Sandeep Nailwal: Polygon 2.0 - The New Value Layer of the Internet?
Aug 18, 2023
auto_awesome
Sandeep Nailwal, co-founder of Polygon, discusses Polygon 2.0, tokenomics, rollup interoperability, staking decentralization, and the multi-chain future outlook. They also explore the importance of trustless decentralized systems, differentiating between optimistic rollups and ZK rollups, and Polygon's role in blockchain construction and cross-chain interoperability.
Polygon 2.0 aims to provide an aggregation layer for every scaling solution on Ethereum, offering rollup interoperability and relieving the Ethereum network.
Polygon offers two key scaling solutions: Validium, which settles on Ethereum and handles data on the Polygon stack, and ZK Rollups, which execute off-chain computations with proofs on Ethereum.
Polygon's aggregator layer allows chains to submit proofs that are aggregated into a single proof on Ethereum, enabling faster cross-chain interoperability and reducing proving costs.
Deep dives
Polygon's Journey to Becoming a Major Crypto Ecosystem
Polygon, previously known as Matic, has evolved into a prominent player in the crypto ecosystem. The project was born from the founders' recognition of Ethereum's scalability limitations and their passion for a trustless decentralized future. They launched Matic Network with a Plasma-based layer two solution, but the majority of users opted for the EVM side of the chain. Despite this, Matic became one of the largest blockchains. However, the vision was always to create a web 3.0 infrastructure that is infinitely scalable. So, Polygon transitioned to ZK rollups, and in March 2023, they launched their first fully audited ZK rollup mechanism. They have also developed Plonk, a widely used technology for building ZK circuits. With the recent launch of Polygon 2.0, the focus remains on providing scalable infrastructure and seamless value movement across chains. The ultimate goal is to enable web 3.0 to reach mainstream adoption.
Understanding Validium and ZK Rollups in Polygon's Architecture
Polygon offers two key solutions for scaling: Validium and ZK Rollups. Validium is a layer two solution where settlement occurs on Ethereum, while data availability and consensus are handled on the Polygon stack. ZK Rollups, on the other hand, involve executing computations off-chain, proving those computations with a concise validity proof on Ethereum. Both Validium and ZK Rollups provide secure and efficient scaling options. However, Validium has a specific attack vector known as a ransom attack, where a sequencer can hide data from users. On the other hand, ZK Rollups provide greater security as the proof of execution happens on Ethereum itself. The Polygon team envisions a future where different chains, such as EVM-based chains and Wasm chains, can seamlessly prove their value on Ethereum using ZK Rollups or Validium. By enabling interoperability between chains, Polygon aims to create a cohesive value network for the internet.
Polygon's Role in Aggregating Chains and Providing Liquidity
Polygon plays a crucial role in connecting various chains and enabling swift value movement across different execution environments. The aggregator layer in Polygon allows chains to submit their proofs, which are then aggregated into a single proof on Ethereum. This drastically reduces the cost of proving for chains and enables faster cross-chain interoperability, with transactions being settled in mere seconds. Polygon's goal is not to replace other layer ones or create a single dominant chain, but rather to provide a central layer for value movement and liquidity across the ecosystem. The vision extends beyond financial applications and includes a future where blockchains play a larger role in democratizing various aspects of human systems. While financial applications will dominate blockchain adoption in the short term, the potential for blockchain spans multiple industries and sectors in the coming years.
Polygon's Architecture: Aggregated Liquidity and Chains
Polygon's architecture revolves around the idea of aggregated liquidity and chains. While public chains provide high liquidity for value-related activities, app chains offer dedicated capacity and scalability for specific applications. Polygon envisions that some chains will become clusters themselves, accommodating large ecosystems. This architecture is inspired by the structure of the internet, with public chains acting as servers and ecosystem chains focused on specific industries. The goal is to create a mesh-like space where different chains coexist and facilitate seamless value movement.
Polygon's Token Economics and Staking Ecosystem
Polygon's token, the P-O-L-Y token, represents the upgrade of their original token, Magic. The token economics of Polygon 2.0 involve a 1% annual inflation rate that is distributed to validators and a 1% token treasury inflation for ecosystem growth over the next 10 years. Validators have the option to donate part of their transaction fees to the ecosystem as well. As for the staking ecosystem, Polygon plans to create a permissionless and decentralized network where any individual holding Magic tokens can stake and choose to validate on any chain. This approach allows for the scalability and interconnectivity required in a blockchain ecosystem.
What started out as Matic Network, in 2017, and later rebranded to Polygon, in 2021, it is now facing another major milestone: Polygon 2.0. Apart from a tokenomics update, their plans include building an aggregation layer for every scaling solution that will settle on Ethereum. This will not only provide crucial rollup interoperability, but it will also further offload Ethereum by recursively combining multiple proofs into a single one.
We were joined by Sandeep Nailwal, co-founder of Polygon, for a fascinating discussion on Polygon’s future revamp, their views on infrastructure decentralisation and interoperability.
