Polygon is a Layer 2 scaling solution for Ethereum that enables speedy transactions and low fees. It uses a modified Proof-of-Stake consensus algorithm, allowing consensus to be achieved with every block.

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History

The history of Polygon goes back to 2017. Polygon was created to address Ethereum's scalability problem, which limited growth for many Ethereum-based dApps due to slow and expensive transactions.

The founders aimed to create a blockchain network that solves these issues, and designed Polygon as a multi-blockchain network that uses sharding to solve the scalability problem and reduce the cost of transactions.

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Architecture

Polygon PoS has a three-layer architecture, including:

Polygon smart contracts (on Ethereum)​

The Ethereum Layer of Polygon is made up of different Ethereum-based smart contracts that handle staking management, delegation management (including Plasma).

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Heimdall (Proof of Stake validator layer)

Heimdall is the Layer 2 scaling solution of the Polygon network. A large group of validator nodes serves as a bridge to connect the Ethereum chain and Bor.

Heimdall is responsible for block validation, selecting the block producer committee, and checkpointing a representation of the sidechain blocks to Ethereum in Polygon.‍

This layer implements the SDK and the Peppermint. SDK enables the effective transformation of Ethereum into a full-fledged multi-chain system, also called the “Internet of Blockchains.”

On the other hand, Peppermint is a forked variant of the Tendermint protocol compatible with Ethereum addresses and verifiable on the Ethereum chain.

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Bor

Bor is Polygon's block producer layer, responsible for producing new blocks and securing the network. The Heimdall node appoints a group of Bor nodes responsible for generating blocks. Bor packages the transaction into a block and submits it to Heimdall, which creates a Merkle root and broadcasts it to Ethereum.

Bor is designed to be compatible with the Ethereum Virtual Machine (EVM), meaning  developers can deploy their Ethereum smart contracts on the Bor network and take advantage of its fast and efficient transaction processing capabilities.

The Bor layer is essential in Polygon's operations, enabling swift and secure transaction processing.

MATIC

MATIC is the native cryptocurrency of Polygon, playing a crucial role in its ecosystem.

As a utility token, MATIC has several roles in the Polygon ecosystem, including:

1. Gas fees – transactions on the Polygon network require gas fees to be paid in MATIC tokens, similar to the Ethereum network.
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2. Staking – MATIC can also be used for staking on the Polygon network. Validators who stake their MATIC tokens are eligible to participate in block validation and earn block rewards.‍
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3. Governance – MATIC holders have the ability to participate in the governance of the Polygon network by voting on proposals and decisions related to the network's development and evolution.
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Advantages of Polygon

1. Interoperability – Polygon is designed to be compatible with Ethereum, allowing developers to easily migrate their dApps and smart contracts to the network, facilitating the building and deployment of decentralized applications.
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2. Lower Gas Fees – Polygon offers a cheaper alternative to Ethereum, which can be beneficial for users who want to avoid high fees.
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3. Fast and affordable transactions – Polygon transactions are processed quickly due to the network's high throughput capacity, which can help improve user experience for dApps and other applications built on the network.

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Disadvantages of Polygon

1. High competition – Polygon faces serious competition from other emerging blockchain technologies, such as Polkadot or Chainlink.
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2. Dependency on Ethereum – as Polygon is built on Ethereum, it makes it dependent on this network to a certain extent.
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Summary

Polygon is a Layer 2 scaling solution for Ethereum, designed to improve its scalability, interoperability, and usability. It provides faster and cheaper transactions using a Proof of Stake consensus, allowing it to process up to 65,000 transactions per second.

Polygon also supports deploying decentralized applications (dApps) and offers a range of developer tools and infrastructure to help build and run them.