Polygon 2.0: A Deep Dive
In June, Polygon unveiled version 2.0, promising major updates to the architecture, governance, and tokenomics of the protocol.
This network of zero-knowledge Layer-2 blockchains was, the protocol said, designed to become the ‘value layer of the internet’.
Here, we take a deep dive into Polygon 2.0.
The future of Polygon
Version 2.0 is a major milestone, bringing enhancements to governance, tokenomics, and architecture.
It is intended to democratise worldwide economic access by boosting DeFi (decentralised finance), innovative coordination mechanisms, and digital ownership.
At its core, the vision is to enable unified liquidity and unlimited scalability by integrating zero-knowledge tech. The scaling challenges of Web3 mean that adding new chains not only fragments liquidity, but also offers a poor UX. Polygon 2.0 uses Layer-2 chains powered by zk and a cross-chain coordination protocol to create a unified network. This network, it is claimed, offers scalability that is almost without bounds and cross-chain interactions that are seamless.
A part of the 2.0 upgrade is the transition of the Polygon PoS (Proof of Stake) blockchain to a zkEVM validium.
This brings better performance and security, as well as enhanced compatibility with the version 2.0 ecosystem.
It works by making transaction data available offline, bringing lower fees without compromising on security.
The Polygon Improvement Proposals (PIP) framework was discussed over the summer, with a view to publishing the plans during the autumn. Subject to consensus, implementation and testing is scheduled for the winter, with mainnet activation in early 2024.
What does 2.0 look like?
Polygon 2.0 is arranged into four protocol layers, and this architecture is crucial.
The staking layer, implemented on Ethereum via the Validator Manager and the Chain Manager contracts, uses Polygon's native token to provide staking services to participating chains.
The interop layer allows cross-chain messaging, enabling secure shared access to native Ethereum assets and near-instant cross-chain transactions.
The execution layer handles transaction sequencing and block production, while the proving layer generates and verifies proofs across the Polygon chains using a zk proving protocol.
Holders of POL will be able to act as validators on multiple Polygon chains, including services like accepting user transactions and determining their validity, producing zk validity proofs for transactions, and providing data availability guarantees.
This new economic approach removes the 10 billion supply cap on the protocol's native token. POL brings a move to an inflationary model to fund the treasury and incentivise validators.
Governing the protocol
Version 2.0 brings a new governance framework split into Community Treasury Governance, System Smart Contract Governance, and Protocol Governance. The aim is to have governance mechanisms that are efficient and scalable.
The Community Treasury Governance creates a self-sustainable ecosystem fund that will support ecosystem projects. There are two phases to the governance process, beginning with an independent board but then moving to decision making by the community.
The System Smart Contracts Governance will look after protocol component upgrades implemented as smart contracts. Responsibility will lie with the community-governed Ecosystem Council.
Finally, the Protocol Governance is a platform for proposing Polygon protocol upgrades facilitated by the PIP framework.
There has been strong commitment to, and activity with, the developer community. At the end of last year, partnerships and events sought to strengthen relationships with developers. In the opening months of 2023, Polygon Lab’s global developer tour, DevX Global, kicked off.
The Hackathon tour continued this year, visiting Asian cities, including Hong Kong and Tokyo. This was an opportunity for developers to compete for a share of $125,000. The tour moved to Europe over the summer, with stops in London, Lisbon, Paris, Zagreb, Amsterdam, and Berlin.
Q2 of 2023 also saw a partnership with Google Cloud announced. This gave startups in their early stages within the Polygon ecosystem access to resources and benefits. The quarter was also marked by the launch of the developer-support AI-powered tool Polygon Copilot.
A focus on helping developers and the deployment of new tools and partnerships certainly seems to have brought results. During the second quarter of 2023, there was a huge spike in deployed contracts.
Independent research showed Polygon had more than 200 full-time developers (837 in total), ranking it in the top six for developer activity during the first six months of this year.
Version 2.0 could bring significant enhancements in protocol architecture, tokenomics, and governance, marking a pivotal step in the network's evolution.
Polygon's developer and user bases are among the most expansive in crypto, and it remains committed to pushing the boundaries. As competition intensifies, the successful rollout of Polygon 2.0 and continued adoption of the Polygon zkEVM will become increasingly critical in the coming quarters.
Author: Brendan Beeken
Moni Talks Founder and Chairman Brendan Beeken is an entrepreneur, commercial strategist, investor, and philanthropist. He writes on a wide range of subjects, including cryptocurrency, decentralised finance, blockchain, business advice, and professional wellbeing, for news and business websites, as well as Latest Moni and his personal site, brendanbeeken.com. Brendan draws from his own research and more than two decades of personal experience in business to offer a unique insight, perspective, and commentary on diverse subjects. He is passionate about making the cryptocurrency space more accessible and encouraging safer and more responsible trading and investing. Brendan's LinkTree is https://linktr.ee/brendanbeeken.