Multiple scaling solutions formed the basis of early success of polygon. These transformed the network to be among the most popular scaling structures of Ethereum. Nevertheless, a system must evolve in order to remain competitive. The architects of Polygon thus decided to have a major upgrade, which enhances performance and remains backward compatible. The redesign of Polygon 2.0 is a whole new design. It replaces individual scaling solutions with a single, zero-knowledge-based Value Layer that allows chains to communicate with one another in a large-scale manner. This piece discusses the way Polygon 2.0 will bring Ethereum scaling to a multi-chain coordination platform in reality.
The vision of Polygon 2.0 is the realization that the existing multi-stack method, despite its success, has architectural constraints that prevent endless scaling. Scaling solutions remain isolated to a large extent. The transport of physical objects in between them requires bridges that create friction. Naturally cross solutions cannot occur in unified liquidity pools. According to the architecture of HEMI, an easy rule is that blockchains are to be integrated into a bigger system rather than remain isolated. Polygon 2.0 complies with this idea through zero-knowledge technology.
Zero-knowledge allows one to authenticate a calculation on a chain without revealing the performed calculation. When a transaction is executed in a Polygon chain, it will generate a zero-knowledge proof that the output is right. That proof can be cryptographically verified by other chains without being re-computed. This enables chains to organize without having to rely on an intermediary. Cryptographic verification can thus make multiple chains share and cooperate effectively with each other.
Value Layer is a philosophical transition. Scaling is not perceived as a technical issue but rather a coordination economic problem. Rather than asking, how rapidly can we conduct transacting? Polygon 2.0 is an inquiry, How can we best distribute economic value over chains to support advanced applications? That routing is done by the Value Layer. Developers specify their requirements, such as speed, finality, security and the layer spontaneously sends the execution to the most appropriate chain. The infrastructure works and developers specialize in their application.
Polygon 2.0, technically, links chains of zero-knowledge, which are homogeneous in the state and liquidity. The transactions automatically proceed to the chain that suits best according to the needs of the app. As an example, a high-frequency trading application is diverted to the quickest chain. A security intensive application is sent on the most secure path. An app that values privacy will be sent to a privacy-protecting chain. All this routing is done automatically by the Value Layer.
One of the innovations is unified liquidity pools. The Value Layer establishes pools which can be tapped by all chains, as opposed to each solution having its own liquidity. Any Polygon chain can draw liquidity on all other chains, via coordinated mechanisms, by a user who has assets on that chain. This single access makes the capital much more efficient than the piece meal liquidity of the old systems.
The native re-staking system allows the validators to stake on several chains simultaneously. Validators are staking POL tokens (the upgraded MATIC) and get rewards corresponding to the number of chains they secure. This model of stake establishes high staking incentives to propagate among chains. They strike a balance between the need to acquire high value chains and diversification. What comes out is a stronger network.
The redesign of MATIC to POL is an economic redesign that is more sustainable in a long-term. There is a POL token that is hyper-productive: it gains returns as the result of staking, obtains power in governance, and receives rewards in the form of protocol fees. These many streams make a single token a more valuable economic resource than the more limited functions of MATIC.
Backward compatibility ensures that existing Polygon infrastructure is able to work during upgrade. The current solutions continue to be effective. On top of them is the new Value Layer. This gradual change allows developers to embrace the new features gradually without affecting the existing apps. The strategy maintains a high value of the network during the transition.
The competitive advantage of Polygon 2.0 is enhanced. The number of scaling solutions is limited to one each in Arbitrum and Optimism. Polygon provides complete portfolio of solutions and new Value Layer. This is the diversity that makes it more attractive to developers than its competitors. Developers can rely on the fact that the infrastructure of Polygon will continue to change as it becomes competitive.
Enterprise penetration is robust. Mission-critical applications of large organizations must be flexible to meet the need of changes. The Value Layer of Polygon 2.0 provides it. The load can be reallocated among chains with the help of apps. Such flexibility is more appealing to businesses compared to those that offer single solutions.
The Value Layer is advantageous in international expansion. Different regions have different preferences when it comes to regulation. Polygon 2.0 will allow apps to be run across jurisdictions at the same time. One application can automatically redirect conforming transactions to the appropriate chain with regards to each jurisdiction. Such flexibility in regulation makes real global applications.
There is increased experience among the developers that can accelerate the innovation. The developers specify what they need and then the Value Layer locates the best configuration instead of deciding between scaling solutions. The abstraction allows developers to focus on their app logic rather than infrastructure. An improved developer experience attracts the best talent and leads to ecosystem development.
