Polygon (MATIC)

From CryptoWiki

Polygon
Total supply10,000,000,000 MATIC
Websitehttps://matic.network/

Basics

  • Based in: Bangalore, India and British Virgin Islands
  • Started in: 2017
  • Mainnet release: In steps (12-5-2020), with the first step on 17-5-2020.
  • After its rebrand into Polygon, it wants to be a multichain, instead of purely Ethereum linked (9-2-2021). Is called a sidechain, but could be seen as its own Layer 1, since it has its own consensus and native token.

"Matic Network describes itself as is a Layer 2 scaling solution that uses sidechains for off-chain computation while ensuring asset security using the Plasma framework and a decentralized network of Proof-of-Stake (PoS) validators. Matic aims to be the de-facto platform on which developers will deploy and run decentralized applications in a secure and decentralized manner.

Matic Network claims to have worked on implementations of Plasma MVP (Minimum Viable Plasma), WalletConnect protocol, and the Ethereum event notification engine - Dagger. Matic intends to provide Matic wallet, payment APIs and SDKs, products and other solutions that will allow developers to design, implement, and migrate DApps built on platforms like Ethereum. Matic plans to support other blockchains in the future to offer interoperability alongside scalability to existing public blockchains."

"Decentraland and Makerdao are among the partners Matic can count, while on the dapp side it’s got a handful of applications up and running. Matic Network uses an adapted version of Plasma, a scaling technology originally conceived for Ethereum. It enables fast and cheap transactions, which attain finality once confirmed on the mainchain."

"Matic’s incentivised staking testnet, CS-2001, is now live! Stage 1a of Counter Stake is now underway, with the purpose of preparing for the basic network rollout. Beginning with 20 active validators, we will add more as the stage progresses."

History

  • Originally was called Matic Network, but rebranded into Polygon (9-2-2021).

Audits & Exploits

  • Polygon Bug Bounty is live on Immunefi with a maximum bounty of $2,000,000 per critical bug found (28-9-2021). Got paid out multiple times, see below.

Bugs/Exploits

"Polygon PoS consensus bypass vulnerability, required open validator spot with high capital costs, $75k bounty paid."

  • 90% of MATIC could have been stolen (30-12-2021), from Unchained:

"The issue arose from a “critical network vulnerability” found within the genesis block of Polygon. According to Immunefi, the vulnerability left 9,276,584,332 MATIC available to steal – which is a truly astounding number when considering MATIC’s supply cap is 10,000,000.

A post-mortem from Polygon explains that the bug was fixed in a “silent patch” just two days after a white hat hacker reported the possibility of an exploit to Immunefi. “Considering the nature of this upgrade, it had to be executed without attracting too much attention,” wrote the Polygon team in an attempt to explain why it upgraded the network without announcing much information. Once the code to patch the bug was written, the validator and code community upgraded 80% of the Polygon network in under 24 hours to initiate the fix (without knowing much because of the “silent patch” decision).

The white hat hackers (a second white hat noticed the vulnerability shortly after the first) were paid a total of $3.46 million for their help – a small amount compared to the billions at stake (MATIC has a market cap of over $10 billion). That being said, before the bug could be fixed, one hacker was able to get away with 801,601 MATIC, of which the Polygon Foundation will bear the cost."

  • After getting more active accounts than even Ethereum, Polygon's founder recommends (5-10-2021) higher minimum gas prices due to a flood of spamming txs (probably causing the activity spike).
  • From BlockThreat (25-8-2021):

"Polygon patched a DoS vulnerability in its StakeManagerProxy and StakeManager contracts after it was responsibly disclosed by Ashiq Amien."

Governance

Admin Key

  • When Polygon pushed a hard fork through in a very short time, discussions arose over its decentralization. Answers from the team were not very clear nor conclusive (17-12-2021).
  • From their Transparency Report (15-5-2021):

"Polygon uses three different multisigs, each for a different purpose.

  1. MS1: PoS/Plasma contract upgrades
  2. MS2: Custom "Child ERC20" contract upgrades
  3. MS3: Mapping of "Child ERC20" contracts

The first two require 5 out of 8 signers. The signers are Polygon cofounders and people* from reputable Polygon/Ethereum projects:

  1. CurveFinance
  1. QuickswapDEX
  2. MUSTCometh
  3. 0xHorizonGames

*identities protected

As the contracts secured by multisigs become battle-tested, we will be exploring introducing the following optimizations/changes:

  1. Moving from multisigs to governance-controlled proxies
  2. Introducing timelocks
  3. (Eventually) Completely removing multisigs/upgradability."

DAO

Treasury

Token

Launch

Token allocation

"The team behind the protocol has allocated $40 million in rewards for lenders and borrowers, the bulk of which is made up of 1% of the total MATIC supply. Users will be able to earn rewards by depositing and borrowing assets on Aave’s Polygon market."

  1. Private Sale tokens comprise 3.80% of the total supply
  2. Launchpad sale tokens comprise 19% of total supply.
  3. Team tokens comprise 16% of the total supply.
  4. Advisors tokens comprise 4% of the total supply.
  5. Network Operations tokens comprise 12% of the total supply [staking].
  6. Foundation tokens comprise 21.86% of the total supply.
  7. Ecosystem tokens comprise 23.33% of the total supply.

Utility

"The network’s token, MATIC, is used in a similar way to Ethereum to pay gas fees for transactions."

Token Details

Stablecoin 

Coin Distribution

Tech

Transaction Details

How It Works

"Unlike several other chains, Polygon was architected with EVM compatibility in mind. This has made it very easy for so many top DeFi project to port their services onto Polygon. In fact, Polygon is architected as four layers which can easily interact amongst themselves.

Of the four layers, only the Polygon Networks and Execution layers are mandatory. Polygon Networks are sovereign blockchain networks that serve a specific community. Polygon networks are independent, but can send messages to other Polygon networks using the Polygon Protocol.

The Polygon Networks are collectively governed by the Execution layer, which interprets and executes all transactions passed to it from the Polygon Networks layer. The Execution layer itself consists of two sublayers, an Execution Environment that serves as a plug-and-play virtual machine running eWASM, and a smart contracts layer that handles execution logic in EVM.

The Ethereum and Security layers are optional, but useful for interoperability and validation. The security layer can be used by any Polygon network to verify its chain integrity for a fee. The Ethereum layer allows any Polygon network to lean into Ethereum’s smart contracts, to provide functionality like checkpointing, staking, and messaging."

"Polygon is a suite of Ethereum scalability solutions, it's not a single solution. Currently we offer Polygon Plasma and Polygon PoS commit chain, and in the future we will offer other major scalability architectures (e.g. zkRollups and Optimistic Rollups).

Plasma fully relies on Ethereum security and it is, to the best of my knowledge, the only decentralized L2 solution (it has a decentralized operator set). Polygon PoS has it own permissionless validator set, and it uses Ethereum for validator staking/slashing and checkpointing.

[Polygon PoS] is not really a sidechain and it's actually *fully decentralized*. It has an open validator set + huge number of delegators. Anyone can participate in securing the network, with any amount.

There are many more differences compared to other chains that you mentioned. For example, our two-way bridge to Ethereum is run by the whole PoS validator set, i.e. it is secured by the whole amount staked in our system ($600M+). Usually bridges are run by a few PoA authorities."

"The PoS chain is what people refer to as a “sidechain” to Ethereum because it has its own permissionless validator set (100+ who are staking MATIC) which means it doesn’t use Ethereum’s security (aka Ethereum’s PoW). The PoS chain goes beyond a standard sidechain and actually relies on and commits itself to Ethereum (what some people may call a “commit-chain”). It relies on Ethereum because all of the validator/staking logic for the PoS chain lives as a smart contract on Ethereum. This means that if the Ethereum network went offline, the Polygon PoS chain would also go offline. Secondly, the PoS chain actually commits/checkpoints itself to Ethereum every so often. This has 2 benefits: it provides Ethereum-based finality to the PoS chain & it can help the chain recover in case of catastrophic event. This also means that Polygon is paying Ethereum to use its blockspace (in ETH) & paying for it to secure the contracts & checkpointing."

Fees

Upgrades

  • When Polygon pushed a hard fork through in a very short time, discussions arose over its decentralization. Answers from the team were not very clear nor conclusive (17-12-2021).
  • From their Mainnet announcement (3-6-2020):

"Currently, we have started the network with a set of 7 Matic Foundation nodes. DApp partner nodes will be joining this set in the coming week."

Staking 

  • From their blog (19-5-2020):

"MATIC holders will be able to delegate their tokens to Matic Foundation nodes in the initial phases."

Liquidity Mining

Scaling

"Polygon will have additional support for such layer two solutions as Optimistic Rollups, zkRollups, and Validium."

  • As of 12-2021, Polygon has aquired different zk-tech projects, like Hermes and Mir to add to their stack.

Different Implementations

Interoperability

"Polygon and Wanchain are launching a decentralized L2 to L2 cross-chain bridge that connects Arbitrum and Polygon’s PoS chain."

  • From their docs (7-3-2021):

"Matic brings you a trustless two-way transaction channel between Matic and Ethereum by introducing the cross-chain bridge with Plasma and PoS security. With this users can transfer tokens across matic without incurring third-party risks and market liquidity limitations. Matic uses a dual-consensus architecture (Plasma + Proof-of-Stake (PoS) platform) to optimise for speed and decentralisation. We consciously architected the system to support arbitrary state transitions on our sidechains, which are EVM-enabled."

Matic seems to have 2 bridges, PoS (which they recommend) and Plasma.

"The PoS (Proof-of-Stake) token bridge is now live on the Matic mainnet for deposits and withdrawals from Ethereum to Matic and vice versa. DApps can now use the robust validator-run token bridge to move ERC20, ERC721 and ERC1155 tokens from Ethereum to Matic and from Matic to Ethereum. Deposits from Ethereum to Matic take ~7-8 minutes to complete and withdrawals take ~30 minutes. This is a vast improvement from the previous deposit & withdrawal mechanism."

Other Details 

Oracle Method

Privacy Method

Compliance

Their Other Projects

  • Matic PoS Chain and Matic Plasma Chains. However, these seem both to be bridges to Ethereum.

Avail

"Avail is a general-purpose, scalable data availability-focused blockchain targeted for standalone chains, sidechains & off-chain scaling solutions."

Finity

"Finity -- a user-first interconnected system of design elements that allows teams to quickly prototype, launch and scale their products without compromising on aesthetics and usability. Finity offers tried-and-tested assets, elements, and templates with a focus on 3D design. Its visual library allows for elements to be used individually or with each other, in perfect harmony."

Polygon Edge

"Polygon Edge is a customizable blockchain solution that enables you to build and launch dedicated blockchain networks tailored specifically to your needs.

  1. Supernets are dedicated to just one specific use case or protocol. This would entail how a dedicated Web 3 hosting would look like.
  2. Supernets are secured by Polygon’s MATIC which would work as a shared security layer in the form of a MATIC-staked validator marketplace.
  3. Supernets are connected with each other and Ethereum. Every Supernet is able to exchange value and messages with other Supernets and with the Ethereum mainnet.

Polygon has announced a $100 Million adoption fund that is immediately available."

Polygon Hermez

  • Hermez was previously a standalone project but merged (or was bought) by Polygon (13-8-2021). It will be the ZK-Rollup and zkEVM side of Polygon.
  • From their blog (13-5-2022):

"Polygon Hermez 2.0, henceforth Hermez 2.0, is a decentralized Ethereum Layer 2 scalability solution utilising cryptographic zero-knowledge technology to provide validation and fast finality of off-chain transaction computations. Hermez 1.0, which has been live since March 2021, is decentralized, permissionless and scales up to 2000 transactions per second (tps). The Hermez 2.0 system is a zero-knowledge EVM (zkEVM) consisting of a few essential components; the Consensus Algorithm, the zkNode software, the zkProver, the LX-to-LY Bridge, the Sequencers and the Aggregators (who are the participants requisite in reaching network consensus), as well as active users of the Hermez 2.0 network who create transactions.

Like its earlier version, which uses Proof-of-Donation (PoD), Hermez 2.0 is designed to be decentralized. However, the old Proof-of-Donation gives way to a newer consensus algorithm called Proof of Efficiency.

Firstly, the PoD model with the complexity of its auction protocol, is vulnerable to attacks, especially at the bootstrapping phases. Also, since at any given point in time, the network is controlled by any permissionless participant, there is a risk for the network to suffer service level delays should such a third party turn malicious or experience operational issues.

Secondly, the auction protocol has proved to be not only complex for coordinators and validators but also costly. More so considering that not every competing validator gets rewarded but only the most effective.

Thirdly, the efficacy of selecting “the best” operator amounts to a winner-takes-all model, which turns out to be unfair to competitors with slightly less performance. Consequently, only a few select operators validate batches more often than others, defeating the very ideal of network decentralization.

The PoE smart contract imposes a few requirements on Sequencers and Aggregators.

Sequencers' Constraints;

  1. Anyone running the zkNode, which is the software necessary for running a Hermez 2.0 node, can be a Sequencer.
  2. Every Sequencer must pay a fee in $Matic in order to earn the right to create and propose batches.
  3. A Sequencer who proposes valid batches, which consist of valid transactions, is incentivised with fees paid by transaction-requestors, the users of the network.
  4. Specifically, a Sequencer collects L2 transactions from users, preprocesses them as a new L2 batch, then proposes the batch as a valid L2 transaction to the PoE smart contract.

Aggregators' Constraints;

  1. An Aggregator's task is to produce validity proofs for the L2 transactions proposed by Sequencers.
  2. In addition to running Hermez 2.0's zkNode software, Aggregators need to have specialised hardware for creating the zero-knowledge validity proofs. We herein call it the zkProver.
  3. The Aggregator who is the first to submit a validity proof for a given batch or batches, earns the Matic fees paid by the Sequencer(s) of the batch(es).
  4. The Aggregators need only indicate their intention to validate transactions and then run the race, to produce validity proofs, based on their own strategy."

Polygon Miden

"Polygon Miden is an advanced ZK Rollup. ZK Rollups are very promising, but currently, it's hard for them to support arbitrary logic and transactions, such as those happening on Ethereum. Polygon Miden will solve this challenge using its core component - Miden VM."

Polygon Nightfall

"Polygon Nightfall (optimistic rollup with zero knowledge for privacy) unaudited beta live, aimed at enterprise."

Polygon Studios

  • Will aid the development of blockchain gaming and NFTs (19-7-2021).

Polygon Zero (fka Mir)

  • Mir was previously a standalone project but got aquired by Polygon (9-12-2021). It will be another ZK-Rollup side of Polygon. The deal was made for $400m. It got renamed into Polygon Zero.

Roadmap

  • Can be found here (3-6-2020). New one here(24-5-2021), but only goes until Q1 of 2021.
  • From their blog (10-6-2020):
  1. "Staking UI to be publicly available on testnet by 15th June and functional for our Staking Education Initiative. Participants will be able to experience live delegation to validator nodes on testnetRegister here to take part.
  2. Final staking & delegation to Foundation nodes on the Matic mainnet to go live on or before 29th June.
  3. Public deposits and withdrawals for end users using the Matic Web Wallet are also slated to go live shortly; the exact date will be provided by Friday, 12th June."

Usage

"Polygon has seen a meteoric rise in transaction volume, exceeding Ethereum’s transaction count by 18% on Tuesday. Its native DEX, Quickswap, accounted for 41,000 transactions that day, hitting over 20% of Uniswap’s transaction volume. There are only 400,000 unique addresses on Polygon, a far cry from 150 million on Ethereum or 61 million on BSC. Curiously, Polygon’s top 3 addresses sent 573,000 transactions this week, a large majority of which appear to be arbitrage trades. Interestingly, only 25% of all Polygon addresses ever sent transactions on Ethereum."

  • From Our Network (5-6-2021):

"As of writing this, the average user on Polygon's implementation of Aave does ~5 transactions on any given day. The combined gas cost for supporting over 4,000 users as of early June was under $15."

  • Polygon’s Bridge TVL has been on a slow decline and hovering around $2.5b since peaking at ~$4.6b (9-2021). Meanwhile TVL on Arbitrum and Avalanche went up substantially.

Projects that use or built on it

  • From Poly Pulse (7-2-2022):

"Recent statistics from Alchemy confirmed over 7000 dApps have already onboarded the Polygon Ecosystem."

"Before launching its mainnet on Jun. 3, 2020, Matic had already attracted more than 50 dApps, making it the most adopted layer 2 platform in the space. dApps on Matic encompass a variety of niches ranging from gaming to DeFi, with notable projects including Decentraland and whitelabel betting platform BetProtocol."

A list of projects built or deployed on Polygon can be seen here (3-5-2021).

Pros and Cons

Pros

  • Is EVM compatible, therefore it is easy for Ethereum projects to launch on Polygon.
  • Low tx fees.
  • Is considered 'ETH-aligned', this narrative has been working in their favour, compared to other EVM-chains or scaling options.

Cons

  • Staking contracts (and with it, the security of their whole chain) are held with a multi-sig with no (15-5-2021) timelock.
  • Lots of competition.
  • When Polygon pushed a hard fork through in a very short time, discussions arose over its decentralization. Answers from the team were not very clear nor conclusive (17-12-2021).

Competition

"If Ethereum 2.0 will bring better scalability to the platform, does this mean that second-layer projects such as Matic Network will no longer be required? Sandeep Nailwal, chief operations officer of Matic, doesn’t believe that Ethereum 2.0 will nail the scalability challenge in the same way that Matic has, telling Cointelegraph: “Ethereum 2.0 doesn’t provide infinite scalability. The best-case scenario is 64 shards, with sharded chains similar to today’s Ethereum chain. Assuming a single chain improves with PoS up to 50 transactions per second, total throughput will still only offer 3200 tps.”

Nailwal believes that the simple fact of Ethereum supplying a higher throughput will drive even greater demand, creating a situation where Ethereum can never scale to the level required by its DApp activity, adding: “First layer blockchains are settlement platforms. They are not meant to support the ’business activity.’” With the craze for DeFi DApps pushing gas fees ever higher, those using second-layer platforms for features like governance votes can avoid the need to move to a competitor platform."

Team, Funding, Partnerships, etc.

Team

  • Matic Network Ltd. (British Virgin Islands).
  • Full team can be viewed here (25-5-2021).
  • Jaynti Kanani; CEO "an erstwhile Plasma contributor who started Matic with Sandeep Nailwal and Anurag Arjun in October 2017."
  • From Coindesk (3-6-2020):

"Matic has since grown to a team of 25 full-time contributors working out of Bangalore, the “Silicon Valley” of India."

Funding

  • From Poly Pulse (7-2-2022):

"Polygon raised about $450 million through a private sale of its native MATIC token in a funding round led by Sequoia Capital India with participation from SoftBank Vision Fund 2, Galaxy Digital, Galaxy Interactive, Tiger Global, Republic Capital and prominent investors like Alan Howard (co-founder, Brevan Howard) and Kevin O’Leary (Mr. Wonderful from ABC's Shark Tank)."

  • Got seed money from Coinbase Ventures.
  • Had an IEO on Binance.
  • Started its own $100M "DeFiforAll" fund (29-4-2021). "The funding, in MATIC tokens, will come from the network’s ecosystem fund and be deployed over the next two to three years."
  • Gave a 'significant grant' to Tidal Finance (27-4-2021).
  • AU21 Capital started a $21 million fund to invest in projects built on Polygon (2-6-2021).
  • Polygon is raising a $100M fund to support blockchain game developers and NFT creators, and tapping the chops of Atari.
  • Donated $1M to Gitcoin (11-2021).

Partners

"Gitcoin and Matic announced that they have formed a long term staking partnership with Matic to collectively grow the scalability community of Web 3." Gitcoin is also part of the Ren Alliance.

“Matic architecture is [designed to enable a] … secure and efficient link between the Ethereum blockchain and Matic sidechains. That’s where MANTRA DAO’s … secure staking infrastructure steps in. The security of that Layer 1-Layer 2 link is managed by validators. Transactions are made on the sidechains and are recorded into blocks minted by selected validators. When a sufficient number of blocks is reached, these are checked by a selected validator that will record the trace and send it to the Ethereum blockchain.” 

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