DeFi
September 28, 2022
What is Token Burn and it's effects on price
An A-Z guide on token burning and how it is largely impacting the cryptocurrency industry.
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The covid-19 pandemic hit the world in 2020 and impacted lifestyles of people all around the globe. The work-from-home culture got promoted and it unknowingly led to a shift of interest of people from fiat currency to cryptocurrency.
Moreover, after the successful bull rally of web2 companies, new web3 companies have started to emerge. In this web3 revolution, cryptocurrencies are going to play an important role and thus it is important that masses should be aware about them.
In this series of articles, we are discussing some basic but important aspects of the top 6 cryptocurrencies. Today, we will take a closer look at Polygon network and its native token Matic.
There are many projects offering scaling solutions to the Ethereum blockchain and Matic/Polygon is one of the competitors. Before we dive deep into the Matic, let’s clear out one major confusion. When the project was launched it was known as Matic. However, now Matic is the native token and the network is called Polygon.
Polygon is a layer-2 solution backed by Binance, It solves the scalability issue of Ethereum and brings a multi-chain system where users can create either zk-rollup chains or independent chains all running with Ethereum’s security protocols.
As discussed above, MATIC is native token of the Polygon network and it is considered as a token with strong fundamentals as the Polygon project is being adopted by masses.
The Polygon network is currently working on improving its ecosystem. It offers a number of scaling solutions, a platform to create new blockchain networks and also a cross-chain bridge to transfer your assets from Ethereum to polygon and vice versa.
Polygon was launched in October 2017. Initially, Jaynti Kanani, Sandeep Nailwal, and Anurag Arjun, two experienced blockchain coders and a business consultant were working on this project and they co-founded Polygon.
The current polygon team was initially part of the Ethereum ecosystem and worked on several features of the Ethereum blockchain like Plasma MVP, the WalletConnect protocol, and the Dagger event notification engine.
The CEO of Matic is Jaynti Kanani who is a blockchain engineer and a full-stack developer by profession. Before working on Ethereum or Matic, she was a data scientist at Housing.com, a property rental company in India.
Sandeep Nailwal is COO (chief operations officer) and co-founder of Matic. He has an entrepreneurial background and has expertise as a blockchain programmer. Anurag Arjun is another co-founder of Polygon who is product manager of the Polygon project.
MATIC or Polygon is an important cryptocurrency network when it comes to the DeFi ecosystem. It overcomes the limitations of one of the largest blockchain, Ethereum. Let’s take a look at some of its statistics as of 18th June 2022.
The mainchain of the Matic network consists of a dual consensus mechanism which includes proof-of-stake and block producers. Such architecture of the blockchain allows the Matic network to process transactions faster and ensures complete decentralization.
Users which stake the Matic tokens become staker on the PoS checkpoint which in fact is the base layer of the Matic mainchain. The next layer is the block layer which is then controlled by block producers that are selected by the stakers on the PoS layer. Block producers can add new blocks to the Matic blockchain each second.
The Matic network is smart enough to provide high security standards to the blockchain. It makes use of the Fraud Proof mechanism to ensure that no manipulation is passed on to the blockchain.
It basically allows users on the network to report or challenge a particular transaction they think is suspicious. If the report/challenge is legitimate, that transaction amount is slashed from the user and given to the user who reported the transaction in the first place. Thus, incentivizing the users to report fraudulent transactions.
Matic has proved to be quite useful and profitable for users. There are plenty of advantages from which we will mention a few. Outlisted bulletins are advantages of Matic.
Matic is said to be quicker and faster than the Ethereum blockchain in terms of transaction speeds. Matic has a defined speed of 65,000 transactions per second. The Polygon network is well optimized for this transaction speed as block confirmations are achieved every 2 seconds.
Performing on-chain transactions or even cross-chain transactions has become way cheaper on the Matic/Polygon network. If for a particular transaction, Ethereum is charging $10-$20 as gas fees, it will only cost you $0.1-$0.5 to make the same transaction on the Matic/Polygon network.
The launch of Matic was successful and it caught enough eyes to gain popularity from the day it was launched. The project and the team behind it is strong, thus it got accepted and adopted by the majority of people.
Moreover, the Matic/Polygon network is practical and the team is collaborating with other blockchains to further improve the ecosystem. Therefore, more developers are taking part in the project, developing dApps on the network and building projects on the Polygon Network.
Matic/Polygon is a layer-2 solution for Ethereum blockchain; it does not have its own blockchain. In fact it is designed to solve the scaling issue of Ethereum. Although Ethereum is one strong ecosystem, it is a 2nd generation blockchain.
Currently, there are more advanced and more practical 3rd generation blockchains present in the crypto world which are ready to take over Ethereum’s place. No doubt Ethereum is going to stay longer, the whole future of Matic depends on the status of the Ethereum blockchain. The project is valid only until the Ethereum blockchain is active.
As already discussed, Matic is a layer-2 solution for Ethereum blockchain; there are a number of similar projects which offer similar solutions to Ethereum. Therefore, networks like ADA and SOl are strong competitors of Matic which can be a cause of concern for the team.
Polygon is a very strong project with 16th rank on Coinmarketcap. It is fundamentally practical and an important aspect of web3 development. So far we have discussed the project, its native token and all the pros and cons of the project.
If you are a developer and planning to join the Polygon team or if you are just an investor or trader, we hope that this article helped you get the right piece of information. To know more about the Polygon project you can check out the Whitepaper released by the team and if you have any more doubts, feel free to share them with us and we’ll get back to you with an answer.
An A-Z guide on token burning and how it is largely impacting the cryptocurrency industry.
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