Interpreting Polygon 2.0: A New Blueprint for Mass Adoption

Original title: "Polygon 2.0: A New Blueprint for Mass Adoption"

Compilation of the original text: Deep Tide TechFlow

Main points

• Recently, people have paid more and more attention to the improvement of the vertical and horizontal scalability of the public chain.
• Polygon 2.0 is an L2 chain network powered by ZK technology, aiming to become the value layer of the Internet, achieving scalability and interoperability through ZK technology.
• According to the new blueprint, a new token economic model of $POL has been proposed and is expected to play an important role until the Polygon 2.0 ecosystem matures.

1. The road to mass adoption

1.1 Introduction

While price performance in the cryptocurrency market remains well below the highs of the last bull run, the blockchain space is more diverse than ever. In particular, since the last bull run was largely due to favorable macro conditions and a lack of meaningful real-world use cases for blockchain, many protocols are focusing on mass adoption in the current market.

Achieving mass adoption will require improvement in not just one area, but multiple areas. First, improving the user interface and user experience of services such as wallets is important, as these are often the initial point of user engagement with the blockchain. Second, more practical blockchain services need to be provided to users. Finally, a sound infrastructure needs to be established in order to provide a convenient blockchain experience for many users.

1.2 Different types of blockchain networks and mass adoption

This article will explore the concept of mass adoption from an infrastructure perspective, but what should a network designed for mass adoption look like? So far, various blockchain networks have proposed unique approaches and strategies.

The first method is to optimize single strands. Projects like Solana, Sei, Aptos, Sui, and others take this approach. The advantage of a single chain is that various dApps in the chain can seamlessly interact with each other and have a high degree of composition. However, the downside is that the performance of the network is limited to the lowest performing nodes, and the network can become centralized as nodes require higher specification hardware for high scalability.

The second approach is to build an ecosystem with multiple L1 networks and appropriate cross-chain protocols. Cosmos, Polkadot, and Avalanche are some examples of this approach. The advantage of this method is that scalability can be theoretically increased infinitely through parallel expansion, but the disadvantage is that despite the existence of cross-chain protocols, the asynchronous nature of different networks reduces composability and fragments the ecosystem and security.

The third approach is to increase scalability in the vertical direction, such as a Roll-up network based on a single base layer. Optimism, Arbitrum One, and Starknet are examples of this approach. The advantage of this approach is that by performing calculations off-chain, it takes full advantage of the security of the base layer, achieves high scalability, and allows various applications to interact with high compositionality in one network. However, the downside is that L1 somewhat limits the scalability of L2, and as Vitalik Buterin pointed out, there is a limit to increasing scalability vertically using the same vertical scaling structure.

All of the above approaches are significant because they provide directions for mass adoption, but they all have clear pros and cons. Therefore, in recent years, a method that combines the above methods has emerged, taking full advantage of the advantages of both, as shown in the figure below.

In addition to the Polygon chain which we will discuss in this article, all leading Rollup networks — Optimsim’s OP Stack, Arbitrum’s Orbit, zkSync’s ZK Stack, and Starknet’s Fractal Scaling — are all working on improving vertical and horizontal scalability sex.

In the above approach, multiple L2 or L3 networks share the base layer, which has the following advantages:

1. Inherit the strong security of the base layer and eliminate security fragmentation;

2. Achieve theoretically unlimited scalability by running the network in parallel;

3. More seamless and secure interoperability and composability through shared settlement or data availability layers.

In my opinion, this is the best model for blockchain mass adoption because:

1. The security of the blockchain network needs to be unified rather than fragmented for the flow of large amounts of funds;

2. It needs to provide high scalability for users;

3. Even with the presence of multiple networks, the transfer and interaction of assets needs to be seamless and secure.

2.Polygon 2.0

2.1 The value layer of the Internet

Recently, Polygon released the blueprint for Polygon 2.0, which builds on the above approach and builds a vision of "the value layer of the Internet". Just like anyone can create and exchange information on the Internet, the value layer is a protocol that allows anyone to create, exchange and program value.

The value of Polygon 2.0 lies in "unlimited scalability" and "unified liquidity", and it realizes these values through a series of L2 chain networks based on ZK technology. On the user side, despite using multiple ZK L2 chains, the user experience will feel like using a single chain.

2.2 Polygon PoS → Validium

Before we dive into the architecture of Polygon 2.0, Polygon co-founder Mihailo Bjelic posted a proposal on the governance forum to upgrade the existing L1 network Polygon PoS to Validium to realize the Polygon 2.0 vision. Polygon already has an Ethereum-compatible ZK L2 technology called Polygon zkEVM that is currently working well.

First of all, the introduction of zkEVM can rely on the security of the Ethereum network to a certain extent, because the validity proof of the calculation results of the Polygon PoS network will be verified on the Ethereum network. Second, the existing Polygon PoS validators will manage transaction data instead of relying on the Ethereum network, which can achieve lower fees and faster speeds compared to the Roll-up model.

This makes the role of the validators of the Polygon PoS network change slightly: first, they will continue to ensure the availability of transaction data; second, they will act as orderers, determining the order of L2 network transactions.

2.3 Polygon 2.0 architecture: L2 network based on ZK technology

How does the structure of Polygon 2.0 present itself in terms of vertical and horizontal scalability improvements? Just like the Internet has a layered structure called the Internet Protocol Suite, Polygon 2.0 is composed of layers that perform different roles.

2.3.1 Pledge Layer

The pledge layer is the layer responsible for Polygon 2.0 verifier-related affairs. It exists as a smart contract in the Ethereum network, including the following two types:

• Validator Manager - a smart contract that manages the pool of validators in the Polygon 2.0 ecosystem, including a list of all validators, which validators participate in which Polygon chains, their stake size, stake/unstake requests, penalties, etc. .
• Chain Manager - Each Polygon chain has a smart contract that manages the list of validators, validating the chain's configuration (e.g. max/min number of validators, penalty conditions, token type/size required for staking )wait.

Validators can join Polygon 2.0's common validator pool by staking tokens and participate as validators on multiple Polygon chains. Validators in Polygon 2.0 are basically responsible for ordering and validating users' transactions to create blocks, while conducting the process of generating zero-knowledge proofs and ensuring the availability of transaction data.

Validators are compensated in various roles through: 1) protocol rewards, 2) transaction fees for participating in the Polygon chain, and 3) additional rewards (eg, native tokens) from the Polygon chain.

2.3.2 Interoperability Layer

The interoperability layer enables seamless cross-chain communication in the Polygon 2.0 ecosystem, making users feel like they are using a single-chain network, even though they are actually using multiple networks.

Each Polygon chain manages message queues (Message Queues), and these messages are sent to other Polygon chains, including 1) content, 2) target chain, 3) target address and 4) metadata. The message queue has a corresponding zero-knowledge proof (ZKP). If the ZKP of a specific message is verified on Ethereum, the target chain can safely execute this cross-chain transaction.

However, due to the high cost of verifying ZKP on Ethereum, the interoperability layer also adds an Aggregator (Aggregator) component, which brings together multiple ZKPs generated by the message queue in the Polygon chain and allows them to be verified on the Ethereum network. Verification at a lower cost. Since the aggregator needs to be decentralized for liveness and censorship resistance, it is governed by Polygon 2.0's pool of co-validators.

In fact, the cross-chain interaction is such that once the aggregator receives the ZKP, the target chain will process the transaction optimally, allowing users to obtain a "unified liquidity" experience, even using multiple networks, transactions can be almost instantaneous deal with.

2.3.3 Execution Layer

The execution layer is the layer in the Polygon chain where the actual computation occurs, and it has components similar to a typical blockchain network (such as P2P communication, consensus, mempool, database, etc.).

The Polygon chain is highly customizable at the client level, including native tokens, transaction fee flow, additional validator rewards, block times and sizes, checkpoint times (ZKP submission frequency), and Rollup/Validium selection, etc.

2.3.4 Proof Layer

Since Polygon 2.0 is a set of ZK-based L2 chains, ZKP plays a very important role in it, and the proof layer is responsible for generating ZKP for each transaction on the Polygon chain. The prover uses Plonky 2 developed by the Polygon team.

3. New token: $POL

3.1 Token Economic Model

While we've been taking a closer look at Polygon 2.0, it's clear that realizing this vision involves both protocol economics and technology. To this end, Mihailo Bjelic, Sandeep Nailwal, Amit Chaudhary, and Wenxuan Deng proposed a new token model called $POL to the Polygon community.

In the white paper, they set the design goals of $POL as: 1) Ecosystem Security, 2) Infinite Scalability, 3) Ecosystem Support, 4) Frictionless, 5) Community Ownership, and propose the following uses:

• Validator Staking: Validators in Polygon 2.0 must stake POL tokens to participate in the validator pool.
• Validator Rewards: Validators will receive predefined rewards on an ongoing basis. Validators receive protocol rewards by default and also receive transaction fees or additional incentive rewards from the Polygon chain.
• Governance: The token will be used for governance, but the governance framework has not yet been made public. A new community fund will be established, managed by POL token holders and will help support the ecosystem.

The initial supply of POL tokens is 10 billion, migrated from MATIC at a ratio of 1:1, and the proposed total inflation rate is 2%:

• Validator rewards: During the first 10 years, validators will receive an additional 1% share of the total supply, after which the community can decide whether to maintain or reduce this share through governance.
• Ecosystem support: In the first 10 years, an amount equivalent to 1% of the total supply will be provided to the newly introduced community fund, which can be used for ecosystem support through community governance. After 10 years, the community can decide through governance whether to maintain or reduce this amount.

Unlike the existing MATIC token economic model, the total supply of MATIC is fixed at 10 billion, while the POL token has an annual inflation rate of 2% for 10 years. This inflationary supply will provide good support for the network until the Polygon 2.0 ecosystem is sufficiently mature. Once the Polygon 2.0 ecosystem is well established and sustainable through transaction fees, the community can reduce inflation through governance. Considering the current inflation rate of the Bitcoin network is around 1.8%, 2% is not a huge number.

3.2 Simulation assumptions

But how realistic is the token economic model for the new POL token? Is the network sufficiently secure, are validators sufficiently incentivized, and is the ecosystem sufficiently supported? Polygon simulated these problems and included the results in a white paper.

Based on a set of assumptions, it is evident that even in a worst case scenario where validators are incentivized at 4-5% per annum, the community fund will be adequately funded. (Note that the size of the Community Fund is calculated using an average price of 1 POL of $5).

• Average transaction fee of Polygon public chain: USD 0.01 (current Polygon PoS average fee), average number of verifiers: 100, average TPS: 38.
• The average transaction fee for the Supernets Polygon chain is $0.001, the average number of validators: 15, and the average TPS: 19.
• Average annual operating cost per validator: $6,000 (operating costs are halved every three years according to a modified version of Moore's Law).

3.3 Comparison with other tokens

At first glance, the proposed POL token economic model is similar to Polkadot's DOT, Cosmos' ATOM, and Avalanche's AVAX, but there are some differences.

First, there is a big difference between POL and DOT: For a network built on Substrate to become a parachain, a large number of DOT tokens need to be locked into the Polkadot relay through a process called a parachain auction in the chain. However, in Polygon 2.0, anyone can deploy a Polygon chain, and validators who meet the verification requirements can participate in it.

Second, POL is slightly different from AVAX and ATOM (with ICS enabled). What all three have in common is that validators who pledge tokens can participate as validators on multiple networks, but there are differences in inflation rates, governance, etc.

4. Summary

As the blockchain industry and technology mature, there are more and more attempts to improve the scalability of the network both vertically and horizontally, and Polygon 2.0 is advancing along this path. While other leading L2 projects (such as Optimsim, Arbitrum, zkSync, Starknet) are making similar attempts, Polygon 2.0 is different in that:

1. zkEVM technology with high compatibility with Ethereum,

2. Using ZKP's cross-chain solution

While other projects have mentioned multiple L2/L3 chains and cross-chain solutions, few projects provide detailed cross-chain solutions. Recently, cross-chain projects have begun to utilize ZK technology (such as zkBridge, Electron Labs, Polymer Labs, etc.), and Polygon 2.0 also has the ability to utilize ZKP in its cross-chain solutions, aiming to provide an excellent cross-chain user experience.

Let's wait and see if Polygon 2.0 together with ZK technology can achieve scalability and interoperability and become the value layer of the Internet.