How do you explain the success of Polygon?
The protocol launched in 2021 at a time when fees on Ethereum were really high, so the timing was perfect for them. The price aspect played a big role. It allowed them to raise funds, to grow very fast, to sign big contracts with well-known players. They have become a major player in the ecosystem, quite exposed, even if their internal organization is still quite unclear.
Why do giants like Meta or Walmart choose Polygon?
Because Polygon offers one of the most affordable costs on the market and allows the development of Web3 projects in satisfactory technological conditions.
Since Polygon is not a true layer 2 relying on Ethereum security, is this network vulnerable to attacks?
The cryptographic proofs of transactions performed on Polygon are placed on Ethereum, so it is not quite accurate to say that Polygon does not benefit from its security at all. On the other hand, since Polygon has its own consensus system, its intrinsic security depends on the value immobilized in "staking" on the validators.
Currently, about $3.6 billion is staked in the form of MATIC tokens, so an attacker would need to raise $1.8 billion to attack the network. That's not a huge sum... For Ethereum, we're talking about $14 billion.
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Howcould Polygon strengthen its security?
As with all Proof-of-Stake protocols, token holders must be encouraged to "stake" their tokens in order to raise the minimum amount required to trigger an attack.
The price appreciation of the token in question is also one of the elements that can contribute to its security. The more expensive it is, the more the amount of dollars to be mobilized is a barrier for an attacker...
Is MATIC's staking interesting?
Yes, especially right now because only 39% of the MATICs in circulation are staking. This is much less than most other major blockchains that use the same system (70-80%).
The advantage for MATIC stakers is that the income is very interesting: we can earn between 6 and 7% annually thanks to the natural inflation of the protocol and the repayment of the network transaction fees. Apart from Ethereum, it is very rare that a blockchain pays its validators so much. Solana and Cardano are not as generous.
What do you offer around Polygon at Kiln?
We recently announced an agreement with the French start-up Ownest (*) which is a historical partner of Polygon and was among the first validators of the network (there are only 100 for the moment).
As this is not their business (Ownest is specialized in logistics), we took over the management of their validator. We had a lot of requests from our customers to do MATIC staking. All this is integrated into our product offering.
Today, we offer software interfaces (APIs) that connect to the various custodial services (Bitgo, Fireblocks, Ledger Enterprise, etc.) and allow them to offer staking to their own customers. Kiln also allows custodial services to know exactly how much they have earned block by block, both on the inflation part of the protocol and on the transaction fees.
How do you see Polygon compared to its competitors like StarkWare and ZkSync who are more advanced on ZK rollups?
Polygon is not the most advanced on this very promising technology, but they have a market strategy that is excellent. It's not always the best technology that wins.
In my opinion, there is room for several scalability solutions, but Polygon manages to get a big piece of the pie with non-Web3 companies. That's kind of what Nomadic Labs is doing at Tezos...
What does that mean?
Nomadic Labs is the entity in charge of promoting the development of the Tezos blockchain among large companies. The problem with Nomadic is that they make too many French partnerships, and I think they have the wrong target: instead of aiming at CAC40 jewels that have never done anything very concrete on Web3, they could be more interested in start-ups, i.e. those who create real applications with volume. For me, the model to follow for Polygon is Amazon Web Services (AWS).
Why is AWS worth replicating?
It's simple: many start-ups can benefit from a credit of up to 150,000 euros. Once this credit is exhausted, you have to pay, and usually, since you are happy with the result, you pay, even if it can hurt! (laughs).
Usually, since the startup has built everything on AWS, they will agree to stay because it would be too complicated to change partners. Polygon mimics AWS to keep companies captive, they have a formidable business strategy.
Polygon shares many things with the Ethereum ecosystem, we imagine that a company could easily migrate to a competitor of the same family...
It's more complicated than that in reality. A company that wants to leave Polygon can't go to Ethereum because of the exorbitant fees. They could opt for StarkNet's solution, for example, but it is very different from Polygon (there is not the same programming language, editor's note). The same goes for the other protocols in the Ethereum ecosystem, there are a lot of differences that make it difficult to change, especially when you are not a Web3 company.
(*) Quentin de Beauchesne is a minority shareholder of The Big Whale