A 10,000-word article interpreting the development history of Polygon: Will the former glory be restored by Agglayer and CDK?

Written by: Saurabh Deshpande, Sidd Harth, Decentralized.co

Compiled by: Yangz, Techub News

In March 2020, the market experienced an unprecedented black swan event. The financial sector was hit by the epidemic, and the Federal Reserve printed a large amount of US dollars to stimulate the economy. In this environment, Bitcoin, Ethereum and some otherTokenThey have experienced the most glorious moments in their lives. But beyond the price, a radical technological change has changed the way Ethereum scales.

In 2020, when Ethereum was far from solving its scalability issues, Polygon (then called Matic Network) was launched as a way to scale applications using the Ethereum Virtual Machine (EVM). In 2020 and early 2021, Polygon stood out among many Ethereum scaling solutions as one of the very few solutions that could provide the same quality applications (such as Aave) on Ethereum at a very low fee.

By 2021 to 2023, the competition for Ethereum expansion has intensified significantly. During this period, Optimistic Rollup (OR) launched products before ZK Rollup (ZKR). Compared with ZKR, OR has a lower design complexity. It is also generally believed that high-performance ZKR that is fully compatible with the EVM will take several years to come out. Although OR is generally considered an intermediate expansion solution, they have accumulated a large number of users and capital. In contrast, ZKR is relatively inferior. This can be seen from the TVL of the two solutions. As of April 11, OR's TVL was approximately US$35 billion, while ZKR's TVL was approximately US$3.7 billion.

While OR was popular with users due to its incentive mechanism and new narrative, Polygon, as one of the first solutions to run as a sidechain, focused on the ZK solution and took the initiative to give up the position to OR. It took time for ZKR to go online, and naturally, the incentives were also delayed. By the time ZKR was actually launched, OR had already established a foothold and successfully attracted users' attention. Coupled with the fact that ZKR was almost indistinguishable from OR in terms of user experience after its launch, it became an extremely difficult battle for ZKR to attract users' attention.

Polygon Labs has a variety of solutions, including PoS chains, multiple upcoming ZKR implementations, and a development toolkit. From the outside, Polygon's actions are confusing, not doing the right thing at the right time, and now it seems to be trying everything. However, after a deeper understanding, I realized the importance of the combination of these fragments. This article will focus on the evolution of the Polygon ecosystem and the prospects for development in the next few months.

The need for speed

Everyone will remember the Crypto Kitties era, which brought a lot of value to Ethereum by allowing the breeding and trading of unique digital kittens.CommunityIn December 2017, the price of some kittens exceeded $100,000, and the gas consumed by transactions accounted for more than 10% of the total gas consumption of Ethereum. It was so popular that even the BBC reported it. However, this incident also highlighted the limitations of Ethereum at the time. With high prices and high demand, ordinary users could not afford the high gas fees.

Clearly, Ethereum in 2017 needs a massive scalability overhaul, and when considering this question, a natural solution is: if a chain can process 12 transactions per second, can we split this chain into multiple independent chains? If there are 100 chains, and each of them processes 12 transactions per second, then there can be 1,200 transactions per second. As more chains are added, the possibility of scalability also increases.

This is the broad concept of base chain “shards”. Shards are basically chains that run in parallel with other smaller chains. However, making these independent shards part of Ethereum by ensuring seamless interoperability is as difficult as scaling itself. For example, when a user needs to perform a transaction involving an application on a different shard, how these chains interact with each other is very important. This means splitting the validator set into multiple sets to validate different chains.

While sharding is the ultimate goal, in the meantime, Ethereum needs to take several necessary intermediate steps to serve as the building blocks of the sharding architecture. These intermediate steps include state channels, Plasma, etc.

In addition to sharding, a different line of thought is beginning to take shape. What if, instead of breaking up the validator set, we reduce the computational burden on them? This is exactly what Rollup is for. Instead of using Ethereum’s resources (Gas) for each transaction, Rollup uses them to publish batches of transactions. Therefore, changing the state (think of Ethereum’s state as the balance of each account, smart contract, etc.)contractThe computation required to store and process transactions (including transactions, transactions, and externally owned accounts) is performed on a different layer from Ethereum, saving Ethereum resources. With Rollup, Ethereum no longer interacts directly with millions of consumers, but instead handles a handful of Rollups that interact with tens of millions of users. Rollup helps Ethereum move from B2C to B2B.

Of course, this is not easy. When Ethereum validators no longer perform computations, how can users know that the people who perform computations are honest? When using Ethereum, we can indeed run our own nodes to check whether the validators are executing our transactions correctly, but we don't do this. Ultimately, we choose to trust Ethereum's validators.

When you transfer assets or exchange assets, validators make changes to the state of Ethereum, such as adding and subtracting account balances. When this computation is moved off-chain, users are essentially trusting whoever is operating this layer. Now, if we say that these layers are just extensions of Ethereum, then users shouldn’t be forced to trust anyone other than Ethereum validators. It’s the responsibility of that layer to prove in some way that what they’re doing complies with Ethereum’s rules.

How different Rollups perform computations and prove them to Ethereum largely determines their type. ORs provide Ethereum with the results of their computations and the data needed to replay transactions (the results they published on Ethereum). Any results submitted by an OR are considered correct until someone questions the execution, so they are called optimistic. Validators typically have seven days to question the results. It should be noted that as of June 2024, none of the ORs except Optimism have implemented fraud protection. Optimism has a first-stage error-proofing or fraud-proofing feature, which means that if the error-proofing system fails for any reason,SafetyThe committee can intervene.

The other major category is ZKR. Zero-knowledge technology allows us to prove anything without revealing the details of what we are proving. Instead of publishing all the data for validators to replay all the transactions, ZKR submits proof of execution to Ethereum.

EthereumL2 Or the anchor point of the extended layer

Today’s Ethereum has grown with the development of protocols and applications. In the process, some projects have adapted to the development, while others have not kept up. The story of Matic Network (now Polygon) illustrates this well. Thanks to the development of Ethereum, Polygon is also thriving.

Since the launch of Ethereum in 2015, crypto assets andBlockchainThe pattern of Ethereum has changed a lot. Ethereum's expansion plan took a major turn at the end of 2020, when Vitalik wrote an article centered on Rollup. The development of Ethereum can be divided into two eras before and after Rollup. If Ethereum is the anchor, then L2 We must follow.

It is clear that Ethereum needs to scale massively to become the world computer. Before understanding the evolution of Ethereum scaling, we should revisit the general meaning of scaling. Scaling is the process of expanding Ethereum’sSafety保证。无论我们采用什么方式，都应在某种程度上依赖以太坊的安全性。也就是说，以太坊 L1 应该拥有扩展层状态的最终决定权。

Before Ethereum decided to support Rollup, developers had proposed several other scaling methods such as state channels, Plasma, sidechains, and sharding.

其中，Plasma 和侧链类似。Plasma 是一条可独立执行交易的链，并将压缩后的数据定期发布到以太坊上。然而，这会带来数据可用性（DA）问题。Plasma 的所有历史数据只有 Plasma 运营者才能获得，以太坊全节点只知道压缩数据。因此，用户必须信任运营者才能保持数据的可用性。也就是说，Plasma 的安全性依赖于根链（以太坊）的安全性。欺诈证明和挑战也根据根链的规则解决。

Data availability solutions usually separate consensus data from transaction data. As chains scale, storing and processing state becomes a challenge. DA solutions address scalability issues by introducing a separation between the consensus layer and the data layer. The consensus layer handles the ordering and integrity of transactions, while the data layer stores transaction data and state updates.

Sidechains are independent chains with their own consensus and validator sets. They publish data on Ethereum periodically. The main difference from Plasma is that they have independent validator sets based on different consensus. Users must trust the sidechain validators to maintain the integrity of their transactions.

Compared with Plasma and sidechains, OR has improvements in the following aspects:

• First, OR avoids data availability issues by publishing all data on Ethereum.

• Second, users do not have to expand to larger trust assumptions; that is, they do not have to trust a new set of operators or validators.

This is why Rollups are considered a superior form of scaling. You could say they are an improved version of Plasma.

State channels are a solution similar to Bitcoin’s Lightning Network.

To use a simple analogy, Sid and Joel run their own sandwich and coffee shops, respectively, next to each other. Because the two products are complementary, they decide to cross-sell and merge the menus. When a customer orders a sandwich from Joel's shop, he only needs to give the order to Sid. And the customer only pays at the dining place. Sid and Joel will keep the corresponding records, but they will not check out after each order, but settle at the end of the day.

The bills opened between the two are like channels between two nodes or accounts. At a high level, two users or applications can open an off-chain channel, perform transactions, and settle on-chain when the channel is closed. This approach requires opening multiple channels between users (opening and closing channels are on-chain transactions) and is difficult to scale. As of June 2024, the Lightning Network has a capacity of only about 5K BTC. In other words, it cannot handle more than 5K BTC back and forth transactions at the same time.

Four Eras of Polygon Development

As one of the earliest scaling solutions to launch a mainnet, Polygon’s development, both technically and ecologically, has gone through four eras:

1. Matic Network

2. Polygon Extensions

3. Embrace ZK

4. Aggregate everything

Matic Network

Matic Network 是 Plasma 和侧链方法的结合。验证者抵押 MATIC Token，验证交易并确保链的安全。作为额外的安全措施，链的状态快照（即 checkpoints ）会被提交到以太坊上。因此，一旦以太坊上的 checkpoints 最终确定，该状态就会冻结在 Matic Network 上。在此之后，区块将无法被争夺和重组。

In 2021, Matic Network changed its name to Polygon, but this is more than just a name change. Matic Network scales Ethereum in a single-chain manner, while Polygon turns to a multi-chain ecosystem. In order to realize the vision of scaling Ethereum from multiple angles, Polygon launched a software development kit (SDK) to facilitate developers to port their applications to Polygon.

So-called SDKs provide building blocks for larger software, in this case, different types of chains. The Polygon SDK provides tools for building both types of chains, including standalone chains with their own validator sets and chains that rely on Ethereum for security (L2s).

Sidechains and enterprise chains that need more control over how things work (who can participate, who can run nodes, etc.) will choose the first option. In contrast, young projects that lack resources or have no issues with Ethereum's security and consensus rules will choose the second option.

In April 2021, a few months after Aave was deployed on Polygon, Polygon TVL jumped from about $150 million to nearly $10 billion. At the time, Polygon dominated most chains in terms of indicators such as the number of active users and transaction volume. Even in June 2024, Polygon PoS still dominated in terms of the number of daily active users. (This data needs to be viewed with caution because we have no way of knowing the true number of active users. Data providers typically track active addresses, but one address does not necessarily represent one user)

Embrace ZK

As the Polygon PoS chain grows and develops, Polygon Labs explores more ways to scale Ethereum.

In 2021, when ZKR was barely in development, Polygon Labs allocated $1 billion in funding for ZK development. They acquired Hermez Network, Miden, and Mir Protocol. While these teams are all in the ZK space, they each have their own special purpose. Hermez is focused on building a live zkEVM, and Mir is focused on building industry-leading proof technology with the goal of creating a zkVM Rollup with client-side proof capabilities.

Polygon Labs went all-in on developing ZK when it was widely believed that ZK technology was still three to five years away from being ready, and OR was just around the corner (albeit without fraud proofs). This makes one wonder why Polygon Labs would do something that would take longer, rather than deploying an OR solution first and then researching ZK.

There are two answers:

• In terms of scalability and security, OR will be a more advanced solution than Polygon PoS.

• But everyone agrees that ZKR is the ultimate solution to defeat OR.

Yes, as long as an OR has fraud proofs, its security guarantees will be better than sidechains (such as Polygon PoS), but the cost will not change much for the end user. It is important to note that fraud proofs are not yet available on any OR except Optimism. Optimism started testing fraud proofs in March 2024. Therefore, it will be some time before all ORs enable fraud proofs on their respective mainnets.

If you think about it from a barbell strategy perspective, risk is typically allocated through very high-risk and very low-risk instruments in the portfolio, and this is Polygon's strategy.

Considering the difference between OR and ZKR, and the fact that the former must submit all transaction data on Ethereum, as the number of OR transactions increases, the amount of data published on Ethereum grows almost linearly. In contrast, the size of ZK proofs grows quasi-linearly. Therefore, as the number of transactions increases, ZKR is significantly more efficient than OR.

The number of people who can fully understand ZK technology and create an infrastructure layer that can handle hundreds of billions of dollars is probably only in the three digits. ZK technology needs time to mature. Acquiring a team researching ZK can bring Polygon Labs a tactical advantage that is rare in the industry.

Rollups and Trains

zkEVM is one of Polygon's most important technologies. Why?

Assuming that the old generationBlockchainThey are old engine trains, they are slow, have small capacity and are expensive. However, with years of experience, they have built a track network across many areas. As one of the most widely adopted standards, we can think of EVM as this track network.

OR is like an improved version of this train, using the same tracks as earlier train sets, but 10x to 100x faster. However, this is not enough. We need to increase speed and capacity by several orders of magnitude to ensure fast, cheap travel. ZK Rollup aims to achieve this. The problem is that these train sets can't use the old track network; they need some modifications. zkEVM allows ZK Rollup to be used with existing EVM tooling.

From a safety perspective, ORs cannot effectively prevent accidents. They operate under the assumption that accidents will not happen. Fraud prevention is like a Nolan movie. They cannot prevent accidents, but they can allow the system to go back in time and fix the problem before the accident occurs. ZK technology, on the other hand, can prevent accidents from happening.

EVM equivalence problem

Let’s take a deeper look at the zkEVM.

The above metaphor explains why we need to be compatible with EVM. However, this compatibility is not 0 and 1, but a spectrum. The prover is an important part of the ZK mechanism. It can prove that an event has occurred without revealing the facts of the event.

So, why zkEVM? SNARK or STARK technology allows the creation of cryptographic proofs. Both methods produce easily verifiable proofs that can be used to prove that a transaction occurred on a certain chain. If we want to scale Ethereum, we can use this technology to prove that Ethereum-like transactions occurred on a certain layer. These layers are Rollups, and ZK technology allows Rollups to compress transaction data by orders of magnitude, thereby scaling Ethereum. If the goal is to scale Ethereum, then the goal of zkEVMs is to prove execution in a way that the Ethereum execution layer can verify.

When a Rollup is completely equivalent to Ethereum, it can reuse Ethereum's existing client architecture.contractMaintain full compatibility with the entire Ethereum ecosystem. For example, the addresses are the same, MetaMask, etc.walletCan be used on Rollup, etc.

Proofing in a way that Ethereum can understand is challenging. ZK-friendliness was not a consideration when Ethereum was designed. That's why parts of Ethereum are computationally intensive for ZK proofs. This means that both the time and cost required to generate these proofs increase. Therefore, if the proof system had to use Ethereum as is, it would be cumbersome. On the other hand, the proof system can be relatively lightweight, but it has to build its own architecture based on Ethereum.

Therefore, different zkEVMs will make a trade-off between the ease of use of existing tools and the cost and difficulty of proof. Vitalik introduced the existing zkEVM types in a blog post. Here are several different types of zkEVM. Type 1 is the most compatible and the worst performing prover, while Type 4 is the least compatible and the best performing prover.

1. Type 1 – These zkEVMs are fully equivalent to Ethereum.

2. Type 2 – Equivalent to EVM, but not identical to Ethereum. This means that Ethereum needs to be slightly modified to make proof generation easier.

3. Type 2.5 – Similar to Type 2 except for the gas cost. When doing ZK proofs, not every operation has the same difficulty. This type of zkEVM increases the gas cost of some operations, so developers should avoid it.

4. Type 3 – This type of zkEVM modifies Ethereum to improve prover times, but sacrifices some equivalence in the process.

5. Type 4 – 这种方法将用 Solidity 或 Vyper（以太坊语言）编写的源代码编译成另一种语言。这种类型的验证器完全舍弃了与以太坊的兼容，是所有类型中最轻量的验证器。它的缺点是与以太坊大相径庭。从地址开始，一切都不同。比如，Starknet 就需要不同的wallet（如 Argent），甚至地址看起来也与以太坊不同。

Polygon Labs recently released an upgrade that introduces a new era of proof technology using Type 1 validators. Using Type 1 means that any EVM chain, whether newly generated using Polygon CDK, or a standalone L1, can become a ZK L2 equivalent to Ethereum.

AggLayer & Polygon CDK: Aggregate Everything

No single EVM chain can bear the load of the entire network, which is why we turned to L2. Currently, there are multiple L2s on the market, but the number of users and capital are not growing at the same rate. Liquidity, users, and value lock-in are divided by multiple L2s. In a sense, L1 and L2 constitute a paradox: the base layer cannot scale, and multiple chains may dilute the scale.

The solution to this paradox is to provide a service that allows assets and information to flow seamlessly between multiple L1s and L2s, and more importantly, without rent-seeking, imposing extractable fees, and ensuring that these chains retain sovereignty.

AggLayer is designed for this purpose. The solution enables secure and fast cross-chain interoperability, and chains connected to AggLayer can share liquidity and status. Before AggLayer, sending assets between different chains either required trust assumptions and packaged assets from third-party cross-chain services, or required extracting assets from L2 to Ethereum and then cross-chain to the desired chain, which was backed by high fees and poor user experience.

AggLayer removes this friction in cross-chain transactions and creates an interoperable web of chains. Currently, L2 can be viewed as different contracts on Ethereum. Transferring funds from one L2 to another involves three separate security zones, two L2 contracts and Ethereum.

In the case of cross-chain transfers, the security zones are part of the infrastructure where validator sets intersect. Validity checks and forwarding transactions happen at these intersections. The result of different security zones is that when you sign a transaction to transfer an asset from one L2 to another, Ethereum is involved in the transfer. The asset is sent from the source L2 to Ethereum and then deposited into the target L2. These are three different orders or transactions or intentions.

With AggLayer, the entire transfer process can be done with one click. AggLayer has a unified cross-chain contract on Ethereum, and any chain can connect to it. Therefore, Ethereum sees one contract, while AggLayer sees many different chains. A ZK proof called "pessimistic proof" treats each connected chain with suspicion, thereby ensuring the security of the total funds locked in the unified cross-chain. In other words, "pessimistic proof" is a cryptographic security guarantee, which means that it is impossible for one chain to destroy the entire cross-chain bridge.

With AggLayer, Ethereum does not need to be involved when transferring assets from one L2 to another, because all L2s share state and liquidity. The three transactions or intentions mentioned above are combined into one.

Suppose Sid wants to buy some NFTs on chain A, but all his assets are on chain B. Then before the purchase, the cross-chain asset transfer from chain B to chain A can be completely abstracted through AggLayer.

The advantages of AggLayer are as follows:

1. Transform the zero-sum game of liquidity and user fragmentation into a more collaborative approach between chains.

2. While maintaining sovereignty, chains can benefit from security and tooling without having to issue bonds as with early models such as Polkadot.

3. Allows chains to interact with each other with lower latency than Ethereum.

4. It brings substitutability to cross-chain assets and improves the user experience. Everything happens in a cross-chain contract, so there is no need for different versions of packaged assets to exist.

5. Since cross-chain is abstracted, the user experience will be better.

Currently, Rollups and Validiums publish their chain states to Ethereum individually. AggLayer aggregates these states and submits everything to Ethereum in the form of a single proof, helping to save the gas cost of the protocol.

Competition in the L2 field is already very fierce, including Arbitrum, Optimism, Polygon, ScrolXiaobai Navigationl, Starknet, ZKsync, etc. are all competing with each other. Of course, you can also participate in the competition, but if we consider the scale of the Internet, we are still incryptocurrencyEarly in the adoption cycle, finding ways to collaborate is often a better strategy.

Even game theory-based research shows that cooperation is almost always the best way to survive and thrive. The positives of AggLayer are its credible neutrality (not biased towards any particular project; any chain can be connected) and unified liquidity and status. Other multi-chain ecosystems charge fees to different chains (and therefore downstream users of those chains), while AggLayer is designed to minimize fees while providing secure, low-latency cross-chain interoperability.

Recently, there has been a general trend of applications launching application chains. Aevo, dYdX and Osmosis are typical representatives of this trend. Regarding this trend, Jon Charbonneau pointed out:

• Applications need flexibility and sovereignty, so they launch their own application chains.

• AppChain has seen growth in users and activity and hopes to capture more value by allowing other applications to build on its chain.

• Then, the application chain becomes a general chain.

正如 Lanre 提到的，市场似乎更看好应用推出应用链，然后成为通用链。如果将这一趋势延伸到极致，最终只会剩下几条通用链。虽然可以有多条链存在，但流动性和用户保持不变，并在这些链之间共享的情况下，链的数量越多，整个cryptocurrency的用户体验就越差。

As we argued before, this is because liquidity and users are shared across a disparate number of L2s, resulting in poor liquidity on many L2s. We must find a solution that brings all of this together, and AggLayer is a step in that direction.

There are many reasons why applications should have dedicated block space. For example, when NFT minting is very popular on the same chain, trading applications should not compete for precious block space. Running liquidations or closing positions should not be affected by other activities on the chain (in terms of fees or throughput). However, if many applications move towards application chains, there is also a risk of fragmentation. Therefore, AggLayer enables the integration of these different chains. This is a simple solution that allows game chains and DeFi chains to avoid direct competition for block space, but enable cross-chain interoperability.

On the one hand, AggLayer can help unify the liquidity between chains, and on the other hand, Polygon CDK can be used to create chains.

Polygon CDK is a collection of open source technologies that have evolved over the years. It started as an SDK, transitioned to a supernet, and finally took on its current form. Polygon CDK allows developers to build two types of L2: Rollups and Validiums.

The most important feature of Polygon CDK is flexibility. When building a new chain (L2), developers can customize different options on four parameters: VM, mode, DA, and Gas tokens.

• A virtual machine is an environment in which transactions are executed. Polygon CDK allows developers to choose different virtual machines, such as zkEVM.

• Mode refers to choosing between Validium or Rollup. The difference between the two lies in the type of data they publish on Ethereum. Rollups publish compressed transaction data on Ethereum, making the Rollup mode more secure. Validiums, on the other hand, publish this data on a separate layer, such as their own DA layer.

• DA is an important component of scaling, where the consensus layer is separated from the data layer. Full nodes on chains such as Ethereum and Bitcoin store all data in order to independently verify all transactions. Polygon CDK allows chains to build their own custom DA committees or use DA solutions such as Celestia.

• Gas token customization means that the chain can charge gas fees in the token of its choice. For example, Polygon CDK allows developers to freely allow users to pay gas fees in the native token of their chain instead of ETH.

• The sorter is currently centralized. In the future, other teams or individuals may also run the sorter.

In addition to modularity and sovereignty, there are other advantages to building chains with CDK. Polygon CDK provides chains with the option to use AggLayer's single, unified cross-chain contract. With it, there is no need to have different versions of packaged assets, improving the user experience of CDK-based application chains.

For example, using Polygon CDK, application chains for lending and derivatives can choose the Rollup model (all data is published on Ethereum), use Polygon zkEVM as a virtual machine, and collect Gas with its native token instead of ETH. Application chains for NFTs may adopt the Validium model, and can choose to publish data on Celestia or a separate Data Availability Committee (DAC), and use ETH as its Gas token.

Collators are currently centralized (as they are in all major ZK Rollups). But if CDK chains wish, they can eventually use a shared sorter. It’s important to note that aggregation does not conflict with modularity or sovereignty.

As of March 2024, 9 teams have builtBlockchain, and another 20 teams have entered different stages of development. The CDK framework is completely open source and anyone can build with it.

In addition, it is also crucial to upgrade the MATIC token to POL. Currently, MATIC is responsible for protecting the Polygon PoS chain. The architecture of the proposed Staking Hub has not yet been announced, but there are proposals that POL will play an integral role.

Ploygon Ecosystem

Developers are the lifeblood of any ecosystem. Developer activity is often a precursor to user on-chain activity. Despite the market downturn in 2022 and much of 2023, the Polygon ecosystem is second only to Ethereum in terms of the number of new developers joining.

If developers are the leading indicator of future development, then users are the feedback loop of the blockchain. For Polygon, user activity remains high. The only EVM chain with higher user activity than Polygon is BNB Chain. Note that Polygon here only refers to Polygon PoS. As more chains connect to AggLayer or use CDK, this number may increase significantly in the future. In general, developers want to customize the network to meet user needs, and this is exactly what Polygon aims to optimize through CDK.

Polygon’s DEX activity is still low compared to other L2s or Solana. Interestingly, Quickswap currently accounts for 60% of all Polygon DEX volume. Typically, Uniswap dominates the volume of the entire EVM chain.

The figure below compares the DEX transaction volume of different EVM chains. Arbitrum dominates, followed by Polygon. It is necessary to mention that Arbitrum provides trading incentives for DEX protocols and users, while Polygon stopped the incentive mechanism in 2022.

TVL is not a great metric for measuring the success of a blockchain because it does not indicate the quality of capital. In other words, most of the capital in cryptocurrencies can be considered “mercenary capital.” Capital flows to where there is an incentive. Protocols either offer rewards or users participate in protocols for airdrops. However, if TVL remains at a high or medium level for a long time, it means that users prefer a certain form of chain or protocol. The following chart shows the weekly TVL of different L2s.

In Polygon’s lending applications, most of the TVL comes from Aave. Aave accounts for 87% of Polygon’s total lending TVL.

In terms of NFT transaction volume, the leading chains are Bitcoin and Ethereum, mainly because NFTs are priced in their native assets (BTC and ETH), and the liquidity of these assets is almost the highest in the industry. In terms of transaction volume, Polygon is ahead of its EVM peers.

In addition, games are a major contributor to the growth of Polygon PoS. Since the beginning of 2024, the number of unique addresses interacting with games on Polygon has quintupled, from 80,000 to nearly 400,000, with Matr1x and Sunflower Land attracting more than 1 million users. This growth was mainly driven by Polygon Labs' partnership with Immutable. Immutable provides a full range of products for game developers, from NFT minting mechanisms, wallets to SDKs. In addition, it also provides all blockchain-related support, allowing game developers to focus on game development without having to worry about blockchain issues for Web3 games.

Currently, the Polygon ecosystem has more than 40 games available, with several more in development. Immutable’s zkEVM built with Polygon CDK is now live on the mainnet for early access. At this stage, the deployment of custom smart contracts is limited to select game studios.

We often say that cryptocurrencies will not have a substantial impact on "normal" life. But decentralized physical infrastructure (DePIN) is gradually changing this situation. In terms of DePIN-related transactions, Polygon is clearly behind Solana, the leader in the DePIN track. In February, Solana had more than 4 million DePIN-related transactions; in comparison, Polygon had about 39,000. And in terms of DePIN adoption indicators, DIMO is clearly in the lead on Polygon.

DIMO allows mobile objects to share data while preserving privacy. The first use case for DIMO is cars, where drivers can use DIMO devices to share data with stakeholders such as manufacturers and policy issuers. Currently, nearly 70,000 drivers use DIMO to share data with applications such as marketplaces, insurance, and peer-to-peer ride-sharing. In return, they can receive DIMO tokens. In addition to cars, DIMO's application can be extended to any mobile object including drones, and can be applied to areas such as supply chain management, smart transportation, and self-driving cars.

Other DePIN projects on Polygon include:

• Fleek Network, a decentralized hosting platform, provides services for websites and applications through a globally distributed network of nodes.

• GEODNET aims to improve GPS accuracy by building a decentralized real-time kinematic network and token incentive mechanism.

• Space and Time aims to create a global, transparent database that is not owned by a single entity.

• XNET, designed to improve mobile connectivity.

Judging from the current situation, the DePin development of networks such as Solana is obviously better than that of Polygon. However, the development of Polygon in this area remains to be seen.

Polygon Challenges

Of course, all change comes with its own challenges, and Polygon is currently facing some challenges.

The first is that the frequency of proof submission is too low.

Finality on Polygon zkEVM can be roughly divided into three stages, namely the trusted state of the transaction being finalized on L2, the virtual state of Ethereum receiving transaction data from L2, and the comprehensive state of Ethereum receiving proof of verification data. Users can continue to interact with L2 applications after the first stage. But if they want to get Ethereum's guarantee, they need to wait. Transactions on L2 will only be finalized on Ethereum after the third state. Polygon zkEVM submits proofs to Ethereum approximately every 20 to 30 minutes, which means that users must trust the Polygon zkEVM sorter within 20 to 30 minutes between two batches of transactions.

The reason for not submitting proofs more frequently is that each batch of transactions has a fixed cost, which is amortized over the number of transactions. Submitting proofs more frequently means that the fixed cost will increase, and the fixed cost will be amortized over the same number of transactions, thus increasing the cost of each transaction.

If Polygon zkEVM (and this also applies to other Rollups) needs to submit proofs on Ethereum more frequently, then there must be more activity on it, or the cost of submitting proofs needs to be significantly reduced. As ZK technology matures, the cost of proofs may decrease, but it is still high at present. Therefore, Rollups need more users to submit proofs to Ethereum more frequently and keep transaction costs low.

Block reorganization problem of Polygon PoS

Polygon has been criticized for constant block reorganizations. While the risk of this issue has been largely reduced, it has not been completely resolved.

For a chain like Bitcoin, many miners are competing to find new blocks. Sometimes, more than one miner may succeed. Suppose two miners find new blocks (#1000A and #1000B) at the same height of 1000. Due to propagation delays, some nodes will see #1000A and others will see #1000B. If a new block is found based on block #1000B, then block #1000A will be discarded or reorganized by the network.

It is important to note that it is possible that another miner finds a third block #1000C at the same height (1000), and the same miner or another miner finds two more blocks on this block (#1001 and #1002). In this case, blocks #1000A and #1000B will be discarded, and #1000C will become part of the chain. Similarly, Ethereum will face a rewrite, but the depth rarely exceeds 1 block.

Polygon reorganizations are more frequent because it uses two consensus protocols: Bor and Heimdall. Bor block producers produce 16 blocks at a time for efficiency and hand them over to Heimdall for verification. When a validator misses the previous block producer, up to 32 blocks (16 x 2) can be reforged. Polygon PoS has a block time of about 2 seconds, so 32 blocks take about 1 minute. That said, these reorganizations mean that applications should not (cannot) assume that transactions such as deposits are completed in at least 1 minute.

While Polygon has addressed deeper reorgs, reorgs of up to 32 blocks are not impossible.

Polygon zkEVM Pause

Like most EVMs, Polygon zkEVM has only one sorter, and any error could cause it to stop running. On March 23, Polygon zkEVM stopped for about 10 hours between transaction batches 2001558 and 2001559. Currently, zk technology is still in its early stages, and Polygon zkEVM TVL is not that high. However, if this kind of shutdown occurs in the later stages, it is likely to drive capital away from the chain.

Next Steps for Polygon

In this article, we reviewed the past and present of Polygon. We first understood how Polygon came to dominate the EVM network and why it fell behind in several aspects.

While writing this, I was reminded of the phoenix rising from the ashes. Many technological advances go through a similar cycle. We see new standards emerge, quickly adopted, and become mainstream. People start paying attention to what’s new and trendy until the innovation capabilities of existing resources outpace the new standard.

Throughout 2022, Polygon could be considered a strong player, and given its dominance in DeFi Summer, Polygon's positioning was safe and comfortable. However, after Optimism and Arbitrum entered the market, developers had other options. And as meme coins on Solana take off and gradually become a "safe" choice for developers looking for niche use cases, Polygon's situation is worrying.

Through our conversations with Polygon Labs, we've learned about the evolution of standards. When a standard is in the growth phase, the motivation for all participants is to maximize its adoption. Polygon Labs has done this in its BD work in 2021. The largest companies and enterprises are leveraging Polygon. And as competition intensifies, the motivation for networks like Polygon will shift in the other direction, that is, to develop new solutions and help more developers join.

This has been the focus of Polygon’s work over the last year, with a focus on AggLayer and CDK. As we showed in the chart at the beginning of this article, markets tend not to price in technological change until it is implemented and effective at scale.

However, while AggLayer and CDK help unify different chains on Ethereum, Polygon still needs some breakthrough applications to prove the viability of the current network. For Solana, such breakthrough applications are Jupiter and Tensor. Users of Jupiter (trading memes) or Tensor (trading NFTs) have tasted the sweetness. Because the underlying infrastructure (AggLayer) has been developing, applications using CDK (extensions) in retail environments are still being built. If these breakthrough applications appear, people's attention will flow to Polygon again. At that time, like a phoenix rising from the ashes, Polygon will rise again.

Apple was early to the computer revolution but lost out to IBM and Windows in the 1980s. However, a decade later, after a corporate restructuring and the return of Steve Jobs, Apple once again became a dominant force.

In a market where people are constantly chasing the hot new thing, the development of Polygon may be overlooked. However, if this technology can bring benefits, it will sooner or later become the focus of people's conversation. Until then, we will witness this transformation.

The article comes from the Internet:A 10,000-word article interpreting the development history of Polygon: Will the former glory be restored by Agglayer and CDK?

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