Honest Analysis of Polygon vs Ethereum 2.0

Honest Analysis of Polygon vs Ethereum 2.0

Mashup of @ThatInternetGuy's reddit  and everstake's post. Check them out their work is great.

The price of MATIC, the native token of Polygon, is up more than 9,535% year to date, but I’m wondering if we can count on this to continue in light of Ethereum’s upcoming 2.0 release.

First to get a better understanding let’s start with the basics.

What is Polygon?

Launched in 2017, at the dawn of DeFi, Matic Network introduced a layer-2 solution using sidechains (one of which is Plasma) designed to increase the extent of scalability of Ethereum.

Layer-2 means the ability to scale the blockchain by using side chains that cannot increase the capacity of the blocks of the original blockchain but are able to use their own blocks to distribute the load on the network. These problems can also be solved within the blockchain, for example, using sharding, which is planned to be implemented in the updated Ethereum 2.0 network.

According to MarK Cuban’s website:

Polygon is the first well-structured, easy-to-use platform for Ethereum scaling and infrastructure development. Its core component is Polygon SDK, a modular, flexible framework that supports building and connecting Secured Chains like Plasma, Optimistic Rollups, zkRollups, Validium etc and Standalone Chains like Polygon POS, designed for flexibility and independence. Polygon’s scaling solutions have seen widespread adoption with 250+ Dapps, ~76M txns and ~790K unique users.

Organic innovation is the beauty and strength of Ethereum, but its side effect is an unstructured, hard to navigate scaling/infra landscape.

Polygon SDK aims to introduce structure to the ecosystem and provide a framework for multi-chain Ethereum to grow further and faster.


Got it, What's Ethereum?

ETH 2.0 is a large-scale update that will improve the scalability and throughput of the Ethereum blockchain up to 100,000 transactions per second, according to the platform’s co-founder Vitalik Buterin. In addition, as part of the update, ETH 2.0 will switch to the PoS consensus mechanism, which does not require waste expenses for mining equipment and electricity. Moreover, PoW mining will also remain available to users

Upgrade 1 –  Beacon Chain: Shipped on December 1, 2020 at noon UTC.

  • It will conduct or coordinate the expanded network of shards and stakers. But it won't be like the Ethereum mainnet of today. It can't handle accounts or smart contracts.
  • It introduces proof-of-stake to the Ethereum ecosystem.
  • The Beacon Chain, at first, will exist separately to the Ethereum mainnet we use today. But eventually they will be connected. The plan is to "merge" mainnet into the proof-of-stake system that's controlled and coordinated by the Beacon Chain.
  • Shard chains can only safely enter the Ethereum ecosystem with a proof-of-stake consensus mechanism in place. The Beacon Chain will introduce staking, paving the way for the shard chain upgrade to follow.

Upgrade 2 — The Merge: ~2020/2021

  • Eventually the current Ethereum mainnet will "merge" with the beacon chain proof-of-stake system.
  • This will mark the end of proof-of-work for Ethereum, and the full transition to proof-of-stake.
  • This is planned to precede the roll out of shard chains.
  • Formerly referred to as "the docking."
  • This will signal the end of proof-of-work for Ethereum and start the era of a more sustainable, eco-friendly Ethereum. At this point Ethereum will be one step closer to achieving the full scale, security and sustainability outlined in its Eth2 vision.


Upgrade 3 — State Execution: ~2022

  • Sharding is a multi-phase upgrade to improve Ethereum’s scalability and capacity.
  • Sharding is the process of splitting a database horizontally to spread the load – it’s a common concept in computer science. 
  • In an Ethereum context, sharding will reduce network congestion and increase transactions per second by creating new chains, known as “shards
  • Shard chains spread the network's load across 64 new chains.
  • They make it easier to run a node by keeping hardware requirements low.
  • This upgrade is planned to follow the merge of mainnet with the Beacon Chain.

*According to Ethereum’s official website Eth2 researchers are working on ways to accelerate the merge. It will probably happen earlier than expected.

So how does Polygon fit in?

The scalability of the Ethereum network is now one of the main problems associated with the DeFi industry. The fact is that the blockchain ecosystem is not yet able to scale enough to meet the growing demands of the community. This leads to congestion in the decentralized network and high transaction costs, making it almost impossible to regularly use decentralized applications for everyday tasks.

Thanks to sidechains, the Matic Network allows for cheap and fast transactions based on the Ethereum blockchain, as well as interacting with other blockchains. Blockchain developers, in turn, can create high-performance dApps built on top of the Matic Network blockchain.

The second drawback of Ethereum is its unfriendly UX. Matic developers have presented a simplified interface that will improve user experience using decentralized platforms and DApps. The team also developed the Polygon (Matic Network) SDK, which will simplify the development of decentralized applications and make it more efficient.

Existing solutions that have introduced blockchains compatible with the Ethereum network are fragmented. This means that there is no single protocol that would ensure compatibility and reliable interoperability between blockchains. Therefore, the Polygon Network aims to create a single sovereign and scalable infrastructure for the development of, in fact, the Internet of blockchains.

This is what the ecosystem built around Ethereum will look like after the development of the Polygon network:

Each blockchain in the Polygon ecosystem operates autonomously and ensures its internal security while interacting with other blockchains. Although the Polygon Network is going to create a single pool of validators, which implies a higher level of security and flexibility, but the autonomy of such networks will be worse.

Polygon Network Architecture

  • The Ethereum Layer is a set of Ethereum smart contracts that provide completeness, staking, and dispute resolution between blockchains.
  • The Security Layer is a conditional layer that manages the set of validators responsible for the security and verification of blockchains. It can work both in parallel with the Ethereum blockchain (meta-blockchain) and on it.
  • The Polygon Networks Layer is a collection of autonomous blockchains that provide interoperability, including block production and consensus between networks.
  • The Execution Layer — the layer responsible for the coordination and execution of transactions. The Execution Layer, in turn, consists of two sublayers: the execution environment (EVM) and the execution logic (Ethereum smart contracts).

A little known fact is that Ethereum is already the biggest multi-chain in the world!

It has organically developed and grew to host a multitude of chains that are all adding value to its ecosystem:

  • EVM chains;
  • Hundreds of enterprise chains;
  • Dozens of L2s.

Multi-chain Ethereum will be akin to other popular multi-chains (Polkadot, Cosmos etc), but with some major upsides:

  • Ability to benefit from Ethereum’s network effects;
  • Higher security (Polygon chains can inherit security from Ethereum)
  • More flexible and powerful.

Comparison of Polygon functionality with other solutions designed for scaling the Ethereum network:


Now, Where is Polygon headed?

So far, Polygon released SDK beta ahead of schedule and aims to support building two major types of solutions:

  • Stand-alone chains: sidechains, enterprise chains etc.
  • Secured chains aka L2s: Optimistic Rollups, zkRollups etc.

This release supports stand-alone chains, L2s will be introduced in future releases.

Polygon SDK architecture follows two main design concepts:

  • Ethereum-compatibility
  • Modularity.

It is materialized through pluggable modules, grouped into three layers:

  • Networking (libp2p, devp2p etc);
  • Consensus (Istanbul, HotStuff etc);
  • Execution (EVM etc).

Polygon Network Team and partners

The platform team consists of blockchain experts and consultants, including Hudson Jameson from the Ethereum Foundation, Anthony Sassano from EthHub, and Pete Kim from Coinbase. The Polygon Network is used by such well-known projects as the Polymarket prediction market, Aavegotchi, the crypto-collection game that uses Non-Fungible Tokens (NFT), Decentral Games, which is based on Decentraland, and the DeFi aggregator Easyfi.



Alright Finally, A Side by Side Look Into the Future of Polygon Compared to Ethereum 2.0.

ETH 2.0

Ethereum 2.0 client is expected to be able to run on a slow computer because the client picks a sing shard by default

  • Ethereum 2.0 will use scalable shards to do most contract executions and then use ZK-Rollup to finalize everything onto the beacon chain periodically.
  • Shard here basically means a mini network. Your transaction will go to that one mini network. Then periodically synchronized over to the main network.
  • Initially it will use 64 shards to stay decentralized and still secure.
  • Fee is expected to 32 to 64 times lower (as for 64 shards).
  • We're going to see $1 tx fee and as low as $0.2 from then on.
  • When ETH price goes up, they will add more shards to keep the tx fee around that baseline.
  • Ethereum 2.0 client is expected to be able to run on a slow computer because the client picks a single shard by default. I think it may be possible to configure ETH2 geth client to take up multiple shards. A powerful machine can opt to take up all shards if they want to.

Polygon

Because Polygon requires upfront that a client must run on a high-performance computer (rather than your typical laptop that Ethereum client can)
  • Polygon is basically Ethereum v1 clone network with BFT Proof-of-Stake. Proof-of-Stake allows Polygon to cap the fee so it won't blow up 500 times like Ethereum v1 is suffering during congestion.
  • Polygon block time is 2 second. That allows 10 times more transactions than Ethereum.
  • Because Polygon requires upfront that a client must run on a high-performance computer (rather than your typical laptop that Ethereum client can), the client must be able to handle 7,000 TPS.
  • NO, POLYGON WILL NOT SCALE WITH ETHEREUM 2.0. It cannot handle more transactions even after it rolls up to Ethereum 2.0, because Polygon network does not offload transaction executions to Ethereum.
  • During high TPS load, the Polygon client running on your laptop cannot keep up with the Polygon main net. Just so you know.
  • Polygon tx fee is not expected to go lower with ETH2.

Ending thoughts.

Ethereum 2.0 and Polygon try to increase TPS and keep the fee low using two different solutions. ETH2 solves it by scaling horizontally by dividing the network up into shards, whereas Polygon (using ETH1 code) solves it by scaling vertically by requiring the client/node to be a powerful machine with big SSD space. Both uses proof-of-stake to cap the fee ceiling..

Things to keep in mind.

Comparing Polygon today to Ethereum tomorrow is a bit unhelpful. We can't Project Polygon forward 2 years because I don't think their roadmap goes out that far and we would need to do that to expand on this discussion.

I am sure there are more but several possible futures spring to mind:

  • Polygon does not evolve and dies
  • Polygon finds a USP outside of what Eth 2.0 offers (perhaps a technical USP or a business UPS like being more enterprise-centric)
  • Polygon finds some way to work harmoniously with Eth 2.0

Among all the solutions created to scale the ecosystem built on Ethereum, the Polygon Network has gone the farthest, solving not only the problem of low bandwidth and high gas fees but also the problem of fragmentation of blockchains and protocols that do not interact well with each other. While ETH 2.0 will solve many of the issues currently congesting the network, the Polygon team has some great partnerships, including working alongside the Eth development team, and there will always be room for players to build upon the network who offer cheaper transactions, interoperability and a great developer experience. This is why I believe Polygon will continue to be a major player in the space with major room for growth in the coming years.


Other Sources

https://ethereum.org/en/eth2/

https://markcubancompanies.com/partner-with-mcc/

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