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Polygon ( $MATIC ) Explained: Tockenomics, Fundamentals, & is Future Bright in 2022?




Ethereum has contributed various innovations to the crypto sector throughout the years, including smart contracts and high-interest-paying decentralized apps. It does, however, confront three major obstacles. These problems are basically simply solved by Polygon ( Matic ) Blockchain.

The first problem with Ethereum is that it can only process 30 transactions per second. This processing speed is somewhat slow, considering that numerous alternatives can handle many more transactions in the same amount of time.

The Cardano blockchain, for example, can process about 257 transactions per second. The Solana and Polkadot networks, on the other hand, can process up to 65,000 and 1,000 transactions per second.

Second, because you’re basically competing in an auction against EVERYONE else who wants to pay to be one of those 30 transactions, the Ethereum network isn’t user-friendly. In layman’s terms, this means it’s pricey, as in $20 to send your friend $1.

Finally, the Ethereum blockchain offers developers a restricted number of possibilities. All Ethereum projects are connected to the same network and have the same throughput. This suggests that they are equally responsible for all of Ethereum’s issues.

Suppose another blockchain used Ethereum’s technology and had a lot more throughput and lower transaction costs.


This article will go through Polygon deeply and find out how it works and how the MATIC coin’s tokenomics functions only at

Sandeep Nailwal, Jayanti Kanani, and Anurag Arjun, three Indian developers, set out to solve Ethereum’s shortcomings in 2017, establishing the Matic (now renamed as the Polygon) network. However, it’s worth noting that, despite the rebranding to the Polygon network, the token is still known as the Matic coin.

What Exactly Is A Polygon ( $MATIC )?

Polygon is a layer-two (L2) scaling platform that enables Ethereum-based apps to address the issues I described before while simultaneously using Ethereum’s security. Its main goal is to enhance Defi technologies and apps by linking blockchains. Over 3000 decentralized apps (dApps) are hosted on the network, with over 80 prominent names migrating from the Ethereum main chain. Because Polygon and Ethereum are so similar, many developers who create valuable tools will port them to other EVM blockchains like Polygon to expand their reach and usage.

What is an electronic voting machine (EVM)?

If you’re wondering what an EVM is, it stands for Ethereum Virtual Machine and is the code that allows computers all around the globe to execute smart contracts on the blockchain. Polygon has an EVM, as do Binance Smart Chain, Fantom, and a few other large networks… they all use the same Ethereum technology. Because they execute essentially the same code, it seems obvious that developers can migrate their code to a different network, and it will continue to function as before.

Mechanism of Polygonal Consensus

The Polygon Proof-Of-Stake chain is what most people think of when they think of Polygon. This is an ethereum sidechain uses a proof of stake method to make sure everyone agrees on what to do. There are a few additional enhancements to this sidechain. Still, the essential one is that it is considerably quicker and can process many more transactions per second, making it much more accessible to end-users.


One of the main goals of Polygon is to provide developers with easy-to-use and versatile tools so that they can accelerate Ethereum’s transition to a multi-chain platform. Matic isn’t simply one Proof-of-Stake chain like we generally think of it; it’s a collection of blockchains that help Ethereum scale. Developers will be able to design all types of scaling solutions for Ethereum if they do this, such as fully independent chains, such as ZK Rollup chains, Optimistic Rollup chains, or any other sidechains they wish.

At first, I thought Polygon was straightforward, but there’s a lot more going on behind the scenes than most people realize.

Polygon can be summarised in one statement for people like you and me: Ethereum, but extremely low gas fees. Transferring ethereum from one account to another now costs $30. On the Matic network, though, it costs less than a cent. This means users may try different apps and experiment without worrying about losing $150 due to a token transfer. Take that for what it’s worth, but the Polygon and Binance Smart Chains are the two Defi blockchains I suggest to novice users.

What Is a Polygon ( $MATIC ) and How Does It Work?

Polygon is a Commit Chain to the main Ethereum chain powered by the Layer-2 scaling solution and Proof-of-Stake protocol. If you’re unfamiliar with a Commit chain, it’s a transaction network that works in tandem with the main chain; in Polygon’s case, this means it runs alongside Ethereum. Before we go any further, if you don’t know what Layer 2 is, you should read our most requested topic on our website first, So why wait? Just go here and grab some knowledge on Layer1 & Layer 2.

Before transferring the data back to the main chain, the Matic Commit chains aggregate together clusters of transactions and process them all at once. 


Consider it this way: Polygon doesn’t send a movie of all transactions. Instead, it sends a single snapshot every now and then so that the Ethereum chain can still understand what is going on without processing a lot of data. It can handle up to 65,000 transactions per second because of this.

Experts believe that in the future, Polygon will contain dozens more chains that will operate in tandem with Ethereum to improve transaction throughput to millions per second.

Polygon’s architecture comprises four layers: the Ethereum layer, the security layer, the Polygon networks layer, and the execution layer. To be honest, you don’t need to know any of this, so move ahead if you just want to learn about Tokenomics.

Different Ethereum-based smart contracts make up the Ethereum layer. Staking, transaction validation, and interaction between the Ethereum blockchain and the multiple Polygon chains are all handled by these contracts. It’s how Matic communicates with Ethereum regularly.

The security layer works in tandem with Ethereum to provide validator services, adding an extra degree of protection to chains. It’s worth noting, though, that both the security and Ethereum layers are optional; they’re not essential for Polygon to function.


The Polygon networks layer is the ecosystem of Polygon-based projects or blockchain networks that are part of this layer. Each project or blockchain in this ecosystem has its community, where local consensus is reached and blocks are made. This is how the ecosystem works.

The execution layer, also known as Polygon’s Ethereum Virtual Machine, comes next (EVM). Its main purpose is to carry out smart contracts on the Matic blockchain. The Ethereum chain’s interoperability with the EVM improves the user experience for developers and programmers.

Tokenomics Explained of Matic

Polygon ( Matic )

I know you’ve been waiting for the point when you can see Polygon’s investment potential. So let’s have a peek, shall we?

$MATIC, the native token of the Polygon network, is trading at roughly $2 with a market valuation of around $13 billion. MATIC tokens are distributed every month and have a total quantity of 10 billion tokens, of which about 6.8 billion are currently in use. The distinction between tokens kept for staking rewards and tokens with a time-locked release schedule, which we’ll discuss later, is that tokens with a time-locked release plan are held for staking rewards.

In 2017, the developers sold around 3.8 percent of MATIC’s entire supply… Then additional 19 percent of the maximum supply was sold at the Initial Exchange Offering. The developer staff holds 16 percent of the overall supply, advisers have 4%, and staking incentives account for roughly 12%. Furthermore, the ecosystem already owns 23.33 percent of the supply, while the Polygon foundation received 21.86 percent.

It is theoretically inflationary because new Matic tokens are generated to reward stakers. Still, Matic has a finite supply, and when they implement their version of EIP1559, Matic will burn base transaction fees, essentially rendering it deflationary. “How will we compensate stakers when the money to pay them to runs out?” you might worry. However, the Polygon team hopes that users’ extra transaction would be enough to keep stake validators working by then.


My finance application has generated approximately 30% APY for the past few months. Of course, Aave on the Polygon network had incredible rates a few months ago, but it appears that some new investors have gotten on. 

So Always DYOR before getting into any Coin. That’s it for today’s topic, and I hope you gained some strong insights on Matic! There are plenty of articles that refer to a particular coin! So DO NOT miss that! That’s all from Pushkar, and I will see you in the next one soon! Till then, Keep reading keep knowing until you make cryptocurrency very simply understandable! Good luck, folks!