What is Polygon (MATIC)?

Definition

Polygon is a \"layer 2\" or \"sidechain\" extension solution running next to the Ethereum blockchain, allowing for fast transactions and low fees. MATIC is the native cryptocurrency of the network and is used to pay fees, pledge, etc. You can buy and sell MATIC through exchanges such as Coinbase.

The Ethereum blockchain carries a wide range of economic activity-from NFT markets and games to the growing DeFi ecosystem. Ethereum is suitable for this activity because it is compatible with smart contracts that can be used to build a variety of applications.

However, the growing popularity of these applications has brought a large number of transactions to the Ethereum blockchain-as a result, transaction fees (also known as \"gas\") can sometimes rise to the point where the cost-effectiveness of small or frequent investments becomes impractical.

Enter Polygon, a \"layer 2\" extension solution (or \"sidechain\") designed to provide users with faster transactions and lower costs. It runs next to the main Ethereum blockchain as a fast parallel blockchain. To use it, you can \"bridge\" some cryptocurrencies to Polygon and then interact with the many popular crypto applications that were once limited to the main Ethereum blockchain.

What is MATIC?

Polygon has its own cryptocurrency, called MATIC, which is used to pay fees, pledge and governance on the Polygon network (which means MATIC holders can vote on changes to Polygon). You can also buy and sell MATIC through Coinbase and other exchanges.

How does Polygon work?

You can think of Polygon as an express train on the subway-it follows the same route as a regular train, but has fewer stops and therefore moves faster. (In this metaphor, the main Ethereum blockchain is the city train.) Polygon uses multiple technologies to create this high-speed parallel blockchain and connect it to the main Ethereum blockchain.

To create a new MATIC and secure the network, Polygon uses a proof-of-stake consensus mechanism-which means a way for you to make money by pledging MATIC.

Verifiers take on the heavy lifting-they verify new transactions and add them to the blockchain. In return, they may receive a portion of the fee and a newly built MATIC. Becoming a verifier is a commitment that requires running a node (or computer) 24/7 and pledging your own MATIC. If you make mistakes or act maliciously (even if your Internet connection is unstable), you may lose a portion of the MATIC you pledged.

The delegator indirectly pledges its MATIC through a trusted verifier. This is an approach with lower commitment, but still needs to be studied-if the verifier you choose acts maliciously or makes mistakes, you may lose some or all of the pledged MATIC.

How to use the Polygon network?

The Polygon network allows you to do many of the same things as the main Ethereum network, but the cost is usually a fraction of a cent. You can try decentralized exchanges such as QuikSwap or SushiSwap; try income-generating lending and savings agreements such as Aave; participate in NFT markets such as OpenSea, or even play \"no-loss prize pool games\" such as Pooltogether.

To try the Polygon network, you need to send some cryptocurrency to a compatible cryptocurrency wallet such as Coinbase Wallet. You can then \"bridge\" some of your cryptocurrencies-stablecoins are a popular choice for such operations-to the Polygon network. You will also need to bridge some MATIC to trade, but even a dollar\'s worth is enough because the fees are very low.

Low fees and near-instant transactions make the Polygon network a great way to try out the DeFi protocol. (Keep in mind that DeFi can be highly volatile-so starting from an early age, don\'t invest more than you can afford to lose, especially as a beginner.)