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What is Polygon? MATIC Explained with Animations - YouTube
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over the years ethereum has brought all
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kinds of advancements into the
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cryptocurrency space including smart
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contracts and high interest paying
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decentralized applications however it
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faces three big challenges the first is
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the low throughput issue which is a
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fancy way of saying ethereum can only
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handle 30 transactions per second for
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the amount of people that are actually
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using ethereum this processing speed is
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considerably low since many alternatives
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can process many more transactions in
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the same time frame for example the
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cardano blockchain does around 257
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transactions per second while polkadot
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can do up to a thousand and solana all
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the way up to 65 000. the second big
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problem is that the ethereum network
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isn't really user friendly since you are
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effectively bidding in an auction
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against everyone else who wants to be
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one of those 30 transactions in short
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this means it is expensive and i mean
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like twenty dollars just to send your
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friend one dollar expensive lastly the
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ethereum blockchain presents developers
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with limited options all ethereum
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projects run on the same network and
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have a similar throughput this implies
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that they all share in ethereum's
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problems with no exceptions but what if
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there was another blockchain that
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leveraged ethereum's technology while
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also offering higher throughput
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extremely low transaction fees and
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better options welcome the whiteboard
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crypto the number one youtube channel
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for crypto education and here we explain
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topics of the cryptocurrency world using
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analogies stories and examples so that
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you can easily understand them in this
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video we are going to explain what
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polygon is how it works as well as the
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specific tokenomics of the matic coin so
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in 2017 three indian developers sought
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to find a solution to ethereum's
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problems which resulted in the creation
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of matic which is now rebranded to the
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polygon network now one thing to note
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here is that even though they rebranded
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to the polygon network the coin is still
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called the matic coin polygon is a layer
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two scaling platform that allows
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ethereum based applications to tackle
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the problems that i mentioned earlier
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while also leveraging ethereum's
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security its primary focus is to
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increase the usage of d5 tools and
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applications by basically connecting
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blockchains together the network
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currently hosts over 3000 decentralized
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applications of which over 80 big names
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migrated from the ethereum main chain
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since polygon is so similar to ethereum
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many developers that create useful tools
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will actually move them from ethereum to
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other evm blockchains like polygon that
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way they can increase their reach and
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usage now if you're wondering what evm
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is it stands for ethereum virtual
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machine and it's the actual code that is
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ran by computers around the world to
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actually carry out the blockchain's
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smart contracts now i must say at this
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point in the video if you have no idea
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what hardly any of these words i've
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mentioned are you can watch some of our
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other dedicated videos that explain some
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of these terms anyways polygon actually
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has an evm but so does the binance smart
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chain phantom and a few other big
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networks they all utilize the main
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ethereum code and since they run
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basically all the same code it makes
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sense how developers can simply move
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their project over to a new network and
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it'll work basically the same way
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without making many changes moving on
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when we think about polygon most people
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think about the polygon proof of stake
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chain which is simply a side chain to
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ethereum utilizing a proof-of-stake
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consensus mechanism there's a few other
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changes to this side chain but what's
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really important is that it's way faster
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and can handle way more transactions per
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second also meaning it's much more
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affordable to the end user but
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technically the polygon network is a lot
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more than just the sidechain one of the
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core ideas behind polygon is to equip
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developers with user friendly and
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flexible tools that way they can fast
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track ethereum's transformation into a
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multi-chain platform to put this in
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simpler words polygon isn't just this
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single proof of stake chain that we
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usually think of they are a series of
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blockchains that can help scale ethereum
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when they actually achieve this
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developers can easily create all kinds
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of different scaling solutions that they
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can use with ethereum like completely
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separate chains like zk roll-up chains
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optimistic roll-up chains or any other
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side chain that they desire by the way
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you can check out our videos on side
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chains and roll ups if you want to learn
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more about how those specifically work
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they're really unique and creative ways
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to bundle up data and save space on the
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main ethereum chain the polygon proof of
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stake chain is just one way to scale
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ethereum in reality polygon plans to
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create many different solutions for
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users to scale it so at first glance i
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thought polygon was pretty simple but
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when you look at its internals there's a
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lot more than regular users c for users
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like you and me we can sum up polygon in
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one sentence it's basically ethereum but
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with super cheap gas fees right now to
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transfer your ethereum from one count to
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another the fee is like twenty dollars
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however on the polygon network it is
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less than a penny this means users are
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free to try out new apps and test things
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out without the fear of losing 150 over
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a token swap personally the polygon and
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binance smart chain are the two d5
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blockchains that i recommend to new
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users so take that for what it's worth
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moving on let's get into a little bit
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more about how polygon actually works so
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polygon is driven by the layer 2 scaling
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solution and the proof of stake protocol
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serving as what is called a commit chain
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to the main ethereum chain now if you
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don't know what a commit chain is it
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functions as a transaction network that
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operates close to the real chain
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therefore in polygons case it actually
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works alongside ethereum now before we
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continue a lot of the future stuff i'm
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going to be talking about is pretty
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technical but if you're interested let's
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dig in the polygon commit chain groups
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up clusters of transaction and processes
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them all together before sending the
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data back to the main ethereum chain
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think of it like this instead of sending
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an entire video of all the transactions
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polygon simply takes a single snapshot
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every now and then so that the ethereum
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chain can still understand what is
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happening but without processing a ton
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of data this is why the polygon network
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can actually process up to 65 000
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transactions per second some experts
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predict that a time will come when
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developers will host thousands of chains
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that work hand-in-hand with ethereum to
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increase throughput all the way up to
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millions of transactions per second now
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let's get a little more technical
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polygons architecture runs on a
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four-layer system comprising of the
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ethereum layer the security layer the
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polygon networks layer and finally the
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execution layer now i'm going to be
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honest with you you don't really need to
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know this stuff so skip ahead if you
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want to get into the tokenomics the
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ethereum layer is made up of different
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ethereum based smart contracts these
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contracts are in charge of staking
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transaction approval and interaction
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between the ethereum blockchain and the
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numerous polygon chains this layer is
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how polygon actually checks in with
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ethereum from time to time next up we
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have the security layer and it works
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alongside ethereum to provide validator
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services giving chains an additional
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layer of security that said it's
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important to note that both the security
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layer and the ethereum layer are
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actually optional they are not required
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for polygon to work layer 3 is the
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polygon networks layer and it's the
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ecosystem of projects or blockchain
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networks developed on polygon basically
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every project or blockchain that exists
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within this ecosystem has its own
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community where local consensus is
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reached and then blocks are produced
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finally we have the execution layer this
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is popularly known as polygons ethereum
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virtual machine and its main function is
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to execute smart contracts on the actual
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polygon blockchain the compatibility
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with the evm like i mentioned earlier
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smoothens the user experience for
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developers and programmers using the
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ethereum chain finally let's get into
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polygons tokenomics the polygon network
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has a native token it's called matic
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which has been trading around two
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dollars with a market capitalization
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value of around 13 billion dollars matic
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tokens are dispersed monthly and have a
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total supply of 10 billion tokens of
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which nearly 6.8 billion is already in
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circulation the difference between these
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two numbers is tokens that are held for
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staking rewards and tokens with a time
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locked release schedule that we'll talk
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about later initially the developers
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sold around 3.8 of maddox total supply
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in their initial private launch all the
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way back in 2017. then later they had an
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initial exchange offering where they
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sold another 19 of the max supply if
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you're wondering where the other tokens
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are the development team owns sixteen
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percent of the supply the advisors have
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four percent staking rewards come to
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around twelve percent the ecosystem
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already has twenty three percent while
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around twenty two percent went to the
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polygon foundation and since matic
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tokens are technically being printed to
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reward stakers right now it is
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technically inflationary however matic
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does have a limited supply and soon they
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will be implementing their version of
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eip1559
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if you have no idea what that is what it
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basically means is that base transaction
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fees will effectively be burned which
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means matic will eventually be a
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deflationary token now if you're
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anything like me you might be wondering
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how are they going to reward the stakers
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when the funds run out well the polygon
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team hope by then the extra transaction
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fees that the users add to prioritize
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their transactions above the base fee
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will be enough to incentivize staking
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validators to keep doing their thing
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wrapping this video up personally i love
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using the polygon ecosystem to invest in
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namely the curve.finance application and
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it has actually been earning me around
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30 apy for the past few months ave on
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the polygon network also had some
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amazing rates a few months ago but
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investors seem to have caught on to
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these great rates lastly if you're
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curious about how to actually invest or
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make money on the polygon network you
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can check out our d5 for beginner's
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guide to get it for free just go to
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whiteboardcrypto.com and enter your
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email this will also sign you up to our
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newsletter where we share the best rates
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in defy and go over a few projects that
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we don't make videos on anyways thank
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you guys so much for watching we hope
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you enjoyed this video we really hope
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that you've learned something and most
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of all we hope to see you in our next
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video
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you
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