bridge.
- Bridge to the Polygon ecosystem.
- Transfer funds and use DApps on Polygon. Keep in mind that you will need MATIC to pay for gas.
- Explore the Polygon ecosystem with over 19,000 decentralized applications.
You can buy MATIC on many different exchanges. Here is a step-by-step guide on how to buy MATIC on Binance.
1. Open Binance and log in to your account.
You need an account at Binance (or any other exchange offering MATIC). If you do not have an account yet, sign up to Binance and pass the KYC
verification. You can choose from two options (circled in the screenshot): buy crypto
if you don’t have any in your account or trade
another cryptocurrency for MATIC.
2. Select MATIC from the dropdown menu.
Click on your preferred payment option (credit card in this example) and pick MATIC from the dropdown menu. You will be forwarded to another window where you need to add your credit card details to process the transaction. After that, you can confirm the transaction.
3. Add a credit card and process the transaction.
To swap another cryptocurrency for MATIC, head to trade
and select convert
from the dropdown menu. You will see the following option, where you have to choose which coin you want to swap for MATIC (in this case USDT
Polygon is compatible with any wallet that can host ERC-20
tokens. Some Polygon wallets are:
- Metamask: Metamask is a web-based hot wallet that can be used for different EVM-compatible blockchains, including Polygon.
- Trezor and Ledger: Trezor and Ledger are cold wallets that prioritize security and make it possible to store coins like MATIC away from your computer on a safe device.
According to DeFi Llama
, Polygon currently ranks sixth by total value locked
(TVL) with over $2 billion. Although TVL is down more than 80% from its peak of over $12 billion, Polygon still has one of the most vibrant ecosystems in the L2 space on Ethereum.
Some DeFi projects on Polygon are:
- Quickswap: the biggest DEX on Polygon.
- Curve Finance: a major stablecoin exchange.
- Uniswap: one of the biggest DEX in crypto.
- Sushiswap: a fork of Uniswap and another big DEX.
- Beefy Finance: a yield-optimizer.
is Polygon’s go-to DEX and a fork of the popular Uniswap exchange. Quickswap works with an automated market maker
(AMM) model, which replaces intermediaries and order books. Quickswap currently has over $368 million in TVL on Polygon.
is a DEX for stablecoins and one of the biggest exchanges on Polygon. Curve currently has a TVL of over $170 million and is a solution for swapping different stablecoins like USDT
. Curve became popular through its AMM model and has integrations with numerous blockchains.
is the second biggest DEX by TVL on Polygon ($119 million at the time of writing). Uniswap is mainly known for being one of the first DEXs to offer trading with an AMM model. The exchange is also available on other L2 solutions like Optimism
is a DEX that launched as a fork of Uniswap
. Sushi has a TVL of over $60 million on Polygon. Users can swap different tokens, borrow, lend and provide liquidity all without giving up custody of their funds.
Beefy Finance (BIFI)
is a multi-chain yield optimizer platform, enabling the accumulation of compound interest on crypto assets. Users can lock their crypto assets in vaults, where they subsequently are used for generating the maximum possible yield across the DeFi ecosystem.
Some lending protocols on Polygon are:
- Aave: a DeFi money market protocol.
- Stargate Finance: a fully composable liquidity protocol.
- Meshswap: a DEX and leverage farm.
- QiDao: a zero-interest lending protocol.
- Balancer: a decentralized exchange.
is a DeFi money market protocol and lending platform. Users can deposit their crypto assets in different liquidity pools
and earn interest on them or borrow against their existing crypto holdings as collateral.
Aave exists on major blockchains and is the biggest protocol on Polygon by TVL. At the time of writing, it has a TVL of almost $430 million on Polygon.
Stargate Finance (STG)
is a fully composable liquidity protocol, allowing users to transfer assets across blockchains and access the protocol’s unified liquidity pools with instant finality.
Stargate’s key products are cross-chain transfers, liquidity provision to its Omnichain protocol, yield farming for STG rewards, and staking to receive veSTG. Stargate Finance is present on all Ethereum L2 solutions, although its TVL on Polygon is not as big as on Arbitrum
, for example. It currently has a TVL of $73 million on Polygon.
is a DEX for swapping, lending, farming and staking cryptocurrency on the Polygon blockchain. Users can lend tokens like Wrapped MATIC
and Wrapped ETH
for APRs of 5% to 7%. In the Meshswap leverage farm, users can deposit assets and earn MESH rewards and transaction fees. Furthermore, vMESH allows stakers to vote on Meshswap governance proposals and influence the protocol’s future.
is a zero-interest crypto lending protocol with stablecoin loans at zero percent interest. QiDao is available across all major blockchains. It allows users to borrow stablecoins against their crypto collateral. QiDao currently has a TVL of $43 million on Polygon.
is a DEX which uses shared pools and smart pools for token swapping. Just like Uniswap and Curve, users can swap tokens and create their own liquidity pools with automatically adjusted pool weights. Balancer has significantly less TVL than other DEXs but is still a major protocol with over $48 million in total value locked.
Some NFT marketplaces on Polygon are:
- OpenSea: the biggest NFT marketplace in the world.
- Refinable: a next-gen, cross-chain NFT marketplace.
- NFTrade: a marketplace to create, trade and farm NFTs.
- ZestyMarket: an NFT billboard platform connecting creators and advertisers.
- Treasureland: a multi-chain NFT trading market.
OpenSea is the biggest NFT marketplace in the world. Polygon is one of the supported blockchains alongside Ethereum and Klaytn
. It has more than two million NFT collections and more than 80 million NFTs.
is a next-gen NFT marketplace with support for Polygon, Ethereum, BNB Chain
. Users can purchase NFTs or trade them and earn passive income on their FINE token.
NFTrade is another NFT marketplace supporting Polygon and other chains, where users can create, trade and farm NFTs. It also offers an NFT launchpad for new NFT projects and social features to present NFTs and interact with other users.
Zesty Market is an NFT billboard platform allowing the tokenization
of digital advertisement spaces into non-fungible tokens. Zesty Market connects creators and advertisers without centralized platforms and allows them to create customized ad campaigns and spaces.
Treasureland is a multi-chain NFT trading market similar to its competitors. It supports Polygon and BNB Chain. Treasureland aims to connect NFT creators, users and consumers to build the eBay of the blockchain world.
Some Web3 apps on Polygon are:
- Atlas USV: a store of value-themed OHM fork.
- Klima DAO: a climate-themed OHM fork.
- The Sandbox: a metaverse open to player contributions.
- Railgun: a privacy application.
- Gensokishi: a 3D metaverse.
Atlas Universal Store of Value (USV)
is a fork of Olympus
, a popular “decentralized reserve currency.” USV takes the mechanism of Olympus DAO
and applies a new concept to it: “a logical, fair, and energy-efficient alternative to Bitcoin.” USV tries to be an alternative store of value by using the token holding incentives pioneered by Olympus. It is the biggest OHM fork
by TVL on Polygon, with over $200 million in total value locked.
Klima DAO (KLIMA)
is another OHM fork, which aims to increase the cost of carbon emission to disrupt the energy markets. Upon launch, Klima DAO generated an enormous amount of attention and was the most popular OHM fork at the market peak. The token has since suffered adrawdown but still has over $50 million in total value locked. Polygon has partnered
with Klima DAO to purchase $400,000 in tokenized carbon credits on-chain
The Sandbox (SAND) is a blockchain-based virtual world, where users create, build and trade NFTs
in a metaverse
. The Sandbox is built by Pixowl, a veteran game development company. The Sandbox focuses on user-generated content to create a metaverse, where each involved player can contribute to the platform’s development. The Sandbox has more than $47 million in total value locked on Polygon alone.
is a smart contract system providing privacy and security to crypto and DeFi users. It allows users to remove their wallet addresses from publicly available blockchain records to enhance their level of privacy. Railgun is the biggest privacy app on Polygon with over $37 million in TVL.
is a GameFi
metaverse that is an incarnation of the PS4 game “Elemental Knights.” Gensokishi is a 3D MMORPG game with a fully-functioning metaverse and undergoing a transfer process from traditional platforms to the blockchain. It currently has $22.5 million in total value locked on Polygon.
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