Why Polygon (MATIC) Is A Great Cryptocurrency Investment
Scalability is a major issue for Ethereum, with very high gas fees and slow transactions fees plaguing the network whenever it is overloaded with transactions.
Polygon (MATIC) positions itself as a solution to Ethereum’s problems, whilst offering its own range of new use cases technological advancements.
In this post we’ll look at why Polygon (MATIC) is a cryptocurrency which every serious investor should consider.
What is Polygon (MATIC)?
Polygon (MATIC) is a protocol and framework for building and connecting Ethereum compatible blockchain networks. It also functions as a Layer 2 scaling solution for Ethereum.
Explained simply, Polygon aims to reduce transaction costs on the Ethereum network, whilst increasing transaction speeds and improving user experience.
Polygon was originally named “Matic Network” after being founded in India by three friends, Jaynti Kanani, Sandeep Nailwal and Anurag Arjun.
Matic Network held its token sale on the Binance Launchpad in 2019, allowing early investors to buy MATIC tokens for $0.002 each. Coinbase Ventures was an early investor in Polygon at this stage.
In 2021, Matic Network rebranded as Polygon and Ethereum developer Mihailo Bjelic joined the team as a fourth co-founder.
The rebrand included expanding Polygon’s vision from a Layer 2 scaling solution to an “internet of blockchains” for Ethereum. This new vision includes building and connecting compatible blockchains and dapps to the network.
Polygon’s MATIC token
Polygons native cryptocurrency MATIC has three main use cases:
- Staking – Users stake MATIC to validate transactions on Polygons sidechains.
- Fees – MATIC is used for transaction fees on the Polygon network and is paid out as staking rewards to validators.
- Ecosystem Staking – Polygon aims to enable staking for projects inside the Polygon ecosystem.
How Does Polygon Work?
Whilst Polygon started off as a scaling solution for Ethereum, it also functions as a glue between Ethereum compatible blockchains. This is done by Polygon’s two main elements, the Polygon Protocol and the Polygon SDK.
The Polygon Protocol enables Polygon based blockchains to connect with each other as well as the Ethereum blockchain. It also allows each blockchain to harness Ethereum’s security, or choose it’s own security modules.
The Polygon Software Development Kit (SDK), also known as the Polygon Framework,
is an easy, one-click system for deploying Ethereum compatible blockchains. Whilst still being under development, it is still available for developers to use.
Once complete, the Polygon SDK will make it simple for anyone to deploy their own, customizable blockchain, similar to creating a website with WordPress.
How is Polygon currently being used?
Due to it’s very low fees (0.001 MATIC) and instant speeds, decentralized finance (DeFi) is a very popular use case for Polygon.
You can bridge Ethereum assets to the Polygon network, allowing you to stake, swap, borrow, lend or farm with reduced fees and instant settlements.
There are two ways to do this.
Method 1: Exchanges
Binance and Kucoin allow you to transfer MATIC directly to your Polygon wallet if you hold any MATIC on those exchanges. Other Polygon assets like USDC, AAVE or CRV need to be bridged using Method 2 below.
Method 2: Bridging
You will need some ETH to pay for gas fees when migrating Ethereum assets to the Polygon network.
Additional bridges for other blockchains include:
Once your funds have reached your Polygon wallet, you’ll need MATIC to pay for gas, however transactions only cost 0.001 MATIC and you can get free MATIC from the following faucets:
Now you’ve successfully bridged your Ethereum assets to the Polygon network and can interact with apps on the Polygon network. DeFi apps on the Polygon network include:
- Aave – Platform to lend, borrow and earn interest on assets
- QuickSwap – Polygon’s largest decentralized exchange (DEX)
- Curve Finance – Platform for Liquidity Pools and Stablecoin trading.
- Beefy Finance – Yield farming optimizer that automatically compounds any interest earned
- SushiSwap – DEX with Liquidity Pools to earn interest on deposits
Polygon (MATIC) is currently priced around $2.64 with an $18 billion dollar market cap, this is a return of over 1300x from its original price of $0.002 in 2019.
At the beginning of 2021, MATIC was trading at $0.0178 before reaching $2.65 in May 2021, that was a 155x return in less than 6 months and the price still has room to grow.
I see Polygon (MATIC) becoming a major cryptocurrency in the next few years, possibly even becoming a Top 10 or even Top 5 cryptocurrency.
Below are some important developments involving the Polygon cryptocurrency.
Polygon and Reddit Co-Founder Launch $200m Fund for Web3, Social Media and Gaming
Alexis Ohanian, one of Reddit’s co-founders has partnered with Polygon to launch a new $200 million dollar fund to invest in social media and Web3 projects.
Polygon will team up with Alexis Ohanian’s venture firm, Seven Seven Six, to launch the fund that aims to empower users over gaming and social media platforms.
Uniswap V3 Launches on Polygon
On the 20th of December, Polygon announced that Uniswap, one of Ethereum’s most popular dapps, is now live on Polygon.
This solves a major problem for Uniswaps users which was very high gas fee’s on Ethereum. For example, in some cases users could end up paying $300 in gas for $50 worth of tokens.
Uniswap confirmed the launch of Uniswap V3 on Polygon via their Twitter account. Uniswap coming to Polygon will help the platform to grow in user adoption which will in turn increase the value of the MATIC token.
ZK-Snarks coming to Polygon?
On the 9th of December, Polygon announced that they had acquired Mir, a ZK (zero knowledge startup) in a $400m deal.
Engineers in the Mir team will now make up part of the team that will use zero knowledge technology to build Polygon Zero, “ a highly-scalable, Ethereum-compatible ZK Rollup.”
Polygon created a twitter thread detailing Polygon Zero and how they will be using zero knowledge technology. Zero Knowledge technology is a scaling solution for Ethereum that bundles hundreds of transfers offline into a single transaction.
Implementing zero knowledge technology into their products will further increase adoption and interest in the Polygon protocol, which in turn will increase the value and price of the MATIC token.
Polygon (MATIC) has great potential
I believe Polygon (MATIC) is a very promising investment and I can’t wait to see how things turn out over the next few years.
How to Buy Polygon (MATIC)
You’ll see more information about each exchange below:
CEX – One of the best exchanges where you can buy MATIC and other cryptocurrencies directly with cash. This exchange is available for all users from any country in the world including the USA.
Bitpanda – If you live anywhere in Europe, this is the best exchange where you can buy MATIC and other cryptocurrencies with cash due to their large selection of tokens. This exchange is only available to people who live in Europe for now.
Kucoin – A good exchange for buying and selling a wide range of cryptocurrencies, I recommend opening a Kucoin account as a secondary exchange platform in addition to one of the options above. This exchange is available worldwide.
If you have any questions or would like to see certain subjects mentioned in this guide or future articles, leave a comment in the section below.
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