{"id":2028,"date":"2021-05-25T16:23:54","date_gmt":"2021-05-25T16:23:54","guid":{"rendered":"https:\/\/de.fi\/blog\/?p=2028"},"modified":"2023-11-11T06:03:23","modified_gmt":"2023-11-11T06:03:23","slug":"the-ultimate-guide-for-web3-polygon-network-373b77ccb1cf","status":"publish","type":"post","link":"https:\/\/de.fi\/blog\/the-ultimate-guide-for-web3-polygon-network-373b77ccb1cf","title":{"rendered":"Ultimate Guide to Web3 on Polygon (MATIC)"},"content":{"rendered":"

If you like Ethereum DeFi, you\u2019ll love Polygon.<\/p>\n

While the DeFi summer crypto bull run<\/a> of 2020 was a pure Ethereum play, DeFi has grown and morphed since then to include projects built on Binance Smart Chain<\/a>, Huobi Chain<\/a>, and other networks. Some DeFi users haven\u2019t welcomed these new players because they don\u2019t believe they are as decentralized as Ethereum or because they consider Ether a more secure native token and would prefer to operate within the original smart contract platform.<\/p>\n

Whether you have reservations about other networks or not though, DeFi on Polygon provides opportunities for all Yield Farmers and this guide aims to get you started within this innovative new network. You\u2019ll find out how it operates, what value proposition it brings to the crypto community, and how to take advantage of the yield farming opportunities that exist within it.<\/p>\n

What is Polygon?<\/h2>\n

Scalability is one of the oldest problems in blockchain. At various points in the past, demand for transactions to be processed and the inability of major networks to do this in a fast or cost-effective way has frustrated users and led critics to the conclusion that blockchains will never serve the masses.<\/p>\n

With all difficult problems though, the brightest minds in any industry have put their minds towards solving the scalability issue. This is exactly why Polygon, or Matic as it was previously called, was established.<\/p>\n

Polygon is a second-layer solution built on the Ethereum network, which aims to eliminate Ethereum\u2019s network congestion issues, high transaction fees, and low processing speeds. The team has created a full-fledged framework that enables a network of interconnected blockchains.<\/p>\n

Within this framework, Polygon plans to implement the ZK and Optimistic roll-ups as part of their scaling solution. ZK roll-ups bundle transactions together before broadcasting this bundle to the network, significantly lowering transaction fees for every sender. Optimistic roll-ups make transactions instant.<\/p>\n

In order to attract professionals to the ecosystem, Polygon has added the Ethereum Virtual Machine (EVM), so that everyone who knows Solidity development within the Ethereum protocol could create and deploy their solutions within Polygon. In this way, Polygon provides a user-friendly abstraction layer with proprietary SDK and WalletConnect support.<\/p>\n

Polygon has also secured the network by implementing the Proof-of-Stake (PoS) consensus mechanism, allowing the native MATIC token to be staked, as well as securing the network\u2019s sovereignty in the long run.<\/p>\n

The project plans to roll out an interface that will bridge users and merchants, providing a set of APIs and SDKs that allow both parties to accept or pay in cryptocurrencies. The system will also support atomic swaps, cross-chain payments, and fiat payments in the near future.<\/p>\n

The Polygon architecture<\/h2>\n

Polygon has contributed to the development of the Plasma MVP (More Viable Plasma) and implemented an adapted version of the Plasma.<\/p>\n

The Polygon framework allows for side-chains to be created, which rely on the main Ethereum network but massively improve transaction speeds and decrease fees. The Polygon side-chain achieved almost 10,000 TPS on the test net, which represents a major improvement in horizontal scaling.<\/p>\n

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The network is divided into two layers, the Matic Block Layer and the POS Checkpoints Layer.<\/p>\n

Matic Block Layer<\/h3>\n

This layer operates via Proof-of-Stake, with stakers choosing block producers on the base layer to create blocks. To achieve faster block generation times, the number of block producers is limited so that it could achieve block generation times of under 2 seconds.<\/p>\n

POS Checkpoints Layer<\/h3>\n

This layer represents an additional network layer that synchronizes with the Ethereum Main Chain once a specific number of blocks have been produced on the Matic Block Layer. To enable this, Polygon has introduced Checkpoints, which contain block information received as a Merkle Root from the Block Layer.<\/p>\n

The Checkpoints Layer provides significant security through the implementation of Fraud Proofs and a Proof-of-Burn mechanism, both of which are described below.<\/p>\n

Fraud Proofs<\/h3>\n

This is a simple mechanism that enhances the security of transactions by allowing network participants to submit details of any fraudulent ones. If network participants agree that a transaction is risky, the fraudulent stake gets slashed and the challenger receives these slashed coins as a reward for their fraud prevention efforts.<\/p>\n

Proof-of-Burn<\/h3>\n

The Checkpoints Layer plays an important role when users withdraw funds, enabling them to prove the remaining balance on the root contract using Patricia Merkle and header block proofs. The header block must be provided to the Checkpoints Layer through the Proof-of-Stake mechanism.<\/p>\n

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The Polygon ecosystem<\/h2>\n

The network is being improved at a breakneck pace, with many projects striving to provide a range of different services. According to our analysis, the network is very active and has all it needs to disrupt the DeFi field as a second-layer solution.<\/p>\n

One example worth considering is QuickSwap \u2014 the best-known decentralized exchange (DEX) on Polygon, which is similar to Uniswap. It runs on the Layer-2 and became very popular across the community because it allows trading at high speed while maintaining close-to-zero fees.<\/p>\n

QuickSwap was launched in February 2021 and, according to recent data<\/a> from the last seven days, has a steady and positive dynamic. It can definitely be assumed that the network will continue to flourish, providing users with next-gen financial instruments.<\/p>\n

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Polygon liquidity mining<\/h2>\n

The Polygon network will distribute rewards amounting to $45 million in two phases. 0.5% of the total supply will be distributed as rewards for users until June 14th 2021 and then, from June 14th 2021 until April 13th 2022, the next batch of tokens will be provided.<\/p>\n

There are three ways a user can interact with the Polygon network and receive rewards. The first involves lending your tokens on services such as AAVE, the second is by staking your MATIC tokens and the third is through yield farming.<\/p>\n

If you want to lend tokens, AAVE supports markets for DAI, MATIC, AAVE, ETH, USDC, USDT, and WBTC. If you lend one of these, you receive rewards in the form of WMATIC tokens. If you want to stake your MATIC tokens and receive rewards, refer to the official staking guide<\/a>.<\/p>\n

If you want to start yield farming, you need to choose a liquidity pool and have the required tokens to enter it. Below is a screenshot from our DeFi yield farming explorer tool<\/a> with a sampling of high TVL pools with impressive APRs:<\/p>\n

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You can use this link to explore live Polygon DeFi opportunities<\/a>.<\/p>\n

Also, here\u2019s a quick overview of the highest TVL across different platforms on Polygon.<\/p>\n

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Polygon network wallets<\/h2>\n

Currently, three wallets support interaction with the Polygon network and these are MetaMask, WalletConnect and WalletLink. Of these, MetaMask is the best option for managing a wide range of assets.<\/p>\n

MetaMask can be downloaded and installed as a plugin for Chrome<\/a> and for Firefox<\/a> if you don\u2019t have it already. If this is your first time using it, make sure to save your seed phrase in a safe place, as this is the only way to access it again if you lose your password.<\/p>\n

Once you have set the MetaMask, you need to connect the wallet to the Polygon Network to start interacting with dApps. To do this, click on the upper dropdown menu and choose \u2018Custom RPC\u2019 from the list.<\/p>\n

Then you need to fill in the fields with the following network information:<\/p>\n