Why Polygon’s latest acquisition matters and what it means for Matic
The India-based Polygon network has embarked on a wave of acquisitions with the aim of developing the Ethereum ecosystem. The Ethereum-powered network has now acquired a zero-knowledge (ZK) protocol developer, Mir, for around $ 400 million. In its native currency MATIC, this translates to around 250 million tokens priced at $ 1.6 each.
The ZK protocol allows transaction authenticators to validate encrypted data without accessing the data. Mir has developed an iterative ZK algorithm that allows it to generate verification proofs in 170 milliseconds. It is the fastest evidence generation capability available in the crypto world and could have a variety of applications across industries.
Polygon is a Layer 2 scaling solution for Ethereum or the âInternet of Ethereum Blockchainsâ, which means it aggregates various Ethereum-based blockchains and allows them to communicate with each other. It was designed to reduce transaction costs while increasing the speed of transaction processing. The Polygon network enables decentralized application (dApp) developers to resolve transaction bottlenecks on Ethereum’s main blockchain which is filling up quickly. DApps are applications that run on a network of blockchain computers instead of depending on a single computer.
These dApps can autonomously run trigger-based tasks in a more secure and scalable manner over Polygon’s multi-chain network. The Polygon network thus retains the robust security protocols of the ethereum blockchain while adding immense scalability and speed to the equation.
Mir is Polygon’s second acquisition after its deal with the Hermez network in August for $ 250 million. Hermez also contributed to the scaling of the architecture on the Polygon network.
The blindingly fast transaction speed comes from Polygon’s use of the Proof-of-Stake model. Crypto investors can pledge a portion of their crypto holdings for blockchain development and become transaction validators in the process. This process called ‘staking’ helps them to provision their assets on the blockchain and earn rewards in exchange for authenticating transactions.
This design dramatically reduces the use of computing power compared to most other blockchains that require complex calculations to verify transactions. The Polygon network is therefore much greener and faster than the main ethereum network and therefore a lucrative investment for institutional investors.
A superior protocol means that native cryptocurrency is needed to reward validators and allow investors to pledge their assets on the new blockchain. MATIC currently sits 14th in the cryptocurrency rankings with a market cap of $ 15.46 billion.
Polygon’s capabilities are reflected in the strong performance put in place by MATIC despite the continued distress in the crypto markets. The MATIC rally could also be partly attributed to the excitement surrounding the recently hosted virtual event on ZK Polygon Day on December 10.
(Edited by : Priyanka Deshpande)