Last week, the Index Coop hosted an AMA with Polygon’s Head of DeFi @Hamzah Khan (hosted by @crypto_texan, write-up by @helmass). Needless to say, community engagement was high with an exhaustive amount of prepared questions and over 25 listeners on the Discord Stage Channel.
The Coop couldn’t have been more pleased about the turnout of the AMA, with more to come in the future. Key discussion points focused on the landscape of Layer-2 scaling solutions, Polygon’s L2 strategy/roadmap, life after the ETH 2.0 upgrade and more.
In this write-up, we’ll highlight some of the main points discussed, for those who could not join the AMA.
Polygon - A 10,000 foot view
Polygon launched as Matic in 2017 and rebranded in February 2021. Polygon is a protocol and a framework for building and connecting Ethereum-compatible blockchain networks. The Polygon framework (Polygon SDK) allows developers to build and connect Layer-2 infrastructure, such as: standalone sidechains, Optimistic Rollups, zkRollups and more. In short, Polygon is an aggregator of scaling solutions that exists on Ethereum.
The Polygon architecture consists of four abstract, composable layers, including: the Ethereum layer, the security layer, the Polygon networks layer, and the execution layer. With this architecture, any project can have its dedicated optimized instance of Ethereum and can exchange messages among themselves. Polygon is battle tested, hosts +400 dApps and has 100 validators validating network.
A little more about Hamzah
Like many of us, Hamzah’s first exposure to crypto was in 2017, however, he did not really look at crypto from a technical standpoint until later on. When the crash occurred in 2018, Hamzah took a break from crypto, but was drawn back in the space in the fall of 2020. After “rejoining,” Hamzah focused his time on getting up to speed, reading about crypto and building on Ethereum.
Being from India, it is unsurprising that one of the largest Indian led projects, Matic (now Polygon), came across Hamzah’s radar. In December 2020, Hamzah joined Polygon and has been contributing ever since. Before joining Polygon as the Head of DeFi, Hamzah worked as a software engineer, an instructor, and co-founded a news curation and aggregation platform. Prior to this, Hamzah received a degree in Mechanical Engineering and Computer Science.
Questions from the Coop
The following questions were collected from the community in advance, and Hamzah kindly answered them in a live Discord AMA session.
How is Polygon improving scaling?
Polygon is an Ethereum compatible side chain, scaling solution aggregator and a first mover in the Ethereum L2 scaling race. Polygon aims to aggregate scalable solutions on Ethereum, while supporting a multi-chain Ethereum ecosystem. Polygon uses a PoS consensus mechanism to allow for validators to push state changes to Ethereum over 20 minute intervals (256 blocks). Thus, the technology helps solve some of the pain points associated with the Ethereum blockchain, like high gas fees and slow transaction speeds, while maintaining security. Essentially, Polygon is able to lower fees and improve transaction times for its users.
What is Polygon building? Can you walk through Polygon’s competitive advantage?
Polygon consists of a PoS sidechain (called the commit chain) and Matic Plasma. Matic Plasma is focused on security, sacrificing some independence and flexibility, while its PoS sidechain offers more independence and flexibility, sacrificing security. Polygon recently deployed its software development kit (or SDK), which allows developers to build on any layer 2 solution offered by Polygon. This could help drive further community collaboration by enhancing the Polygon competitive moat. Hamzah also noted Polygon is building solutions for zk and optimistic rollups, which could be available in late 2021. Polygon’s competitive advantage is centered around its integration with Ethereum, its focus on the community, and its first mover advantage in the L2 scaling race. It offers scalability, high throughput, and a smooth UX experience. Focus on interchain communication could be a differentiator as there is typically a lack of communication between L2 solutions.
Can you walk through the competitive landscape?
The competitive landscape exists both on Layer 1 and Layer 2, where L1 focuses on on-chain scaling and L2 focuses on off-chain scaling. Most of the L2 scaling solutions today are still under development. L1 scaling keeps all transactions on Ethereum or another smart contract platform. There are many other L2 scaling solutions (Optimism, Arbitrum, Raiden, Matter Labs, Connext, Skale, etc.), however most are still under development. Ethereum (and Polygon) face competition from the likes of Binance Smart Chain, Solana, Polkadot, and Cosmos.
Polygon competitive positioning
Source: polygon.technology
What happens once the Eth 2.0 upgrade is complete?
Ethereum is undergoing a major blockchain rebuilding and is moving from a PoW consensus algorithm to PoS, which will improve transaction speed and reduce user fees. That said, the transition to ETH 2.0 will take time with Hamzah noting recent sentiment pointing to an early-2022 event. Hamzah also noted that people need scaling today and solutions will be needed to onboard the next 5 million users. EIP-1559 will also make Ethereum deflationary and could place upward pricing pressure on the asset and user fees. Although rollups and sharding help eliminate congestion, there will be a lot of computation (DeFi, gaming, and Web3) which cannot be accomplished on-chain. Polygon believes in a multichain future and ultimately wants to be anchored to Ethereum. Read more about the ETH 2.0 merge here.
How can Polygon improve DeFi? “We will not miss DeFi summer happening on Polygon.”
Polygon aims to make it easy to experiment with money legos. This is driven, in part, by its extensive DeFi dApp integrations (which include the likes of Aave, Quickswap, Pooltogether, Ren, Polymarket, and more), but also its ability to provide seamless compatibility across multiple DeFi solutions. Hamzah highlighted that composability is everything in DeFi and that Polygon aims to create options and opportunities in areas like stablecoins, lending, and yield farming. Lower transaction fees and transaction times help drive access to a wider audience, which should enhance further DeFi adoption. Lower user fees helps to increase the opportunity set, potentially opening the door for new DeFi strategies to emerge.
How can Polygon enhance blockchain gaming?
Polygon will be working with another provider to launch the Polygon Gaming Studio, a gaming SDK. Gaming infrastructure will also be a part of Polygon gaming. Projects highlighted include: Aavegotchi and Decentraland. Polygon aims to be an active participant in the shift toward blockchain gaming, especially as games implement in-game NFTs. Hamzah noted that blockchain gaming will only be able to match Web 2, when throughput is maximized and gas prices are no longer a concern. Transaction costs currently sit around $0.00004.
Which projects (not related to Polygon) are catching your eye?
While we get the impression that the list is long, Hamzah noted under-collateralized lending projects that use zk-proofs and work around synthetics. One “damn cool” project was a real estate volatility index at zip code granularity. Hamzah highlighted these projects could all benefit from a low gas price environment.
How to get involved
If you are building in crypto feel free to contact Hamzah, his DMs are open. Polygon also provides a developer support program (DSP), which helps teams with early build grants, marketing/promotional support and more. Read more about the programs here.
If you like to listen into our next AMA, make sure to join our Discord here and follow us on Twitter to get the announcement.
Awesome work guys, requesting a recorded video link