Bitcoin, the first blockchain ecosystem ever created, changed our perception of how financial assets can work. However, while it was a pioneering technology, we shouldn’t underestimate the influence of the 2nd generation of blockchains.
Ethereum is the pioneer and biggest startup of this generation, which enhanced the universe of cryptocurrencies with such innovations as smart contracts and DApps. Through these innovations, crypto and blockchain received a wider promotion across different sectors and businesses.
At the same time, what was first represented by Ethereum facilitated a real competition between cutting-edge ideas, their capabilities, and their implementation. Thanks to this, we were able to witness real Layer 2 battles, which aren’t over even today. What’s more many of those projects were introduced as “killers” of the pioneer project, which encouraged crypto enthusiasts to compare their capabilities with what Ethereum offers. Today, we are going to join this trend by comparing innovations introduced by Polygon and Ethereum.
The ETH network, a groundbreaking blockchain-based solution, operates on a decentralized system powering a multitude of apps, from virtual currencies to DeFi and self-executing agreements. Here’s a unique breakdown of how Ethereum functions:
- Blockchain Technology: It is which is essentially a distributed and immutable ledger. Different from common centralized solutions, where a single entity holds control, Ethereum’s ledger is maintained by a global ecosystem of nodes (computers).
- Smart Contracts: The capacity to execute self-executing is a hallmark feature. They automate various processes, eliminating the need for intermediaries.
- Ether (ETH): Ethereum’s native token, Ether, serves multiple purposes. It acts as a digital asset, incentivizes miners to secure the network, and is used to pay for fees for financial operations.
- DApps: Ethereum hosts a wide array of DApps. These are solutions that run on the blockchain, ensuring transparency, security, and censorship resistance. Examples include DeFi platforms, NFT marketplaces, etc.
- Consensus Mechanism: It currently operates on a Proof of Stake (PoS) model, transitioning from Proof of Work (PoW). PoS allows participants to “stake” their Ether as collateral to validate operations and create new blocks.
- Nodes and Miners: Ethereum relies on nodes and miners to secure operations. Nodes store the entire history, validate operations, and propagate them across the network. Miners, in the PoW system, used computational power to solve complex mathematical problems and add new blocks to the blockchain. With PoS, validators replace miners.
- EVM (Ethereum Virtual Machine): It’s a crucial component that ensures contract execution. It’s a non-authorized runtime space ensuring code executes uniformly across all nodes, maintaining consistency.
- Gas Fees: To perform anything within the ecosystem, individuals must pay gas fees. These fees compensate miners (or validators) for the computational power utilized. Gas fees fluctuate according to the network demand and the complexity of the operation.
- Interoperability: Ethereum is created to be interoperable with external networks. This promotes cross-chain communication and facilitates the exchange of assets and data across non-related ecosystems.
In essence, Ethereum is a versatile and transformative solution that empowers developers to create DApps and smart contracts, all while maintaining security and decentralization. Its ongoing evolution ensures it remains at the forefront of the industry.
Polygon, often referred to as the “Internet of Blockchains,” is a Layer 2 scaling solution for Ethereum. It’s designed to enhance the scalability, efficiency, and versatility of the pioneering technology. Here’s a unique insight into how it performs:
- Layer 2 Scaling: Polygon is built on top of its predecessor. The major objective is not to replace Ethereum but rather to improve it. It takes advantage of Ethereum’s security while addressing its scalability potential.
- Polygon PoS Chain: The core of Polygon’s framework is its Proof of Stake (PoS) sidechain, known as the Polygon PoS Chain. It functions independently while staying connected to Ethereum’s mainnet through smart contracts.
- High Throughput: The Polygon PoS Chain executes transactions more quickly and at a significantly lower cost than the Ethereum mainnet. It achieves high throughput by using PoS consensus, where validators stake MATIC tokens to generate new blocks.
- Bridging Assets: Polygon allows digital assets to migrate seamlessly between the Ethereum mainnet and its PoS Chain.
- Polygon SDK: Participants can build custom blockchains, known as “Polygon PoA Chains,” using the Polygon SDK.
- Ecosystem Growth: The Polygon ecosystem is flourishing, with numerous projects and protocols adopting its technology. It hosts various DeFi platforms, NFT marketplaces, and gaming projects, all taking advantage of its scalability.
- Polygon PoA Chains: In addition to the PoS Chain, Polygon supports multiple Proof of Authority (PoA) chains. These chains are suitable for specific use cases like enterprise solutions, where a degree of centralization is acceptable.
- Consensus Mechanism: Ethereum primarily utilizes PoS as its consensus mechanism, which involves validators staking Ether (ETH) to secure the network. Polygon employs a PoS sidechain. This PoS chain offers quicker and cheaper transactions while maintaining interoperability with the mainnet, which still primarily uses Proof of Work (PoW).
- Scalability Approach: Polygon is designed as a Layer 2 scaling solution for Ethereum. It operates as a separate network alongside Ethereum, enhancing scalability by processing transactions more efficiently on its sidechain.
- Use Cases and Ecosystem: Ethereum has a broad and well-established ecosystem with a focus on smart contracts, DApps, DeFi, and non-fungible tokens (NFTs).
- Security and Finality: Polygon’s PoS sidechain achieves faster transaction finality, usually within a couple of seconds, offering quick confirmations for users and developers while maintaining a secure environment.
- Token Utility: Polygon has its native token called MATIC. MATIC has a dual role; it’s used for staking by validators on the PoS Chain to secure the network and also as gas for transactions within the Polygon ecosystem.
These differences highlight how Ethereum and Polygon, while interconnected, serve distinct purposes within the blockchain space. Ethereum remains the foundational blockchain for various applications, while Polygon complements it by addressing scalability concerns and offering a broader range of use cases.