Polygon (MATIC)

• Polygon (previously Matic Network) is the first well-structured, easy-to-use platform for Ethereum scaling and infrastructure development. Its core component is Polygon SDK, a modular, flexible framework that supports building multiple types of applications.

• Using Polygon, one can create Optimistic Rollup chains, ZK Rollup chains, stand alone chains or any other kind of infra required by the developer.

• Polygon effectively transforms Ethereum into a full-fledged multi-chain system (aka Internet of Blockchains). This multi-chain system is akin to other ones such as Polkadot, Cosmos, Avalanche etc with the advantages of Ethereum’s security, vibrant ecosystem and openness.

• The $MATIC token will continue to exist and will play an increasingly important role, securing the system and enabling governance.

1. What is Polygon (MATIC)?

Polygon is a layer-2 scaling platform that enables fast, easy, and secure off-chain transactions for not only payment transactions, but also generalized off-chain smart contracts.

Some of its key features include:

• Scalability: fast, low-cost and secure transactions on Polygon sidechains with finality achieved on mainchain and Ethereum as the first compatible Layer 1 basechain

• High throughput: achieved up to 7,000 TPS on a single sidechain on internal testnet; Multiple chains to be added for horizontal scaling

• User experience: smooth UX and developer abstraction from mainchain to Polygon chain; native mobile apps and SDK with WalletConnect support

• Security: Polygon chain operators are themselves stakers in the PoS system

• Public sidechains: Matic sidechains are public in nature (vs. individual dApp chains), permissionless and capable of supporting multiple protocols

Polygon's mission is to create a plasma-influenced Layer 2 scaling solution to "enable throughput capable of meeting the transaction demand for mass adoption of dApps".

Polygon is unique both in terms of its technical approach towards Layer 2 as well as its potential support for variety of use cases.

• Polygon's Layer 2 is an account-based variant of MoreVP (More Viable Plasma). The Plasma framework is used to guarantee the security of assets on the main chain (such as ERC-20 and ERC-721 tokens for Ethereum), while generic transactions are secured by a Proof-of-Stake network, built on top of Tendermint. Polygon sidechains are essentially EVM-enabled chains and are conducive to ready deployment of solidity smart contracts, essentially making it an easy tool for Ethereum Developers to use it for scaling their dApps/Protocols.

• Commercially, Polygon sidechains are structurally effective for supporting many Decentralized Finance (DeFi) protocols available in the Ethereum ecosystem.

• Polygon's core philosophy is to enable dApps to compete with the user experience that is offered by centralized apps today.

• Ethereum is the first basechain Polygon supports, but Polygon intends to offer support for additional basechains, based on community suggestions and consensus, to enable an interoperable decentralized Layer 2 blockchain platform.

Within Polygon, the MATIC token has three key use cases:

• Participating in the Proof of Stake consensus: Polygon sidechains enforce consensus using a Proof-of-Stake (PoS) layer in which network participants stake MATIC tokens to participate as validators.

• Paying for the transaction fees in the network: The transaction fees on Polygon sidechains are paid in MATIC tokens. The more users onboard to use the apps on Polygon, the more the transaction volume and hence the transaction fees. The MATIC token is also used to pay staking rewards to the POS stakers

• Having taken inspiration from Livepeer and its "protocol funding the ecosystem" model, Polygon intends to enable a separate staking mechanism for supporting the ecosystem projects. This will help create a fund out of the "block rewards" that can help support developers working on features and dApps needed by the network to get a part of block rewards. This mechanism is funded by reserving a percentage of the transaction fees in-protocol to support the projects building for enhancing Polygon's Ecosystem.

2. Key products and features

One of Polygon's ecosystem products, Dagger, is a Zapier integration that allows any builder to gather real time ethereum updates to plug into their spreadsheets, apps, or other products. Today, more than 400 dApps and trackers are built using this trigger tool.

To ensure smooth asset transition to sidechains and easy asset management for users, Polygon will be releasing its own wallet with a WalletConnect integration.

Expected DAU

Several dApps are actively being developed on Polygon to provide a better user experience with lower transaction costs:

• Decentraland:

  • Full data

  • Confirmed DAU: 79

  • Current Daily Transactions : 402

  • Expected DAU with Polygon Marketplace with low txn fee and better user experience games should be much higher. May be a 100 times higher than this as it is expected to compete the user experience of centralized games and apps

• Cryptostaw - Venmo using DAI:

  • Example there.

• Pocket full of Quarters - Game that raised funds on Republic.co

• Chainbreakers - Game built on Decentraland Universe

Fee Abstraction

Below is a flow chart to understand the fees abstraction mechanism to be implemented on Polygon sidechains.

Source: Polygon Management Team

The dApps will use their native dApp tokens on the Polygon chain for in-app transactions while also using them to pay network fees to consensus enablers in MATIC.

As shown in the flowchart above, the dApps operating on Polygon chains will help maintain a reserve of Matic Tokens with the liquidity providers, this will ensure that their customers can transact freely without having to worry about holding MATIC Tokens in their own wallets.

Blockchain and network data

Polygon has validators who will stake their assets for the right to participate in the PoS consensus mechanism on the sidechains.

The transaction fees will be determined by the users on the network as they do on Ethereum, but given the high transaction throughput that is possible, the transaction fees are expected to be significantly lower than those of Ethereum due to supply and demand of "gas fee" markets.

The blue boxes in the diagram above represents the sidechain and the human icons show the staking layer. Multiple sidechains can be added below this staking layer, with more blue colored sidechains attached below the staking layer.

3. Economics and supply

3.1 Key metrics (as of April 1st 2019)

3.2 Token supply distribution

• Private Sale tokens comprise 3.80% of the total supply:

  • Seed Round: Sale conducted at a rate of 1 MATIC = 0.00079 USD and raised a total of USD 165,000, selling 2.09% of total token supply

  • Early Supporters: sale conducted at a rate of 1 MATIC = 0.00263 USD and raised a total of USD 450,000, selling 1.71% of the total token supply.

• Launchpad sale tokens comprise 19% of total supply. It was conducted in April 2019 for a total raise of ~$5,000,000 USD worth of BNB at ~$0.00263 per token for 19% of the total token supply. The BNB to MATIC rate will be determined on the day of the sale.

• Team tokens comprise 16% of the total supply.

• Advisors tokens comprise 4% of the total supply.

• Network Operations tokens comprise 12% of the total supply.

• Foundation tokens comprise 21.86% of the total supply.

• Ecosystem tokens comprise 23.33% of the total supply.

Polygon token supply distribution

3.3 Token governance and use of funds

As of February 26th 2019, Polygon has used approximately 7% of TGE funds according to the allocations below:

• 1% Partnerships.

• 9% Marketing.

• 15% Legal.

• 75% Technical Development.

As per their risk management strategy, Polygon plans to perpetually hold sufficient fiat reserves to fund their operational costs for at least 12 months. The rest of any funds held in crypto will be stored in cold wallets with multisig support.

3.4 Polygon token release schedule

The following chart represents the number and breakdown of all MATIC tokens that are intended to be released into circulation on a monthly basis.

MATIC release schedule (%)

4. Roadmap, updates, and business development

4.1 Communicated vs. completed milestones

By Q1 2019, some of the projects built on top of Polygon included:

• A Burner wallet (i.e., a friction-free mechanism to move tokens quickly through a web browser interface and withdraw out to cold storage when complete) implementation for onboarding users to dApps with one-use wallets.

• An upcoming games platform.

• A marketplace for NFT assets.

• A VR game.

• An advertisement exchange.

• Others (still in development).

4.2 Updated roadmap

Q2 2019

• Polygon Mainnet release (alpha)

• Allow Deposits and withdrawals of Ethereum-based assets using the Polygon Plasma implementation in alpha

• Plasma - Cross-asset swaps between ERC721-ERC20, ERC20-ERC20, ERC721-ERC721) on testnet

• Proof-of-Stake Validator onboarding

• dApps developer program

• Polygon Wallet - WalletConnect for dApps (Ethereum & Polygon transactions)

Q3 2019

• Polygon Mainnet release (beta)

• Plasma - Asset swaps (ERC721-ERC20, ERC20-ERC20, ERC721-ERC721) support on mainnet

• Generic smart contract support (with PoS guarantees)

• Plasma Fast exits implementation on testnet

• Plasma Watcher nodes

Q4 2019 & Q1 2020

• Polygon Mainnet release

• Plasma Fast exit services on mainnet

• Transaction relay pool (perform transactions without ETH) - for enabling easy asset/state movement from Ethereum to Matic

• Generic smart-contract support (with Plasma guarantees) - Proof-of-Concept

• Plasma - NFT Marketplace platform release for Ethereum assets

4.3 Commercial partnership and business development progress

Polygon has already partnered with several blockchain projects, including the following:

• Decentraland: Decentraland is a virtual reality platform powered by the Ethereum blockchain. Users can create, experience, and monetize content and applications using a developer toolkit that works on any platform (all VR headsets and web browsers) and is designed to create virtual environments and applications. Polygon is collaborating with Decentraland to scale the transactions that will occur as a result of user interactions within the virtual universe. This will include payments, NFT sales and eventually general game states and other data.

• Quarkchain: QuarkChain is an innovative permissionless blockchain architecture that aims to provide a secure, decentralized, and scalable blockchain solution. Polygon and Quarkchain intend to collaborate on L2 scaling research by exploring and developing Plasma sidechain solutions on top of Quarkchain. Polygon will also be working with Quarkchain to build notification services like Dagger and Mobile Wallet capabilities for Quarkchain.

• Ankr Network: Ankr is a distributed computing platform that aims to leverage idle computing resources in data centers and edge devices. Polygon will collaborate with Ankr to explore building a decentralized Web3 stack in which Ankr can provide Distributed Cloud Computing services for Decentralized Application Development on the Polygon.

• Portis: Portis is a technology company that wants to make sure any person in the world can use decentralized applications, just as easily as they use "regular" apps. Polygon is working with Portis to help these dApps using Portis achieve scalability and an enhanced user experience.

• MakerDAO: Maker is the organization behind the DAI stablecoin. Polygon is partnering with MakerDAO to explore and jointly support teams for the development of dApps which use DAI on Polygon sidechains. Polygon intends to integrate DAI as the first ERC-20 token on Polygon sidechains.

• Ripio Credit Network: Ripio Credit Network is a peer-to-peer credit network that connects lenders and borrowers located anywhere in the world. Polygon is working with Ripio to enable micro loans on its Plasma sidechains. Polygon, along with RCN, is also researching faster Plasma exits where exit NFT's will be used as collateral for loans on the RCN platform.

5. Project team

6. Polygon's activity

6.1 Social and community data

Community strategy overview

Polygon's main community focus has been to attract more and more dApp developers to build on the network. Thus, Polygon wants to build a developer community, and tap into the immense potential of developers who have yet to dive into crypto. To achieve this, Polygon is collaborating with top universities in India and the rest of the world to ensure that budding developers are aware and use Polygon as a platform to scale their dApps.

Polygon's primary geographical focuses are detailed as below:

• India - Polygon has sponsored, mentored, and judged several hackathons in India such as ETHIndia, and also organized a DApp training course in India's leading engineering institution IIT Bombay that introduced 80 developers to building and maintaining decentralized applications. The team has continued to support and provide guidance to some of the projects from this cohort. Polygon has also addressed students at blockchain events at institutions such as IT Mumbai, IIT Roorkee, and NIT Surat. Polygon team was also a sponsor and part of the judges panel at ETHIndia that was held in Bangalore and at ETHSIngapore

• US & China - Given these geographies are centres of the blockchain development, they are strategically important to Polygon as a significant percentage of current blockchain developers are based out of these areas. Polygon plans to have developer outreach hubs based out of SF and Hong Kong along with working spaces to spur innovation and development on the Polygon platform.

• Japan - Polygon is fairly connected with the Plasma research community in Japan and is also working to raise awareness in the local community. Polygon intends to build a sizeable developer base in Japan specifically related to enterprise use cases.

• Germany -Chainbreakers is a German team developing an RPG game on Decentraland. They have announced that they will be using Polygon for their scalability needs. Polygon plans to hire from the vibrant blockchain development community based out of Berlin and also are exploring the feasibility of having a development center in Berlin.

• United Kingdom - Polygon is collaborating with a decentralized exchange from the UK to help them explore moving to Polygon sidechains to boost trade processing speeds and increase user adoption.

• Korea - Polygon did an interview with KoreaCryptoSocial during a blockchain event in Seoul, but the team will add additional resources devoted to the Korean market after its Launchpad sale.

• Vietnam - Polygon has started a local telegram group to engage the Vietnam community, organize developer meetups, and establish university connections.

• Thailand - Polygon has a Thailand community group and plans to identify the universities and developer hotspots to collaborate with to spur blockchain development.

Social media channels

Twitter
Medium
Official Announcement Channel
Telegram - Polygon Official Community

7. Appendix

Advisors

• Pete Kim

• Esteban Ordano

• Ari Meilich