Polygon is not a Layer 2

Intro

Polygon is a framework for creating blockchain networks and scalability solutions compatible with Ethereum. The chains currently launched or in development within the Polygon ecosystem include Polygon Edge, Polygon Hermez, Polygon Miden, Polygon Zero, Polygon Avail, and Polygon Nightfall.

With a current market capitalization of $5 billion, the Polygon ecosystem is widely regarded as the best Layer 2 solution for Ethereum. It offers several chains that aim to address Ethereum’s main issues, namely, the low number of transactions per second and high costs. In 2022, Polygon‘s blockchain forged collaborations with major global brands such as Adobe, Disney, Meta, NFL, NuBank, Reddit, Robinhood, and Starbucks.

The combination of these high-profile partnerships and the rapid growth of protocols on the Polygon chain solidified 2022 as the year of mass adoption for Polygon. A quick look at the following data illustrates this:

Based on data from Polygon Labs (Figure 2), it can be observed that over the past year, the ecosystem generated $26 million in Network Revenue, thanks to an incredible 211% increase in Unique Active Wallets. This metric represents the number of unique cryptographic wallet addresses that interacted with the Polygon ecosystem.

According to Polygon Labs, 2023 will be the year of Zero Knowledge (ZK) technology. The team’s primary focus will be on developing and enhancing Zero Knowledge technology, DeFi, and Web 3, with the aim of achieving exponential growth in the Polygon ecosystem in the coming year.

Polygon is not a Layer 2

What if I told you that Polygon is not a true Layer 2? Strange, isn’t it? But that’s precisely the case.

Unlike other Layer 2 solutions like Optimism and Arbitrum, Polygon has a substantial difference that positions it more as a sidechain than a Layer 2. This is because Polygon has a consensus mechanism and block structure that differs from Ethereum’s, making the Polygon blockchain more similar to a Layer 1 than a Layer 2.

But what is an Ethereum Sidechain?

Sidechains are independent blockchains with different consensus mechanisms, block sizes, validators, and roadmaps. While a sidechain may share some surface-level similarities with Ethereum, it has distinct functionalities.

An Ethereum sidechain is a separate blockchain network that runs parallel to the Ethereum main chain. Sidechains connect to the main chain through a two-way system that enables the exchange of assets between the chains.

Sidechains have their own consensus protocols, often designed for specific applications, making them more scalable and significantly reducing transaction speeds and costs. However, this also means that they typically do not inherit the security properties of the parent chain, i.e., Ethereum. When using a sidechain, users rely solely on the security of the sidechain, including its validators and consensus mechanisms.

Despite sacrificing some security, sidechains alleviate congestion on the main chain, reducing costs for everyone and enhancing the usability and scalability of the Ethereum ecosystem. Developers can also use sidechains to explore and test new features and use cases not available on the main chain.

As mentioned, the main advantages brought by sidechains are increased transaction speed and cost reduction. If we were to compare Ethereum’s blockchain with Polygon‘s, we would notice a significant difference:

• In terms of TPS (Transactions per second), Ethereum (POS) stands at around 27 transactions per second, while Polygon can handle up to 65,000 transactions per second on a single sidechain, surpassing Ethereum by a wide margin.
  
  
• In terms of transaction fees, Ethereum (POS) currently has a cost of $2.77 per transaction, but during chain congestion, fees have exceeded $30 per transaction. In contrast, Polygon has a cost of $0.01 per transaction.
  

These comparisons reveal why an increasing number of users are turning to alternative solutions to Ethereum, seeking faster transactions and cost savings, albeit at the expense of some security.

Conclusions

Although Anurag Arjun and MIhailo Bjelic, the founders of Polygon, have confirmed that the engineers contributing to the chain are working to transform it into a true Layer 2, this transformation has not yet occurred. Therefore, it is more accurate to consider Polygon as a Layer 1 blockchain that performs multiple functions.