What is matic crypto?

What is a Polygon (MATIC)？

One of the hottest projects in the DeFi sector in 2022 is Polygon and its native cryptocurrency, MATIC. MATIC is the token used on Polygon for payments and settlements, much like Ether (ETH) on the Ethereum blockchain.

Formerly known as Matic Network, Polygon is an extended solution that offers various tools to expedite and reduce the costs and complexities of transactions on blockchain networks.

At the heart of Polygon's vision is a platform hosting a myriad of decentralized applications (dApps) - Ethereum. Users can enter virtual worlds, play games, purchase art, and engage in a variety of financial services. However, the significant activity on its blockchain has almost paralyzed Ethereum due to increasing transmission costs and congested traffic.

Enter Polygon. In essence, Polygon positions itself as a Layer 2 network, refraining from attempting to alter the original blockchain layer but acting as an additional layer atop Ethereum. Much like its geometric namesake, Polygon boasts numerous facets, shapes, and uses, promising to provide a simpler framework for building interconnected networks.

Polygon aims to assist Ethereum in scaling, enhancing security, efficiency, and utility, while incentivizing developers to bring attractive products to market faster.

After rebranding, Polygon retained its MATIC cryptocurrency to solidify the network. MATIC serves as the payment and settlement unit among participants interacting within the network.

For more details, refer to Kraken's Polygon MATIC Beginner's Guide:

https://www.kraken.com/zh-cn/learn/what-is-polygon-matic

What is the purpose of Polygon's establishment？

Before delving into Polygon and MATIC, understanding the challenges Ethereum currently faces is essential because it's closely related to the founding purpose of Polygon.

Ethereum was initially designed to process only about 10 to 20 transactions per second (TPS). However, with the increasing number of users and transaction volume, the system gradually became overwhelmed, resulting in severe transaction delays and escalating transaction fees due to a bidding mechanism.

Although Ethereum hopes to address speed and cost issues through ETH 2.0, the entire upgrade process will take 3 to 4 years. During this period, many teams have attempted to address Ethereum's dilemmas, and Polygon is one of them.

Polygon was established to address three major issues facing Ethereum:

Low throughputPoor user experience, high fees, and delayed transactionsLack of sovereignty (shared throughput, congestion risk, non-customizable technical stack, governance dependence)

On the memory blockchain, many project parties are exploring Ethereum-compatible memory blockchains, which means that while alleviating the aforementioned limitations, they can continue to use the thriving ecosystem of Ethereum.

Different protocols and projects have their advantages, but most project parties have not constructed a memory blockchain system, nor do they have protocols that can connect.

Polygon, on the other hand, attempts to create a memory blockchain framework that allows different protocols to communicate with each other, thereby solving the problems faced by Ethereum. Therefore, Polygon can be directly regarded as an expansion and integration solution for Ethereum, not just an “Ethereum killer”, but also an “Ethereum helper”.

The main purpose of Polygon's development is to address the scalability issues related to memory blockchain. Although the emergence of Ethereum has significantly improved the overall application level of memory blockchain, such as creating new projects such as DeFi and GameFi, it has naturally attracted a large number of new users to enter the field of memory blockchain.

However, as a long-standing public chain, Ethereum has always had the problem of poor efficiency, which is not difficult to understand. If investors view Ethereum as a highway and the data on the chain as traffic flow, then when new projects appear, the traffic to be processed on the natural chain will increase (traffic flow will increase). However, since there is only one highway, traffic congestion problems will also arise.

The main purpose of the birth of Polygon is to assist Ethereum in solving the congestion problem on the chain. Therefore, Polygon has a fundamentally different design purpose from other cryptocurrencies, that is, Polygon's purpose is not to replace Ethereum as a new public chain, but rather to become a side chain of Ethereum, which is why Polygon is known as an “Ethereum helper”.

What are the uses of Polygon and MATIC？

Uses of the Polygon chain:

Alleviate Ethereum's main chain burden:

The primary use of Polygon is to alleviate the burden on the Ethereum main chain. As a side chain of Ethereum, some transactions and smart contract calculations can be performed on the side chain and then returned to the main chain, significantly reducing the burden on the Ethereum main chain.

Providing lower transaction fees:

Another main use of Polygon is to improve user experience. Ethereum's transaction fees are very expensive and not affordable for ordinary users, and the speed is slow. Polygon's high performance, low fees, and speed can solve the problems of ordinary users.

Token uses of MATIC:

As transaction fees on Polygon:

As the native token of the Polygon blockchain, MATIC is required for all operations on the chain, and the transaction fee for each transaction is only about $0.01-0.02 worth of MATIC tokens, much cheaper than on the main chain.

Staking to Polygon to ensure security:

Validators and delegates stake their MATIC tokens to the staking smart contract to protect the smooth operation of the network. These contracts are used to achieve consensus and ensure the security of the network.

What other special innovations does Polygon have？

Polygon is a Layer 2 aggregator based on a modular, highly flexible blockchain framework that allows compatibility with almost all Ethereum scaling solutions.

Polygon offers two main solutions based on demand:

Stand-alone chains:

Polygon stand-alone chains rely on their security, have their own verification nodes, and have their consensus models, such as Proof of Stake (PoS) and Delegated Proof of Stake (DPoS).

Stand-alone chains are independent blockchains that do not use Ethereum's consensus mechanism, so they can provide the highest level of independence and flexibility, albeit at the expense of some security. Therefore, in the process of use, a balance needs to be struck between flexibility and security.

The architecture of these chains can be flexibly adjusted to inherit some of Ethereum's security, and Polygon's PoS mechanism utilizes this architecture by verifying stakeholder pledges and periodic termination checkpoints through Ethereum.

Stand-alone chains are usually very suitable for:

● Enterprises.

● Projects that do not require the highest security level.

● Projects with strong community connectivity.

Secured chains:

Here, secured chains refer to chains that rely on Ethereum's security, rather than saying that Polygon has established its verification pool.

Currently, in addition to supporting Plasma chains, Polygon will also support other major Layer 2 solutions, such as Optimistic Rollup, zkRollups, Validium, etc., so Polygon can be said to have become a unique Layer 2 aggregator.

Secured chains are usually very suitable for:

● Projects that require the highest security level.

● Startups, such as young projects and communities.

In summary, using stand-alone chains and secured chains, Polygon can be compatible with almost all Ethereum extension solutions. This scene can be imagined as Ethereum's Internet, and through the existing extension solutions of Polygon, it is easy to access Ethereum.

How to trade MATIC？

In the cryptocurrency market, investors have two trading methods to trade cryptocurrencies.

The first trading method is to buy directly on cryptocurrency exchanges, such as buying MATIC on the Binance exchange. The traded currency is MATIC spot, and this trading method is mostly used for spot hoarding coins and waiting for a price surge to sell for profit.

The second trading method is to choose cryptocurrency Contracts For Difference (CFDs) and speculate on the price changes of cryptocurrencies.

Contracts For Difference (CFDs) are a popular derivative financial product that allows trading in either direction (long or short) of cryptocurrencies without actually owning the assets, through margin trading.

Investors can choose to open CFD long positions (predicting price increases) or short positions (predicting price declines), for example, choose the MATIC/USD trading currency pair, speculate on the price trend of MATIC, and because the contract term of CFD is short, this trading method is quite suitable for short-term operations and also suitable for spot hedging.

The biggest difference between the first trading method “purchasing cryptocurrency spot” and the second trading method “investing in cryptocurrency CFDs” is？

Firstly, the first trading method will store the purchased cryptocurrency in the wallet, while CFD trading is the position in the account, regulated by financial regulatory authorities.

CFD trading is not limited by the trading asset, and buying/selling is just a contract, so it is more flexible, and CFDs are regulated mature financial products.

For more details, refer to: https://www.oanda.com/bvi-ft/lab-education/cryptocurrency/matic/#/

How to use Polygon？

Polygon offers faster and cheaper transactions relative to Ethereum through more efficient consensus mechanisms and reduced security compared to Ethereum. You can use the official Polygon PoS bridge to bridge Ethereum assets from the mainnet to Polygon. Bridging typically takes 8 to 10 minutes. Once completed, you can perform most Ethereum operations on Polygon, such as swapping, lending, and providing liquidity, but with lower fees and faster transactions. At any time, you can bridge back to the Ethereum mainnet.

Official Polygon PoS bridge: https://wallet.polygon.technology/login/

FAQ

What is Matic cryptocurrency？

Matic is a Layer 2 scalability solution designed to increase the throughput and efficiency of the Ethereum network. It achieves faster transaction confirmation times and lower transaction costs by adopting sidechain technology.

What are the uses of Matic cryptocurrency？

The primary use of Matic is to promote scalability and efficiency on the Ethereum network. It can be used for accelerated payments, decentralized exchanges, gaming applications, etc., making these applications more efficient and reliable.

How to buy Matic cryptocurrency？

You can buy Matic on many cryptocurrency exchanges, such as Binance, Coinbase Pro, Kraken, etc. You can purchase Matic using other cryptocurrencies or fiat currencies and store them in wallets that support Matic.

How is the price of Matic cryptocurrency determined？

The price of the Matic cryptocurrency is determined by market supply and demand. The higher the demand for Matic in the market, the more likely the price is to rise; conversely, if market demand decreases, the price may fall. Additionally, other factors in the market may also affect the price of Matic, such as industry news, market sentiment, etc.

What is the future development of Matic cryptocurrency？

The future development of Matic depends on the efforts of its team, technological development, and market acceptance. With the widespread adoption of cryptocurrencies and blockchain technology, Matic is expected to achieve significant development in the future and become an essential part of the Ethereum network.