MEXC Global Research: Market Investment Research Analysis of the Base Layer Expansion Scheme, Polygon (MATIC)

Source: NiftyKit

In 2021, the projects at the forefront of the base layer blockchain race is not Binance Smart Chain, Polygon, and Solana. However, the latter two are likely to have late development advantages.

Polygon uses an Ethereum sidechain that focuses on high performance and scalability issues. Unfortunately, every user who uses Ethereum for transactions suffers from high gas fees and transaction congestion. The following data in the picture can fully summarize the problems to be solved by Polygon.

We can look at Polygon’s situation from the following aspects.

1. Polygon network DeFi TVL

At present, the TVL of the Ethereum network is $88.52 billion USD, and the TVL on Binance Smart Chain is $24.77 billion USD, the TVL on the Polygon Network is $3.6 billion USD.

Compared with this set of data, the current Polygon DeFi ecosystem may be far inferior to the Ethereum network or the Binance Smart Chain. However, another set of data shows that in the second quarter of this year, the number of Polygon’s daily active wallet addresses once surpassed Ethereum to 73,000, with an year-on-year increase of 13000%. So far, the number of Polygon wallet addresses is 660,000 +.

About the situation of the Polygon network’s native asset MATIC (based on the data retrieved on September 3): The asset price is 1.5USDT/token, the market value is $9.754 billion USD, and the market value ranks 19; The total value of online staking is U$1.832 billion USD.

At present, Polygon is in a multi-chain-driven mode. Its ecosystem leaders are AAVE, Sushi, Aavegotchi, and other games. Dapp also decided to expand its functions to Polygon·

According to a report by Dappradar in July, since its expansion to Polygon, AAVE’s TVL on the sidechain has reached $2.11 billion USD. Considering Ethereum, this number accounts for 22.56% of the total TVL. A similar situation occurred in SushiSwap. Its TVL in Polygon accounts for 20.4% of the total TVL of SushiSwap.

Therefore, based on the data, at present, the TVL contribution value of Polygon mainly comes from AAVE and Sushiswap.

2. Polygon (MATIC) Tokenomics

MATIC has a total distribution of 10 billion tokens, including:

  • The distribution proportion of private sales and Launchpad sales is 3.8% and 19%, respectively;
  • The allocation proportion of team and advisors is 16% and 4%, respectively;
  • The distribution proportion of foundation, network operation, and the ecosystem is 12%, 21.86%, and 23.33%, respectively.

According to public disclosure, MATIC’s private sales price is 0.00079USDT/token and 0.00263USDT/token respectively. The partial private sale has been unlocked in 2019, and the partial network operation has also been unlocked; The team will unlock 1/5 every half a year from April 2020; The foundation will unlock 1/8 every half a year from April 2019; The ecosystem part will be unlocked every half a year from April 2019. In other words, before all these MATICs are unlocked, they will face certain selling pressure in April and October every year.

3. Polygon’s Security Situation

Polygon mainly combines the features of sovereign blocks (sovereignty, scalability, and flexibility) and Ethereum (security, interoperability, and developer experience), which is compatible with existing Ethereum tools (such as MetaMask, MyCrypto, Remix, etc.), and can exchange messages between them and with Ethereum.

Polygon’s technology implements the Polygon framework and the Polygon protocol through two main components.

The “Polygon framework” allows developers to deploy Ethereum compatible preset blockchains with one click and provides a set of customized modules for building blockchains, including pluggable consensus, staking, governance, Ethereum virtual machine EVM/Ewasm, execution environment, and dispute resolving procedures.

The “Polygon Protocol” can transmit information between Polygon chains or between Polygon chains and Ethereum and rely on the security as a service of the Ethereum network.

There are two ways for Polygon to realize the capacity expansion path. One is the path that depends on Ethereum network security, namely “Secured Chains”. This method does not establish its own verifier pool, but is directly provided by Ethereum or professional verifiers.

Under this method, in addition to the current implementation of Matic Plasma, Polygon will also support other major extension solutions, such as zkRollups, Optimal Rollups, Validium, and other various schemes.

The other is Stand-alone Chains, which has its own verifier pool, is fully responsible for its security, and has the advantages of independence and flexibility. Examples include the Matic PoS chain, sidechain, and enterprise chain. However, because of this, many projects cannot share security, which may impact them when becoming a part of the Polygon ecosystem.

Polygon provides various solutions in Ethereum’s capacity expansion, including the core Polygon PoS chain, two mature solutions Polygon SDK and Polygon Plasma, and trying to build a dedicated data availability layer Polygon Avail.

In August, Polygon acquired Hermez with $250 million USD, thus complementing the capacity expansion technology based on zero-knowledge proof (ZK), which is the most difficult at present, so that Polygon can further complement the Rollup scheme.

4. Polygon’s Ecosystem Situation

At present, Polygon’s Layer2 chain has been widely used, with more than 520 DApps, more than 400 million on-chain transactions, and more than 17 million independent address users, including DeFi, NFT, and games. At present, there are more than 520 ecosystem projects deployed on Polygon with apparent official cooperation, including many blockchain ecosystems such as DeFi, NFT, GameFi, and tools.

In addition to the leading projects Aave, Sushi and Aavegotchi, AirNFTs, Quickswap and Decentral Games Polygon has formed a primary ecosystem dominated by DEX, insurance, lending, NFT and GameFi.

Recently, polygon held a hackathon for the first time in the theme directed towards Fastest way to build Polygon dApps with Moralis, Building an NFT marketplace on Polygon, Polygon DeFi Panel, etc. to provide professional ecosystem construction and post-investment services for innovative ecosystem projects.

MEXC Global will participate in the project as a global market partner. In addition, MEXC Global and Polygon will jointly set up a global ecosystem fund to invest in Polygon’s innovative ecosystem projects.

Note: This article is only for information sharing and does not constitute any investment suggestions.