MEXC Research: A Detailed Explanation about Ethereum’s Expansion Plan of Star MATIC (Polygon)
Ethereum allows users to write custom code into the decentralized ledger in the form of “smart contracts”. Because of their openness and transparency, these contracts have become the home for DeFi. Today, approximately 200,000 unique addresses are still trading every week based on Ethereum’s DEX.
However, due to the dramatic increase in load, Ethereum was gradually overwhelmed. High gas fees, slow processing time and low throughput all hinder its development.
The idea of Matic came from wanting to improve Ethereum. Matic envisioned a solution to use both PoS Bridge and Plasma Bridge to help and improve the Ethereum network’s scalability and overall transaction speed.
What is Matic Network (Polygon)?
On February 10 of this year, the Matic network completed a brand upgrade and changed its project name to Polygon.
Matic network (Polygon) is a Layer 2 expansion plan based on the Plasma framework and attempts to build a modular, universal and flexible expansion framework for Ethereum.
Relying on the Plasma framework, Matic could host DApps, which have great potential for projects such as DeFi. Matic currently accounts for a considerable portion of the ETH’s NFT and Gaming Layer 2 ecosystem.
The Ethereum expansion plan by Matic includes two expansion solutions, the Plasma Bridge and PoS Bridge. In the future, Matic will support other Layer 2 expansion plans, such as zkRollups and Optimistic.
Matic Plasma Chain
Plasma Chain is the second-layer network of Ethereum and also a Plasma solution based on the EVMs (Ethereum Virtual Machines). Plasma allows users to move transactions from the main chain to the child chain, as to achieve faster transactions and lower fees. Plasma has an exit mechanism based on Fraud Proofs, which returns the off-chain results on the proof of transaction to the main chain and uses the security of the main chain to protect the user’s assets and interests so it may take longer to withdraw funds. In addition to supporting Plasma, Polygon will support other Primary Layer 2 solutions, such as Optimistic Rollups, ZKRollups, and Valium, and can essentially be understood as a “Layer 2 Aggregator”.
Plasma chain are generally suitable for
1. Projects with high-security requirements
2. Startup projects (those unable to establish sufficient decentralized and secure verification node mechanisms)
Matic PoS Chain
Officially known as commit chain, it can be understood as Ethereum’s sidechain. It is generally responsible for its own network security, that is, it has its own verification node pool, but it borrows from Ethereum’s security and is also compatible with EVMs (Ethereum Virtual Machines). The PoS chain provides maximum independence and flexibility and is balanced with some decentralization and security. Due to the EVM compatibility, Ethereum-based projects can easily migrate their smart contracts to the Matic PoS chain.
PoS chains are generally suitable for
1. Enterprise projects
2. Projects that do not require the highest level of security (such as games)
3. Projects with a strong community (able to run a sufficiently decentralized and secure pool of verification nodes)
Matic Cross-Chain Bridge
Since Matic is a solution for Ethereum’s expansion, it is divided into two parts. One is for Ethereum’s main network, the other is for Matic’s main network, which can also be interpreted as Ethereum’s sidechain. The load of the sidechain is calculated by Ethereum and flows through the cross-chain bridge to Ethereum’s main network and back.
In short, let’s take an ETH transaction as an example:
Users want to conduct an ETH transaction on Ethereum, but due to the high gas fee and long processing time, this transaction cannot be conducted on Ethereum’s main chain.
Users can send ETH to the contracts of Matic’s sidechain. Matic’s sidechain calculates and includes the asset into account on Matic’s sidechain. At the same time, Ethereum’s main chain cannot access this asset.
After that, users can make fast transactions with low gas fees through Matic’s network. The wallet on the Matic network is exactly the same as that on Ethereum and allows almost the same experience as Ethereum’s main chain.
When users want to transfer the asset back to Ethereum’s main chain, Matic will transfer them in a way similar to deposits.
By introducing a cross-chain bridge with Plasma and PoS security, Matic provides a two-way trading channel between Matic and Ethereum. Users can transfer tokens to and from Matic without third-party risks and market liquidity restrictions.
Parts of the Ecosystem
Aave: Borrowing and Lending Platform
Aave (AAVE) is the earliest decentralized borrowing and lending platform on Ethereum. It allows the yield earning by storing crypto assets, and can also borrowing through assets as collateral. On April 1, the protocol was deployed on the Matic chain to provide lending services for users. Currently, it supports lending services for assets such as MATIC, DAI, USDC, USDT, WETH, WBTC, AAVE and other assets. Users can get WMATIC rewards for depositing or lending assets. Users can use Matic’s cross-chain bridge to transfer assets from Ethereum to Matic.
Curve: Stablecoin Exchange Protocol
Curve fi (CRV) is the first decentralized stablecoin exchange protocol in Ethereum. Launched in January 2020, it allows users to trade stablecoins with low slippage and low transaction fees.
Polygon, launched on April 19, supports the exchange of stablecoins DAI, USDC, USDT. Currently, users can receive WMATIC rewards by depositing aDai-aUSDC-aUSDT fund pairs.
Sushiswap: DEX platform
SushiSwap (SUSHI) is the second-largest DEX platform on Ethereum. The latest version of SushiSwap brings together yield and collateral management. In addition, the IDO distribution platform MISO was launched on May 17. The Polygon version of SushiSwap has also started liquidity mining. At present, it supports more than ten kinds of LP mining, such WMATIC-WETH, USDC-WETH, USDC-WETH, USDC-USDT, DAI-USDT and others.
Dfyn: DEX platform
Dfyn (DFYN) is a cross-chain DEX platform. The protocol launched liquidity mining on May 10. Current users can provide liquidity to funding pools such as MATIC-ETH, USDC-ETH, UNI-ETH, AAVE-ETH, USDC-USDT, DAI-USDT to receive DFYN rewards.
Polywhale (KRILL) is a native application on the Matic chain. It is a decentralized yield management platform and is also the first platform in this chain to support single cryptocurrency locking and mining. Its development route also includes a lottery pool, IDO, NFT and other functions.
The platform was launched on April 24 and currently supports single-asset locking of KRILL, WMATIC, WBTC, WETH, QUICK, USDT, and USDC. It is important to note that users of single-cryptocurrency mining pay a 4% fee. Polywhale launched an auto-compounding pool and currently supports more than ten LPs, such as WMATIC-WETH, USDC-WETH, USDC-WETH, USDC-USDT, etc.
QuickSwap: DEX Platform
QuickSwap (QUICK) is the first DEX native to Polygon. It supports the generation and exchange of tokens on Matic chains and new projects. It currently supports up to 3,131 exchangeable assets. This also reflects the abundance of assets on the Matic chain. Users can obtain QUICK rewards by providing liquidity to corresponding funding pools such as QUCIK-ETH, QUCIK-MATIC, ETH-MATIC, ETH-USDC, ETH-LINK, etc.
Opensea: NFT Trading Platform
Opensea, the NFT trading platform, also deployed its beta on Polygon with very low transaction fees.
Aavegotchi: DeFi+NFT Gaming Platform
On March 3, Aave Ecosystem's NFT game Aavegotchi officially launched on Polygon. Aavegotchi is a DeFi-based crypto collectible platform that calls on its own Aavegotchis to collect, compete, or combine them for the ultimate DeFi gaming experience. Its GHST token holders are also rewarded for providing liquidity on Quickswap.