What is Polygon? The Beginner’s Guide

Polygon, formerly known as Matic Network, has become the most popular Ethereum scaling solution. This article is a Polygon beginner’s guide and review. We’ll guide you through Polygon’s history and technology. What problem is Polygon trying to solve and how?

eToro banner

Polygon is a versatile platform

First, let’s place Polygon into the correct category. We like to divide cryptocurrencies into three main categories: currencies, platforms, and tokens.

Bitcoin is the best-known currency. Other popular currencies include Litecoin, Bitcoin Cash, and Monero. They are designed to function as digital money and a medium of exchange. They don’t have any other significant use cases besides transferring and storing value.

Ethereum is the king of platforms. Platforms are not just currencies – they are operating systems for smart contracts. You can think of platforms like iOS or Android. Platforms give a framework for software developers to build decentralized apps (Dapps). Other popular platforms include Cardano and Binance Smart Chain.

Tokens are always issued on a platform, which means they don’t have their own blockchain. Tokens are usually either utility tokens or governance tokens. They have a use case inside a specific app. Chainlink, Uniswap, and Aave are popular tokens.

Polygon is a platform, but not a typical one. It’s not just an operating system for Dapps, but Polygon is also aiming for interoperability. You might have heard the words “internet of blockchains” before. Polkadot and Cosmos are similar platforms.

Originally, this project was known as Matic Network. The purpose was to build a scaling solution for Ethereum using Plasma technology. This has been done. However, Polygon is nowadays much more than just an Ethereum sidechain.

Below is a short introduction from the spring of 2021, when the project was re-branded from Matic Network to Polygon.

The native token of Polygon is MATIC. At the time of re-branding, a token called Polymath (ticker: POLY) already existed in the market. Hence, Polygon couldn’t switch the ticker of the MATIC token as well.

MATIC is used similarly to other platform tokens, such as Ether. Users pay transaction fees with it in the Polygon blockchain. MATIC is also staked by the network validators.

The history of Polygon

The history of Polygon goes back to the year 2017. This is when a son of an Indian diamond mine worker, Jaynti Kanani, was still working for He was following closely the crypto market too and especially the difficulties of Ethereum.

Kanani wanted to solve Ethereum’s scaling issues, and he wasn’t the only one. Many scaling projects launched in 2017 with similar goals. Next, Jaynti Kanani contacted Sandeep Nailwaliin, who he knew already from the crypto scene. Anurag Arjun was working in the same office as him. Kanani pitched them the idea of the Matic Network. Mihalio Bjelic also joined the core team later.

Below is a picture of the core members from the Polygon website.

polygon core team

The project started officially in 2018. You can read more about the early stages of this interview.

This is one of the few crypto projects originating from India. It gave the Matic Network team some extra challenges due to the regulatory uncertainties in the country. India has banned and unbanned cryptocurrencies several times in the past five years.

Since India is quite an unknown territory in the crypto industry, Matic Network didn’t have access to big VC firms either. The early stages of the project were tough. There wasn’t much funding available.

Things started to change in 2019. Matic Network received funding from Coinbase Ventures, which is one of the best-known VC firms. The MainNet Alpha version was also released with fresh partnerships. You can read more from this recap.

The key event of 2019 was the Initial Exchange Offering (IEO). It was hosted on the Binance Launchpad in April. Matic Network sold 19% of issued tokens (1.9 billion of 10 billion) for investors. The MATIC token ended up being the best-performing Binance Launchpad IEO of 2019.

In 2020, the MainNet was finally launched. This was done in phases during the summer.

Matic Network was building a Proof of Stake sidechain for Ethereum using the Plasma technology. This sidechain could scale up to thousands of transactions per second without giving up the security of the Ethereum blockchain.

The first major DeFi boom took place in the summer of 2020. This clogged the Ethereum blockchain again. Matic Network was still hidden from the mainstream audience, even if it had the perfect solution for the problem. The price of MATIC went nowhere during the year of 2020.

The DeFi market exploded again in early 2021. This is when the MATIC token caught finally the attention of investors. The price 10-folded quickly from around $0.02 to $0.20. More and more partnerships were announced.

In February 2021, Matic Network was re-branded to Polygon.

This is when the project announced its new goals. Polygon wants to be “the internet of blockchains” and has a focus on interoperability. This is exactly what projects like Polkadot and Cosmos are also working with.

Still, Polygon is strongly linked with Ethereum. Many popular Ethereum influencers also joined the advisory board. The names like Hudson Jameson, Ryan Sean Adams, and Anthony Sassano are well-known to all Ethereum enthusiasts.

The MATIC token took off after the re-branding. It had a magnificent run all the way to $2.68 in May 2021. This is still the ATH price at the time of writing this article (8/2021). The MATIC token price went up more than 100x in five months.

Since the Polygon blockchain is EVM (Ethereum Virtual Machine) compatible, it’s easy to create Polygon versions of Ethereum applications. Users can move their funds easily from Ethereum to Polygon network (and back) using token bridges.

Popular Ethereum Dapps such as Aave, Curve, and SushiSwap have launched their Polygon versions. At the moment (8/2021), Polygon is the most popular scaling solution for Ethereum.

The Polygon blockchain

As mentioned in the previous chapter, the project started as Matic Network. The purpose was to create a scaling solution for Etherum using the Plasma technology. In practice, this means a sidechain, which uses the Proof of Stake consensus algorithm.

The situation is as follows. The Ethereum blockchain has still (8/2021) a very limited transaction capacity. The DeFi boom has made it painfully obvious. Transaction fees have surged, which has driven small investors to Binance Smart Chain. The recently implemented EIP-1559 upgrade doesn’t solve this either.

Bitcoin has solved this problem with the lightning network. The idea is to create an additional layer (network) on top of Bitcoin, where small and microtransactions can be moved. This is roughly the idea behind Matic Network as well, which is now known as Polygon.

Polygon is built using Plasma technology. It solves the scaling issue by using sidechains. The Polygon chain is an independent blockchain, but it’s also connected to Ethereum.

matic plasma

There is a snapshot being taken off the Polygon blockchain and being sent to the Ethereum blockchain at regular intervals. If something would happen on Polygon’s end, the blockchain could be restored easily with the help of the recent snapshot.

A Plasma sidechain solves the scaling issue without giving up the security which the main Ethereum layer offers. In theory, Polygon can scale up to 7000 transactions per second (TPS). Ethereum can process about 15. There are already more daily transactions on Polygon than Ethereum.

The MATIC token is needed because of the Proof of Stake consensus algorithm. The validators of the Polygon network stake MATIC. Regular investors can stake the token too for earning yield. All transaction fees on Polygon are also paid using MATIC.

It’s easy to operate in the Polygon network. You can use the popular MetaMask wallet, just like you’d use it on Ethereum or Binance Smart Chain. Tokens can be moved from Ethereum to Polygon by using a token bridge. Many popular exchanges, like Binance, support also MATIC withdrawals to the Polygon blockchain.

The internet of blockchains

Let’s dive deeper into Polygon from the technical point of view. The previously described sidechain was the original plan. However, the re-branding in February 2021 was done because Polygon has higher goals. It wants to offer building blocks for the new internet of blockchains.

The Polygon architecture is very mobile and robust. It’s made of four different layers. Each new project can choose the building blocks that fit its goals. We recommend checking the video below for more information.

The first layer is the Ethereum layer. This includes multiple smart contracts on the Ethereum platform. They handle transaction finality, staking, and communication between Ethereum and Polygon. Since Ethereum is the safest smart contract platform in the market, it’s smart to utilize it for the most critical functions.

The second layer is called the security layer. It works in parallel with the Ethereum layer. It offers transaction validation. Any blockchain built on the Polygon network can use these “validators as a service” for a fee. The first and the second layer are voluntary building blocks.

A popular DeFi protocol would be a good example of a project, which would like to use the first layer. The risk of hacking is real for such an application. It would be wise to leverage the safety of the Ethereum network.

The security layer might be enough for an NFT marketplace. This would be an application, which wants to optimize transaction fees as low as possible. It wouldn’t necessarily need all the security features a DeFi app does.


Opensea is a popular NFT marketplace.

The third and fourth layers are called the Polygon layer and the execution layer. These are compulsory for all projects in the Polygon network. The Polygon layer includes all blockchains in the network. They have their own consensus mechanisms, while they benefit from the interoperability between blockchains.

The executive layer executes all transactions and connects to the Ethereum Virtual Machine (EVM). Since Polygon is EVM-compatible, it’s very easy to clone Ethereum Dapps to Polygon. This is why so many popular Dapps have moved to Polygon already.

Polygon applications

Polygon has grown exponentially in 2021. The previously mentioned EVM compatibility has been a big factor. More Ethereum applications move to Polygon every day, and token bridges have become faster and more reliable.

The most important crypto infrastructure projects are also integrated with Polygon. These are the indexing protocol The Graph and the oracle giant Chainlink.

You can find the most popular Polygon Dapps at There are also other Dapp listing sites, such as There are more than 100 interesting Dapps already running on Polygon.


At the time of writing this article, there are 4.5 billion dollars locked in all Polygon Dapps. This is called TVL (Total Value Locked). The number might feel small when compared to the 150-billion-dollar DeFi industry. However, Ethereum’s TVL was 4.5 billion dollars in August 2020. This is just one year ago.

Aave is by far the most popular Dapp on Polygon. Almost half of all USD value is locked on this protocol alone. As you can see from the image above, there are several multi-chain Dapps that are running on both Polygon and Ethereum.

Quickswap is Polygon’s version of the popular decentralized exchange Uniswap. You can make trades with close to zero fees, while Uniswap has still fees in the range of $20-$50 per transaction.

Polygon as an investment

Even if Polygon was re-branded in February 2021, the native token has still the ticker MATIC. This might be confusing to some newcomers.

MATIC token has clear use cases, which we’ve mentioned already. It’s the native token of the Polygon Plasma sidechain. All transaction fees are paid with MATIC on this network. Hence, MATIC has the same base function as ETH, BNB, ADA, and other platform tokens.

Since this sidechain uses Proof of Stake consensus, MATIC tokens are needed for staking. This gives MATIC even more demand and locks tokens out of circulation. It’s also used as a governance token, meaning MATIC holders and vote for the blockchain development.

Is MATIC token a good investment, then? If you want more views, check the Coin Bureau video below. It gives you a good overview of the project.

MATIC was one of the hottest tokens in the market in the first months of 2021. That’s when Polygon was undeniably undervalued when you looked at the market cap. Even after MATIC’s price went from $0.02 to $0.20, the project was still around 60th to 70th in the cryptocurrency rankings.

At the time of writing this article, MATIC is priced at $1.40. The Polygon project sits at 19th place in the global cryptocurrency rankings (by market cap). It’s obvious that this rise has eaten most of its growth potential. Polygon’s market cap is already twice the size of Cosmos, which is a direct competitor.

Yet, the most popular “internet of blockchains” project, Polkadot, has 2.5 times the market cap of Polygon. One could say that Polygon is probably in the ballpark of fair valuation. There’s still room for more, but potential gains will be much lower now.

The market has also changed around Polygon. It’s not the only viable Layer 2 solution for Ethereum. For example, Uniswap is going to scale with Optimism. We should also remember the upcoming Ethereum 2.0 version.

It looks like Ethereum 2.0 will be out in early 2022. This will solve many scalability issues Ethereum has. Many investors feel that there will be less demand for projects like Polygon, which are seen as temporary solutions.

Decrypt has published an article about this. Check the link above for a detailed view.

MATIC was probably the most underrated token in the market in early 2021. Polygon was also the most promising Ethereum scaling solution. Now, the market cap of Polygon is 100x higher and the competition gets tougher every day.

MATIC price and how to buy MATIC

The MATIC token is listed on all the biggest cryptocurrency exchanges. We recommend Binance, which is the market-leading platform. You’ll get the best liquidity and multiple trading pairs. It’s also possible to stake MATIC at Binance and earn yield for your tokens.

Buy MATIC from Binance

Coinbase is a more newbie-friendly solution. They also listed recently Quickswap’s native token (QUICK). If you believe in Polygon and its popular DEX, you can invest in both at Coinbase.

Since the MATIC token is also running on Ethereum, it’s supported by many popular wallets. You can store MATIC using TrustWallet (mobile) or Exodus (desktop & mobile). The hardware wallet Ledger Nano X offers ultimate safety.

Read more about Polygon at the official website Keep up-to-date with the latest news by following the official Twitter account and Medium blog.

eToro banner

What is your reaction?

In Love
Not Sure

You may also like

Comments are closed.