How do you explain Polygon's success?
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 part. It enabled them to raise funds, expand very quickly and sign major contracts with well-known players. They've become a major player in the ecosystem, with a fair amount of exposure, even if their internal organisation is still rather vague.
Why do giants like Meta or Walmart choose Polygon?
Because Polygon offers one of the most affordable user costs on the market and they allow Web3 projects to be developed under satisfactory technological conditions.
As Polygon is not a true layer 2 relying on Ethereum's security, is this network vulnerable to attacks?
The cryptographic proofs of transactions carried out on Polygon are placed on Ethereum, so it's not entirely accurate to say that Polygon doesn't benefit from its security at all. On the other hand, as Polygon has its own consensus system, its intrinsic security depends on the value immobilised in "staking" on the validators.
Currently, around $3.6 billion is "staked" in the form of MATIC tokens, which means that 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 around $14 billion.
How could Polygon strengthen its security?
As with all Proof-of-Stake protocols, token holders should be encouraged to "stake" their tokens in order to raise the minimum amount that needs to be mobilised to trigger an attack.
The appreciation of the price 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 dollar amount to be mobilised is a barrier for an attacker...
Is MATIC staking worthwhile?
Yes, especially at the moment as only 39% of MATICs in circulation are being staked. This is much less than most of the other major blockchains that use the same system (70-80%).
The advantage for MATIC stakers is that the income is very attractive: you can earn between 6 and 7% annually thanks to the natural inflation of the protocol and the network's transaction fees. With the exception of Ethereum, it is very rare for a blockchain to pay 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 French start-up Ownest (*), which is a long-standing partner of Polygon and was one of the first validators on the network (there are only 100 at the moment).
As this is not their business (Ownest specialises 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 storage services (Bitgo, Fireblocks, Ledger Enterprise, etc.) and enable them to offer staking to their own customers. Kiln also allows custody services to know exactly how much they have earned block by block, whether on the inflation part of the protocol or on transaction fees.
How do you see Polygon compared to 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's room for several scalability solutions, but Polygon manages to carve out a big slice of the pie with non-Web3 companies. That's a bit like what Nomadic Labs is doing at Tezos.
What does that mean?
Nomadic Labs is the entity responsible for promoting the development of the Tezos blockchain among large companies. The problem with Nomadic is that they make too many Franco-French partnerships, and I think they've got the wrong target: instead of aiming at the flagships of the CAC40 that have never done anything very concrete on Web3, they could be more interested in start-ups, i.e. those that create real applications with volume. In my view, the model for Polygon to follow is Amazon Web Services (AWS).
Why is AWS worth replicating?
It's simple: many start-ups that launch can benefit from a credit of up to 150,000 euros. Once that credit has run out, you have to pay, and generally, given that you're happy with the result, you pay, even if it can hurt! (laughs).
In general, given that the start-up has designed everything on AWS, it will agree to stay because it would be too complicated to change partners. Polygon imitates AWS to keep companies captive, they have a formidable sales strategy.
Polygon shares a lot of things with the Ethereum ecosystem, so you'd imagine that a company could easily migrate to a competitor in 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 the StarkNet solution, for example, but that is very different from Polygon (they don't use 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 mean you can't change so easily, especially when you're not a Web3 company.
(*) Quentin de Beauchesne is a minority shareholder in a private capacity in The Big Whale
