Polygon Gets Massive $450 Million Funding

Polygon is (L2) a secondary scaling solution for the Ethereum blockchain.

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These types of solutions work on top of an existing blockchain network rather than using their own blockchain.

In this instance, Polygon works on top of Ethereum which has become slow and expensive to use as it becomes ever more popular. I wrote a Poll about it on LinkedIn you can see here.

• Polygon has raised $450 million in a private token sale.
• The Ethereum scaling project plans to grow its ecosystem and onboard the next billion users in crypto.

Layer-2 refers to a network or technology that operates on top of an underlying blockchain protocol to improve its scalability and efficiency. ... For instance, Bitcoin is a Layer-1 network, and the Lightning Network is a Layer-2 solution built to improve transaction speeds in this fashion on the Bitcoin network.

Web 3 has More Traction than Metaverse

While Meta looks like it's in serious trouble burning Cash on wishful thinking, Web3 has momentum. If the Metaverse is for corporate elite types, hype around Web3 that is attracting young people and blockchain developers that has also attracted some of the biggest names in venture capital, including Andreessen Horowitz and Tiger Global.

There has been growing interest in Web 3, which is the third generation of internet services and has been made possible by decentralized networks. While the Metaverse hype mostly focused on VR platforms that have failed consistently, Web3 has made small little real steps.

Polygon eventually wants to become a decentralized version of Amazon Web Services. It’s part of a movement in crypto known as “Web3.”

The investment round was led by Sequoia Capital India with participation from more than 40 venture capital funds, including SoftBank Vision Fund 2, Galaxy Digital, Tiger Global and Republic Capital. Billionaire investor Kevin O’Leary also participated in the raise. It appears that in some ways Sequoia Capital is playing catch up with arch-rival Andreessen Horowitz in the race to invest in what could be the future of the internet — so-called Web3.

Just as Bitcoin has made a rejuvenated price increase in February, 2022, Polygon with a market cap of about $13 billion, is aggressively now able to expand its portfolio of Ethereum scaling solutions and works to attract the larger developer ecosystem.

• Sequoia Capital India
• Tiger Global
• Softbank

Read Polygon’s own blog announcement on this.

So what does it mean? With fresh capital in hand, Polygon plans to allocate $100 million to its ecosystem fund and about $10 million each to its various scaling products, including Hermez, Miden, Zero, and Nightfal.

TechCrunch notes that this is the first time many of these investors are making a bet on an Ethereum scaling solution, or broadly on the blockchain infrastructure play, according to Web3 Signals, a website that tracks venture investments in the crypto space.

Polygon recently committed to investing $1 billion in ZK-rollup-related scaling efforts and since then has announced two acquisitions worth $650 million: Mir and Hermez.

Polygon will use the funding to expand its scaling solutions, which includes Polygon PoS, Polygon Edge and Polygon Avail, and support mainstream adoption of Web3 applications.

Future of NFTs, DeFi and Ethereum Scalability

Polygon, which offers scaling and infrastructure support to Ethereum, has attracted considerable attention over the past year as the explosive growth of decentralized finance and nonfungible tokens raised concerns about Ethereum’s network capacity.

Its Matic Token has reached $2.00 now as of February 7th, 2022. It was just $0.10 a year ago. That’s a 20x increase. Here are other tokens that went up in 2021 a lot.

Ethereum has attracted the largest developer ecosystem for any blockchain, but it’s plagued by slow speeds and high transaction costs (also known as gas fees).

Since its founding in 2017, Polygon has massively grown its ecosystem. Over 7,000 decentralized applications are currently building on Polygon, the project said. Some of its major partners include Aave, OpenSea, Mark Cuban’s Lazy.com, and Dolce & Gabbana for its NFT efforts.

Polygon is among a handful of so-called Layer-2 or side-chain firms that are attempting to help Ethereum’s network solve its growing pains by employing techniques to move a wide range of transaction information off the blockchain.

• Moving a lot of details off the Ethereum blockchain allows Polygon to pack more transaction details on an Ethereum block and significantly scale the number of transactions it can process.
•  Polygon says it’s completed over a billion transactions to date and has around 2.7 million monthly active users.

"Thousands of developers across a range of applications are choosing Polygon and their complete set of scaling solutions for the Ethereum ecosystem." - said Shailesh Lakhani, MD at Sequoia Capital India.

While Polygon is getting popular, it ran a massive risk of losing almost all of its tokens in December due to a critical bug. Polygon moved to fix the vulnerability, but still, a malicious actor exploited the bug and stole MATIC tokens worth over $2 million at the time.

How to scale the future of Ethereum? For the first few years, Polygon focused on a technique called Plasma to move information off the Ethereum blockchain, but the firm has in recent years expanded its focus on multiple technologies, including zero knowledge rollups, optimistic rollups and validium, to tackle this challenge.

Polygon is exciting for obvious reasons. It is an interoperability and scaling framework used for building Ethereum-compatible applications. It aims to address one of Ethereum’s longest legacy issues—throughput and costs.

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