How Will Ethereum 2.0 Affect Scaling Products Like Polygon?
For now, Polygon is serving as a band-aid for Ethereum's scale problems. Even once Ethereum 2.0 takes effect, it has a place. So what does Ethereum 2.0 mean?
While Ethereum 2.0 provides its own set of scaling solutions, Polygon has been assisting in reducing network congestion.
Nevertheless, Polygon's ambitious vision consists of scaling options that will permit it to keep participating in ETH2.
The Ethereum blockchain is expected to become more usable with the impending release of Ethereum 2.0 thanks to improved security, quicker and less expensive transactions, and less uncertainty about whether certain transactions actually completed. In essence, it will enable network scaling.
Decentralized application (dapp) users have relied on Polygon for a number of months to get over network sluggishness. Polygon is a so-called second-layer solution that sits on top of the Ethereum blockchain. Back in April and May, it dominated the news with what seemed like an endless series of climbs and collaborations as it addressed the sky-high transaction demand and fee costs. What is Polygon's ultimate goal now that Ethereum's London hard fork is behind it and devs are heading straight for the proof-of-stake Eth2 network? Can it provide a longer-lasting solution to the network's congestion?
What does Polygon do for Ethereum?
As an interoperable scaling solution for Ethereum, Polygon—previously known as Matic Network—can interface with numerous different blockchains and assist reduce network congestion. It provides dapps with a number of scaling options so they can handle transactions more quickly. For applications involving decentralized financing (DeFi), that functionality is crucial. DeFi enables people to lend, borrow, and trade without the use of middlemen, yet poorly timed transactions can result in substantial losses.
Rollups and sidechains are the two broad classifications of scaling solutions. On top of the Ethereum blockchain, rollups process a number of transactions collectively rather than separately before submitting them back to the main chain as a single transaction.
Contrarily, transactions and assets are transported and processed on sidechains, which are effectively clones of the Ethereum main chain and can, if necessary, be summoned back to the main chain.
Currently, Polygon offers either its Matic proof-of-stake chain or Plasma rollups, one of each scaling option. Rollups and side chains are also scaling options, but they offer various degrees of security. The former make advantage of the Ethereum network's security, whereas standalone sidechains employ their own security measures.
Sharded proof of stake by itself has the potential to increase Ethereum's current rate of 15 transactions per second (TPS) to around 3,000 TPS. That's really good, more than the 1,700 TPS or so Visa routinely manages (for those who want to do the arithmetic, proof of stake alone would deliver speeds of 50 TPS; double that by 64 shards).
Lowering the price of Ethereum
The Ethereum blockchain would become more economical as a result. Haseeb Qureshi, a partner at Dragonfly Capital, contrasted costs in his essay "I'm Worried Nobody Will Care About Rollups," which was published on July 8. A straightforward Uniswap-style deal now costs $0.0001 on Polygon "He composed. "It is $0.20 on Binance Smart Chain. It costs around $7 to use Ethereum. And it will run about $0.68 on Optimism, an Ethereum rollup scaling solution.
This illustrates that transaction costs on EVM-compatible chains like BSC or Polygon will be orders of magnitude lower, albeit the tradeoff will involve a security compromise. Furthermore, transactions on rollups with higher security standards should still be far cheaper than they are right now.
As ETH 2.0 emerges over the coming months, Polygon should maintain its position at the forefront of DeFi thanks to efforts to expand its toolkit.
