Polygon, formerly known as MATIC network, is a layer-2 scaling solution created in 2019 to address several limitations in the Ethereum blockchain, such as transaction speed, throughput, and gas fees.
It was originally designed as a scaling solution, but it rapidly evolved into a multi-purpose ecosystem that’s been receiving a lot of attention. MATIC, its native token, debuted on the Binance Launchpad in 2019 amid the Initial Exchange Offerings (IEO) boom.
But first thing’s first, let’s see what layer-2 solutions are if we want to have a better knowledge of Polygon.
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What Are Layer-2 Solutions and Why Do We Need Them?
A layer-2 solution is a blockchain that runs parallel to a mainnet — in Polygon’s case, Ethereum — but processes transactions outside of the mainnet, resulting in an increased throughput (transaction speed) and lower gas fees.
In other words, what layer-2s do is that they build a communication channel between the two blockchains and send the information package (the transaction data) from the mainnet to the parallel blockchain to execute the transaction for a fraction of its cost and at a much higher speed, all without compromising the Ethereum mainnet.
As we know, Ethereum is the go-to ecosystem for most software developers looking to launch their dApps (decentralized applications) due to its vast and secure infrastructure and innovative tooling.
However, the high demand for dApps and the subsequent supply clogged the network, and its throughput has significantly downgraded — it’s not uncommon to see gas fees rising up to two or three digits in USD equivalent, which can be quite expensive depending on how much you interact with the network, leaving the Ethereum blockchain only for the ‘big players.’ You can use Etherscan’s gas tracker to check the current gas fees.
This is why Layer 2 solutions have become essential to the DeFi ecosystem as they enhance Ethereum’s scalability and…
