Despite performance and scalability issues, Ethereum is still attracting plenty of developers and investors. In the meantime, it’s impossible for us to ignore Polygon, which is hard on Ethereum’s heels. But is it really a rival?
New blockchains regularly appear in the DeFi space, causing everyone to wonder if any of them can outperform Ethereum, one of the current market leaders. Polygon is relatively new to the industry, yet the platform is growing at an exponential rate. It has over 8,000 monthly active teams, with 65% of them integrated exclusively on the platform compared to Ethereum’s figure of 35%.
But if we compare both blockchains by their total value locked (TVL), Ethereum still leads the field here. At the time of writing, the numbers are $67,26B for Ethereum and $2,55B for Polygon. However, we cannot ignore the fact that Polygon is still relatively new: what matters is that it steadily grows and attracts more attention from the community.
Read on to see a detailed Ethereum vs Polygon comparison, to learn whether Polygon might outpace Ethereum, and to find out which blockchain is the best fit for dApp development.
Introduction to Ethereum
Introduced in 2013, Ethereum is one of the oldest and most widely known blockchain platforms. It is currently home to 2,970 dApps, thanks to its open-source ecosystem where anyone can develop blockchain-powered products and thereby contribute to the ecosystem’s growth.
Platform advantages and limitations
Many DeFi enthusiasts turn to Ethereum because it allows them to access any ecosystem’s dApps using just a wallet. As a result they can send, receive, borrow and lend money without the need to add personal information.
All this contributes to ETH being the world’s second-largest cryptocurrency. In May 2021, its price reached $3,400, quadrupling its value since the start of the year. Experts predict that by the end of 2022 Ethereum’s price will be somewhere between $4,000-$4,500.
Despite its tremendous popularity, the platform has some notable drawbacks. These include slow transaction processing times and high gas fees imposed by the Proof of Work (PoW) consensus mechanism.
These challenges should be tackled by the introduction of Ethereum 2.0. This will use the Beacon Chain and its accompanying architecture of shard chains. However, the full release of Ethereum 2.0 is not expected to happen at least till 2023 — and that’s the most optimistic estimation.
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Introduction to Polygon
Polygon is a decentralized scaling solution designed specifically for the Ethereum network. It allows developers to connect their Ethereum-compatible smart contracts within the Polygon platform and create scalable dApps with low transaction fees.
Polygon was first introduced to the world as Matic Network In 2021 it was rebranded as Polygon — an internet of blockchain for Ethereum based on the Proof of Stake (PoS) consensus. To put it simply, Polygon is a Layer 2 solution for Ethereum. It is interoperable with the latter’s infrastructure and tackles Ethereum’s main challenges (namely, slow transactions and exorbitant gas fees).
But how does Polygon work? The answer is that it operates just like any other PoS-based blockchain, having its infrastructure, token, validator nodes, and native dApps. The difference is that the transactions are ultimately settled on the Ethereum mainchain.
Platform advantages and limitations
Some of the main benefits and improvements that the Polygon platform brings to the Ethereum network include:
- EVM compatibility, allowing Ethereum’s developers to launch dApps in several clicks while benefiting from faster and cheaper transactions
- Interoperability, meaning that multiple cross-chain protocols can exchange information between Polygon and other chains
- Eco-friendliness, because being based on the PoS consensus algorithm, Polygon demands 99,99% less energy compared to PoW
So, the main difference between Polygon and Ethereum is that Polygon enables countless dApps to take advantage of Ethereum’s features without suffering the platform’s limitations. No wonder Polygon currently boasts 19K dApps running on its network, which is a 500% increase compared to October 2021.
And yet, despite numerous advantages over Ethereum, Polygon also has several limitations that it needs to overcome. It has limited resell support, as auctions are currently not supported by the platform. Also, transactions on Polygon are still less secure compared to those on Ethereum. So some improvements are needed here too.
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Ethereum vs Polygon: which one will rule dApps development?
Both platforms are popular solutions for the development of decentralized applications, with each of the pair having its pros and cons. Take a look at the Polygon vs Ethereum infographic below to quickly grasp the key differences between the two before reading on to find a detailed comparison based on multiple parameters.
Architecture defines the state of the blockchain network. Therefore it is one of the core factors that should be considered when choosing a platform.
Ethereum leverages a stateful architecture, meaning that all the transactions on the platform are recorded in the state. When a new transaction occurs, the whole network needs to update the copy to reflect the recent transaction.
Imagine you’re sending 10 ETH to a recipient through the Ethereum platform. To complete the transaction, the network of miners needs to update the records to reflect the architecture, which is why the transaction process is much slower compared to stateless networks.
In contrast, Polygon promotes a borderless economy and works like a PoS blockchain where exchanges are presented in the form of clusters. Polygon also has its currency, Matic, used for exchanges.
Polygon has a four-layered architecture:
- The Ethereum layer, which is the Ethereum-based smart contract that settles the conditions related to staking, transaction finality, etc. between Ethereum and Polygon
- The security layer, which provides a periodical check of the validity of any Polygon chain for a fee and offers additional security to the chains
- The Polygon network layer, represented as the ecosystem of networks that are responsible for handling local consensus and building their blocks
- The execution layer, which implements the platform’s EVM, executing smart contracts
Another significant difference between Ethereum and Polygon lies in their consensus algorithms. Ethereum is currently based on the PoW consensus, which requires high processing power and is the main reason for Ethereum’s slow and costly transactions. High processing power impacts the performance of the platform but at the same time ensures better security.
Ethereum is currently in the process of moving to PoS, which will allow it to fix the platform’s limitations.
Polygon uses the PoS consensus, which ensures better performance compared to PoW and provides a PoS security layer to the blockchains that are launched on Polygon.
Also, Polygon relies on a range of technologies that allow the platform to ensure high scalability and low gas fees. These are Plasma chains, ZK-rollups, and optimistic rollups.
Polygon applies a layer-two scaling technology named Plasma, which is one of the factors behind Polygon’s mass adoption. This technology relies on bridges to enable the flow of assets between the root and child chains. Polygon Plasma chains constitute a framework for the development of decentralized applications while reducing transaction load on the main blockchain to ensure faster and cheaper transactions.
ZK-rollups and optimistic rollups, the other scaling solutions used by Polygon, allow the platform to validate transactions almost immediately.
There are multiple differences between existing consensus algorithms you should be aware of. Check out this article to learn them all
Platform ecosystem and key projects
Ethereum currently has one of the largest ecosystems, with myriad notable projects on the DeFi scene, including Uniswap, Compound, Oasis, and Aave.
Ethereum is also one of the top platforms for NFT-based projects, such as OpenSea, Rarible, and Audius. It is a top choice for game development, with Axie Infinity and Dark Forest being the best project examples, and for metaverse development, with Decentraland and Cryptovoxels being the most famous metaverse projects.
Judging by the numbers of dApps created on both platforms, Polygon (around 19,000) significantly outperforms Ethereum (around 3,000) in the Ethereum-Polygon contest. The most popular DeFi apps on Polygon are Curve finance, SuchiSwap, QuickSwap, Sorbet Finance, and AAVE. It is also the home for numerous DAOs, including Blockonomist, El Dorado, BlobDAO, and Idavoll network.
Polygon can also boast some interesting partnerships. For example, it partnered with a GOGOcoin dApp to develop a rare NFT that can achieve a yield of up to 50%. Lido finance also announced a partnership with Polygon to allow users to stake Matic in a secure and decentralized way.
Level of decentralization
As you might already know, in a decentralized blockchain all information is recorded in nodes or validators, which are located in different parts of the world. At present almost all blockchain platforms claim to be decentralized. But how can we measure this precisely? One possible way is to use the Nakamoto Coefficient.
Nakamoto Coefficient is a metric that represents the number of validators that would have to collude together to slow down any respective blockchain from functioning well. In practice, the more nodes the blockchain has, the more decentralized it will be.
According to the Nakamoto Coefficient, Polygon has 100 validators and a coefficient of 2. The Nakamoto Coefficient doesn’t provide data for Ethereum, explaining that due to the large size of its network the total number of validators is undetermined.
However, Vitalik Buterin, the founder of Ethereum, measured this indicator in 2020 and arrived at a coefficient somewhere between 25 and 35. The estimate was based on the fact that Ethereum had 7,400 nodes at that time. Therefore, if we’re going to give scores in our Polygon vs Ethereum comparison, we would definitely acknowledge this as a win for Ethereum.
Scalability and transaction fees
When choosing the platform for your dApps projects, it’s wise to pay attention to the scalability factor, for it’s this that is responsible for determining whether the network is scalable enough to complete the transaction.
If we take Ethereum, it currently processes between 13-15 TPS, a lower figure than most of its competitors. Luckily, Ethereum 2.0 promises to handle 100K TPS, so all that remains is to wait and see if it will keep to its word. Polygon can process 65,000 TPS, thus ensuring better scalability and transaction speed.
When it comes to the Polygon gas fees vs Ethereum gas fees, the indicator is pretty volatile and can vary significantly. At the time of writing the average transaction fee on Ethereum is more than $6, but it can reach tens or even hundreds of dollars depending on network congestion. Polygon offers much more attractive transaction fees, less than $0,01.
Market cap and latest developments
At the time of writing, Ethereum’s market cap is an estimated 223,597M compared to Polygon’s 4,955M. The difference is huge, but we should remember that Polygon is a younger network than Ethereum.
Ethereum has recently launched a set of libraries named Ethereum-cryptography 1.0. These libraries aim to establish a more secure and faster Ethereum cryptography stack and empower all kinds of projects in the space.
Polygon is currently incentivizing regular web3 hackathons that contribute to the development of its community. It is also working to develop NFTs in its platforms. Recently this led it to establish a partnership with Adidas and Prada to build their first collaborative NFT project on this platform.
Is Polygon a competitor for Ethereum?
When a new blockchain establishes a strong presence in the market, the crypto community is always likely to ask whether it can provide competition for Ethereum. When it comes to Polygon, though, it cannot be viewed as Ethereum’s competitor as the platform is actually reliant on Ethereum (and vice versa).
Polygon is built on top of the Ethereum blockchain and its goal is to provide an infrastructure that will lead to mass adoption of Ethereum by ensuring increased performance and scalability. In short, Polygon improves Ethereum, which leads to more people using the longer-established platform: ultimately the result is that Ethereum’s solution increases in value, despite the possibility of Polygon stealing the total value locked from it.
Some crypto enthusiasts claim that Solana is the key competitor of Ethereum. Check this article to learn if it’s true
Will Ethereum 2.0 eliminate the need for Polygon?
Ethereum 2.0 is the major upgrade that crypto enthusiasts are currently waiting for, as it promises to increase network speeds while lowering transaction costs. Consequently, there are questions about whether Layer 2 platforms like Polygon will still be necessary after Ethereum 2.0’s unveiling.
Layer 2 solutions like Polygon will luckily continue to be supported, as they improve Ethereum chain utility. Moreover, as more and more decentralized applications emerge, Ethereum 2.0 may soon start to creep up against the limits of scalability. This will lift gas fees higher, so ultimately the network may end up under the same conditions as before.
Platforms like Polygon will further improve the experience of Ethereum 2.0, as any Ethereum upgrade can be made even faster with Layer 2 solutions to ensure that the user enjoys the best possible experience. What’s more, already existing Polygon partnerships, and multiple successful projects behind it, suggest that the platform won’t become obsolete with the Ethereum upgrade.
Should you invest in Polygon and Ethereum?
Despite the challenges and limitations associated with Ethereum, the platform continues to lead the market, as demonstrated by numerous metrics, from total value locked to market cap. Ethereum is now the second most popular blockchain after Bitcoin, a sign that very many investors and developers are supporting the platform and helping it to grow.
By delivering enhancements to the Ethereum network, the Polygon community is growing fast too. It already boasts 19,000 decentralized applications and 1,6B transactions processed. The platform offers good potential for investment, since it supplies multiple use cases, from the development of NFT-based products to the implementation of DeFi solutions.
Polkadot is another promising blockchain that can outperform Ethereum 2.0. Take a look at our detailed comparison and gain actionable insights
Which platform should you choose for your DeFi project?
As we stated earlier, Ethereum and Polygon cannot be viewed as direct competitors. However, there are a few important differences between the two, which you should take into account when making the choice.
Key differences in the Polygon vs Ethereum comparison are transaction speed and cost. Slow transactions and costly gas fees may result in poor user experience, which would have a negative impact on the platform’s adoption. From this perspective, it is better to choose Polygon, thanks to its ability to ensure fast transactions while offering low gas fees.
However, if you prioritize the security of your transactions, Ethereum should be your top choice. What’s more, this blockchain still enjoys one of the largest communities and greater popularity in the crypto market.
To make the right decision, we recommend that you take a look at the blockchains’ differences once again and see how they align with your project goals. Alternatively, you can seek assistance from blockchain developers and consultants who have experience in working with both platforms and who can provide you with valuable insights based on your business goals.
Future of both platforms
The future seems bright for both the Ethereum and Polygon blockchains. If Ethereum can address its key pain points with the upcoming upgrade, the outcome will undoubtedly be community growth and the platform’s even wider adoption and recognition.
As for Polygon, it is also bound to grow its network, and increase its influence on the crypto market, due to the increasing number of users and the projects that currently rely on it.
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