What is Polygon? How Does It Work? A Comprehensive Overview

What Is Polygon (MATIC)?

Polygon, formerly known as Matic Network, is an Ethereum layer-2 scaling solution. Polygon is a blockchain that increases scalability and speed by processing Ethereum transactions on a separate layer. Polygon is a leading layer-2 solution that is competing with the likes of Arbitrum and Optimism. Its native MATIC token has grown its market capitalization into a top 15 cryptocurrency.

Key Takeaways

  • The Polygon platform, powered by the MATIC token, was launched to overcome the limitations facing Ethereum in terms of speed, cost, and scalability.
  • MATIC tokens are used to govern and secure the Polygon network and pay transaction fees.
  • Polygon uses a modified proof-of-stake consensus mechanism to verify transactions.

What Is The History of Polygon (MATIC)?

Initially known as the Matic Network, Polygon was founded in 2017 by four software engineers in Mumbai, India: Jaynti Kanani, Sandeep Nailwal, Anurag Arjun, and Mihailo Bjelic1.

The team recognized the scalability limitations of the Ethereum blockchain, which hindered its ability to handle the increasing demand for decentralized applications (dApps). To address this challenge, they developed a multi-chain scaling solution that utilizes sidechains and Plasma technology to offload transaction processing while maintaining Ethereum’s security.

In 2019, the Matic Network launched its Initial Exchange Offering (IEO) on Binance2, gaining significant traction in the cryptocurrency market. The following year, it underwent a rebranding to Polygon Technology, solidifying its identity and positioning itself as a comprehensive platform for Ethereum scaling.

Polygon’s growth accelerated in 2021 with the launch of its Ethereum Virtual Machine (EVM) compatibility, enabling developers to seamlessly port existing dApps to the Polygon network. This expansion attracted a surge in users and developers, propelling Polygon to become one of the most popular Ethereum scaling solutions.

Today, Polygon serves as a crucial infrastructure for the decentralized finance (DeFi) ecosystem, supporting a number of dApps and fostering innovation in the blockchain space. Its continued development and integration with other blockchains solidify its position as a leading player in the Web3 landscape.

Polygon’s success is reflected by its total value locked, which, according to DeFi Lama3, is around $875 million, and has numerous Dapps with over $30 million locked in their smart contracts.

Polygon's total value locked is one of the highest among layer-2 scaling solutions.
Polygon’s total value locked is one of the highest among layer-2 scaling solutions. Source: DeFi Llama

How Does Polygon (MATIC) Work and Improve Ethereum’s Scalability?

Polygon (MATIC) is a layer-2 scaling solution that operates as an interconnected network of blockchains alongside the Ethereum mainnet. It aims to address the scalability issues of Ethereum by enabling faster and more efficient transaction processing while maintaining Ethereum’s security and decentralization.

Polygon’s core technology utilizes sidechains, which are independent blockchains that are connected to the Ethereum mainnet. Transactions are initiated on the Polygon sidechains, which offer higher transaction throughput and lower fees compared to the Ethereum mainnet. Once processed, these transactions are eventually anchored back to the mainnet, ensuring their finality and security.

To achieve this, Polygon employs several mechanisms, including:

  1. Plasma Framework: Plasma is a sidechain architecture that allows for secure off-chain transaction processing. Transactions are committed to the sidechain’s blockchain and periodically linked to the Ethereum mainnet using cryptographic proofs.
  2. Matic PoS Consensus: Polygon adopts a modified proof-of-stake (PoS) consensus mechanism to secure its sidechains and ensure network stability4. This consensus mechanism involves validators who stake their MATIC tokens to participate in block validation and earn rewards.
  3. Cross-Chain Communication: Polygon bridges enable seamless communication between the Ethereum mainnet and its sidechains, allowing for the transfer of assets and data across different blockchains5.
  4. EVM Compatibility: Polygon’s Ethereum Virtual Machine (EVM) compatibility ensures that developers can easily port existing dApps and smart contracts from the Ethereum mainnet to the Polygon network, minimizing development overhead.

The combination of these technologies enables Polygon to address Ethereum’s scalability limitations while maintaining its core strengths, making it a popular choice for developers and users seeking a more efficient and cost-effective way to interact with the Ethereum ecosystem.

What Are The Pros and Cons of Polygon?

Polygon offers several advantages that make it an attractive platform for blockchain developers and users alike.


  • Fast transaction processing speeds: Polygon’s consensus mechanism enables quick transaction confirmation by completing the process in a single block. This allows the platform to maintain fast transaction processing speeds, with an average block processing time of 2.1 seconds.
  • Low transaction fees: Polygon keeps its fees for using the platform low, with a typical transaction fee of around $0.01. This makes it an affordable platform for users and developers, especially compared to other blockchain platforms.


  • Not an autonomous blockchain: Polygon is a Layer 2 solution that works on top of the Ethereum platform. This means that if the Ethereum chain experiences serious disruptions or ceases to exist, Polygon would be severely impacted.
  • Limited use cases for MATIC: The MATIC token is primarily used to govern and secure the Polygon platform and pay transaction fees. Unlike some digital currencies, MATIC is not generally used for everyday purchases. This limits the scope of its use cases and may impact its overall adoption.

What is the difference between Polygon and Ethereum?

Polygon and Ethereum are both blockchain networks that use a modified proof-of-stake mechanism. Polygon is a secondary scaling solution that complements Ethereum by providing additional features for developers and improving scalability.

Ethereum officially switched to a proof-of-stake consensus mechanism in 2022. Despite Polygon’s significantly lower transaction costs and higher throughput, Ethereum still boasts a higher total value locked (TVL) market cap.

Consensus MechanismPoS (modified)PoS
Transaction FeesVery LowExpensive
Transaction SpeedHigherSlower
Total Value Locked (TVL)LowerHigher
Polygon offers faster transactions and higher throughput than operating directly on Ethereum.

What Is Polygon 2.0?

Polygon 2.0 introduces POL, a new token that will play a central role in the network’s tokenomics, replacing MATIC as the primary currency for various purposes. Here’s a closer look at the specific tokenomics of POL:

Transaction Fees: POL will be used to pay transaction fees on the Polygon 2.0 network. This aligns the economic incentives of network participants, ensuring that those using the network contribute to its security and maintenance.

Staking: Staking POL will be essential for securing the network. Validators who stake POL will be responsible for verifying transactions and ensuring network integrity. They will receive rewards in the form of POL tokens, incentivizing them to maintain the network’s uptime and stability.

Governance: POL holders will have voting power in Polygon’s governance process. They will be able to take part in decision-making related to network upgrades, tokenomics, and other important aspects of the protocol. This ensures that the network’s development aligns with the interests of its community.

Cross-Chain Communication: POL will facilitate cross-chain communication between Polygon 2.0 and other blockchains. This will enable seamless asset transfers and interaction between different ecosystems, further expanding the utility of POL.

The introduction of POL is expected to bring several benefits to the Polygon ecosystem, including:

  • Enhanced Security: POL staking will strengthen the network’s security by incentivizing participants to maintain network integrity.
  • Enhanced Scalability: The transition to POL is designed to improve the network’s scalability, allowing for faster transaction processing and increased throughput.
  • Decentralization: The move to POL staking will further decentralize the network, as more participants will have the opportunity to contribute to its security.
  • Expanded Utility: POL’s role in transaction fees, governance, and cross-chain communication will broaden its utility and enhance its value proposition.

Overall, the shift to POL as the native token of Polygon 2.0 represents a significant step forward for the network, strengthening its security, scalability, and decentralization while expanding the utility of its native token.

How Has MATIC Traded In 2023, And What Are The MATIC Price Predictions?

Despite Polygon’s TVL racking up considerable gains, the MATIC token has had a relatively poor 2023. While Ethereum and Bitcoin have rallied by over 100%, MATIC is down around 6% in the past year and has only managed to gain 12% year to date, according to TradingView6.

Despite performing poorly in the past year, several MATIC price predictions expect sentiment to improve in 2024 and beyond.

Coincodex7 is extremely bullish on MATIC, with a yearly high target of over $3 for 2024 and $4 for 2025. Looking further ahead, their yearly low targets move above $1 in 2026, and their high target exceeds $5 in 2028.

Coinpedia8 has a low price target of $1.6 for 2024 and a high target of over $2, which implies a gain of over 100%. In 2025, they expect plenty more gains, with a medium price target of $3.8 and a high target of $5.

Remember that price predictions can be upended by volatility and are notoriously unreliable, so always do your own research before risking any capital.

MATIC has struggled in 2023, falling behind the broader market rally.
MATIC has struggled in 2023, falling behind the broader market rally. Source: TradingView

Final Thoughts on Polygon (MATIC)

The Polygon team set out to make the Ethereum network more scalable, cheaper, and easier to use. They’ve enjoyed plenty of success, building a huge ecosystem of dApps, and the MATIC toke’s market capitalization has grown to over $7.5 billion. The MATIC token has struggled in 2023 compared to the wider crypto market, but some price prediction experts have forecast a turnaround in 2024.

Frequently Asked Questions

How does Polygon enhance Ethereum scalability?

Polygon is a Layer 2 scaling solution that operates on top of the Ethereum network. It uses a combination of technologies, such as Plasma and Optimistic Rollups, to increase the speed and reduce the cost of transactions on the Ethereum network.

Polygon is interoperable with Ethereum, which means that developers can easily port their Ethereum-based applications to Polygon. This enhances Ethereum scalability by reducing congestion on the Ethereum network and enabling faster cheaper transactions.

What is the tokenomics of MATIC?

Polygon (MATIC) has a maximum supply of 10 billion tokens. As of now, 9.2 billion MATIC coins have already been issued, according to CoinGecko.

What is Polygon?

Polygon is a Layer 2 scaling solution for the Ethereum blockchain. It aims to address the scalability issues of Ethereum by enabling faster and more efficient transaction processing while maintaining Ethereum’s security and decentralization. Polygon achieves this by using a combination of technologies, including sidechains, Plasma, and the Ethereum Virtual Machine (EVM).

Peter Barker


Peter Barker

Peter is an experienced crypto content writer and a DeFi enthusiast with more than 3+ years of experience in the space. Previously a journalist and news editor at a leading European news sourcing agency.

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