Polygon (previously Matic Network) is a Layer 2 scaling solution for Ethereum that allows developers to build scalable decentralized applications with lower transaction fees while still benefiting from Ethereum’s security. The Polygon ecosystem has seen significant growth recently due to the high gas fees on Ethereum, attracting many investors who see its potential to scale Ethereum and drive Web3 adoption.
What is Polygon?
Polygon is a framework for building interconnected blockchain networks that uses a modified version of Plasma, a layer 2 scaling solution originally conceptualized for Ethereum. It enables scaling Ethereum-compatible blockchains while still relying on the security of Ethereum’s main chain via the proof-of-stake mechanism. Polygon aims to provide faster and cheaper transactions on Ethereum and also enable interoperability between Ethereum-compatible chains.
Some key aspects of Polygon include:
- It is Ethereum Virtual Machine (EVM) compatible, so any dApp built on Ethereum can be ported to Polygon with minimal changes
- It uses a Proof-of-Stake consensus mechanism that allows Ethereum users to act as validators
- It supports fast transactions with lower fees compared to transacting directly on the Ethereum mainnet
- It enables interoperability between multiple Ethereum Virtual Machine (EVM)-compatible chains
Polygon uses a dual token model comprising the MATIC token and Proof-of-Stake tokens. MATIC is used for payment services on Polygon and acts as gas fees on the network. Proof-of-Stake tokens are used for staking as validators on the Polygon PoS chain.
Who are the major investors in Polygon?
As one of the leading layer 2 solutions for Ethereum, Polygon has attracted significant interest from investors. Some of the major investors in Polygon include:
| Investor | Details |
|---|---|
| Mark Cuban | Billionaire investor and owner of the Dallas Mavericks NBA team. Backed Polygon in May 2021. |
| Reddit co-founder Alexis Ohanian | Co-founder of social media platform Reddit. Invested in Polygon in October 2021. |
| Animoca Brands | Hong Kong-based gaming company. Invested $2.4 million in Polygon in July 2021. |
| Samsung Next | Venture capital arm of Samsung. Invested in Polygon in October 2021. |
| Accel | Venture capital firm known for early investments in Facebook and Flipkart. Invested in Polygon in October 2021. |
In addition to direct investments from venture capital firms and high networth individuals, Polygon has also received indirect investments from backers of its ecosystem partners:
- 0x – 0x raised funding from investors like Pantera Capital, Blockchain Capital, and Coinbase Ventures. It has partnered with Polygon to offer faster and cheaper access to its decentralized exchange protocol.
- Aave – Aave raised funding from Blockchain Capital, Standard Crypto, and Blockchain.com among others. It has expanded to Polygon to offer decentralized lending on a scalable platform.
- Uniswap – Top DeFi protocol Uniswap is backed by investors like Paradigm, Andreessen Horowitz, and Union Square Ventures. It has deployed on Polygon for lower gas fees.
By attracting applications from leading Ethereum protocols to deploy on its platform, Polygon has gained the confidence of crypto investors seeking scalable and low-cost solutions to drive mainstream adoption.
Major polygon adoption campaigns
In addition to direct investments, Polygon has also gained significant exposure and adoption through major development campaigns focused on its ecosystem:
Polygon Ecosystem Grants Program
Launched in October 2021 with a $1 billion allocation, the Polygon Ecosystem Grants Program provides funding for projects building on Polygon across areas like DeFi, NFTs, metaverses, scaling solutions, and more. Some of the major recipients include:
- 0x – Received a grant to integrate with Polygon and offer faster 0x protocol transactions
- Aave – Received funding to expand its DeFi lending platform to Polygon
- Balancer – Granted funding to deploy its automated market maker protocol on Polygon
- Decentraland – Received a grant to integrate Polygon for cheaper transactions in its metaverse
Polygon Launch Kit
Polygon Launch Kit is a $20 million fund targeted at onboarding mainstream brands and celebrities to launch NFT drops and metaverse projects on Polygon. Some major partners include:
- UFC – Launch of UFC Strike NFTs featuring famous UFC fighters
- Luxury fashion brand Dolce & Gabbana – Launch of D&G family NFT collection on Polygon
- Decentraland – Partnership to allow brands to purchase virtual real estate and display NFTs
By subsidizing deployment on Polygon for mainstream brands, this campaign significantly boosts Polygon’s visibility and usage as more celebrities and enterprises launch high-profile NFT projects.
Polygon Nightfall
Polygon Nightfall is a privacy-focused blockchain compatible with the Ethereum Virtual Machine. It uses “optimistic rollups” – bundling transactions off-chain and submitting only transaction data to Ethereum. This increases privacy by keeping transaction details off the public Ethereum mainnet.
Nightfall has attracted interest from enterprises needing privacy for blockchain applications including:
- EY – Consulting firm exploring Nightfall for private enterprise transactions
- Unilever – Consumer goods brand using Nightfall for sustainable supply chain tracking
- Coca Cola – Experimenting with Nightfall for private logistics management
These partnerships demonstrate Polygon’s appeal for enterprises beyond just DeFi and NFTs.
Recent major funding rounds
With increasing adoption of its network, Polygon has also directly raised significant funding from investors in recent months:
Series B – February 2022
In February 2022, Polygon raised $450 million in a private token sale from investors including:
- Sequoia Capital India
- SoftBank Vision Fund 2
- Galaxy Digital
- Republic Capital
- Alan Howard
- KKR
This round valued Polygon at $2 billion. The funds will be used to expand Polygon’s ecosystem through developer support, DeFi and NFT projects, and enterprise adoption.
Series A – October 2021
In October 2021, Polygon raised $50 million in a round led by Tiger Global. Other investors included:
- Republic Capital
- Ethereal Ventures
- KUCOIN
- Array
- Crunchfund
- Polychain Capital
This Series A round valued Polygon at $1 billion and demonstrated investor confidence in its vision of scaling Ethereum through layer 2 solutions.
Polygon’s ability to attract funding from high profile crypto investors and venture capital firms highlights its position as one of the leading layer 2 scaling solutions on Ethereum. The capital raised will continue to fund its vision of making blockchains scalable and interoperable to support mainstream adoption of Web3 applications.
Conclusion
Polygon has quickly risen to become one of the top platforms supporting the growth of decentralized applications on Ethereum. By providing easy plug-and-play scalability, it has attracted some of the largest applications in DeFi, NFTs, and gaming to expand onto its ecosystem. This has caught the attention of investors keen to back projects that can drive real-world usage and adoption of blockchain technology.
With backing from prominent crypto investors, enterprises, and venture capital firms, Polygon is poised to strengthen its position as the leading layer 2 scaling solution for Ethereum. Its continued funding success highlights the potential investors see in Ethereum’s scalability issues being solved by projects like Polygon that retain Ethereum’s security guarantees. As more developers turn to Polygon to launch highly scalable dApps with fast and cheap transactions, investor interest in the project will continue rising given its central role in Ethereum’s future growth and success.