Indian encrypted unicorn Matic: from nothing to a market value of tens of billions
Original title: "How did India's encrypted unicorn Matic become?" "
Original author: Aaryaman Vir
Original compilation: Wang Dashu; chain catcher
In the past period of time, many mainstream Ethereum applications including Aave, Curve, Aavegotchi, and OpenSea have chosen Polygon (formerly MATIC) to expand performance. With the increase in the market value of Polygon and the assets carried on it, The $12 billion Indian unicorn has become a behemoth in the crypto world.
At the beginning of April this year, Aaryaman Vir, co-founder of Prophetic Ventures, shared the experience behind the founder of this company, and The value support behind its rapid growth is of great reference value for readers to understand the project in the current industry background.
1.Matic Founders' Story
Matic started with three co-founders: Jaynti Kanani, Sandeep Nailwal and Anurag Arjun. Later, Serbian programmer and entrepreneur Mihailo Bjelic joined the team as a co-founder. That being said, the main inventor of the Matic protocol is Jaynti, also known as JD.
JD was born and raised in Ahmedabad (Note: the sixth largest city in India), his The father was a worker from one of the city's many diamond factories. Growing up, the family environment was not easy for JD, his two older sisters did not attend high school due to financial difficulties.
Nonetheless, the family sent JD to an engineering college in the nearby town of Nadiad. It's a coincidence that JD ended up in the computer science program there - he didn't get good enough grades to get into the college's more popular electrical engineering program - but I guess it's a very happy coincidence.
After graduating from university in 2011, JD joined Persistent Systems, an IT services company in Pune. Through a mentor, JD was first introduced to Hacker News, Y Combinator, and global startup culture. After discovering this exciting new world, JD plunged into his studies of technology and entrepreneurship.
A natural consequence of immersing himself in entrepreneurship, JD soon aspired to start his own. However, his first venture - a twitter analytics tool - failed to take off, and JD applied to Housing.com shortly thereafter.
When JD was working as a front-end developer in Housing, he befriended the company's head of data science, which led to his entry into the company's Data science team. Around 2015, JD first heard about encryption. The story behind this is interesting. As a Game of Thrones aficionado, JD wanted to build a spin-off project that people could use to bet on plot developments in the show.
"Which character will die on Game of Thrones? Bet right and win!" - This is the JD app premise, but he had problems building a payments feature that could serve a global user base. While trying to find a solution to these problems, JD discovered cryptocurrency and quickly fell down the "rabbit hole" like many of us.
JD has been reading and absorbing information about the crypto world ever since. After making some money in the 2017 bull market, JD finally left Housing.com in October 2017 to start his own business again. In 2018, JD completed the first proof-of-concept of the system, which will eventually become the Matic network. Along the way, he meets Anurag and Sandeep. Along with the rest of the Matic team, three of them went on to create one of the most valuable and important cryptocurrency projects out there.
JD's career has shown that it doesn't matter who you are, where you are from, or how much money you have, anyone can learn through curiosity , determination and willingness to take risks to change the world.
JD has undoubtedly taken many risks in his life, you could even say that the act of going to college has Family members pose a risk. Still, all those risks paid off in one of the most unlikely and dramatic ways possible.
2. The background of Matic development
No matter How, to start understanding Matic, we first need to understand Ethereum, which allows users to write custom code into a decentralized ledger in the form of "smart contracts". Once this code is deployed to the ledger, everyone else can see and interact with it. Applications can be built without a central server, without a single database and open source from the start.
The coolest thing about Ethereum is that anyone can come up with an idea and use that idea as a set of intelligent The contract is published to the world computer. On the other hand, after deployment, anyone can read and interact with these contracts. All these programs are transparent, open and freely accessible.
This functionality has given rise to a massive industry known as "decentralized finance" or simply DeFi. Today, around 200,000 unique addresses trade on Ethereum-based DEXs per week, with 1,000-1,400 unique borrowers per day.
But the problem is that Ethereum has some limitations: transaction throughput, transaction speed and transaction cost. Any transaction made on Ethereum must be replicated across all nodes running the Ethereum program, which is the only way the various internal copies of the distributed ledger will remain in sync. But this opens up the possibility of abuse, where someone could write a program that takes up a gigabyte of memory or creates an infinite loop that crashes the computer the program is running on.
In order to solve this problem, Ethereum introduced the concept of gas. Transactions require more storage and memory, and users must pay more gas fees for the transaction to be reflected on the distributed ledger. As a result, complex distributed applications can become very expensive to build and use.
In addition to gas-related issues, Ethereum also has transaction bottlenecks. The system is designed in such a way that it can only handle 12-20 transactions per second. For a very popular system like Ethereum, this results in a large number of pending transactions. Additionally, transactions take around 13 seconds to process and be written to the ledger, with different users bidding higher and higher to ensure their transactions are next in the queue to be processed.
Therefore, millions of DeFi, NFT and Ethereum ordinary users have to wait Confirm the transaction. Users can skip the queue by paying a higher gas fee, which leads to the current average gas fee of $20 on Ethereum.
This is the current problem of Ethereum, high cost, slow processing time and low transaction throughput make it Completely untenable in many application scenarios.
3. So, what is Matic?
The idea of Matic came from the need to improve Ethereum’s cost and scalability issues. In 2018, Matic's team started modifying and innovating some existing concepts in the cryptocurrency world in order to create Layer 2 solutions on top of Ethereum.
Unlike Layer 1, Matic provides a Layer 2 network that helps improve transaction costs and throughput. To achieve this, the Matic system involves two main components:
1) A group of Matic Smart Contract
2) Matic sidechain, which is a completely independent blockchain
Given our current understanding of smart contracts on Ethereum, the first part is easy to implement, and the second part of the Matic sidechain is essentially A new chain built autonomously by the Matic team. Unlike Ethereum, this new chain is optimized for some parameters such as transaction speed and transaction throughput.
Transactions on the Matic chain are confirmed after 1-2 seconds, compared to 15-20 seconds for Ethereum , In contrast, more transactions can be processed in parallel on Matic, thereby reducing the fee pressure on Ethereum. There are still transaction fees on Matic, but these are around $0.00004-$0.00012 and are paid in MATIC tokens, the native cryptocurrency of the Matic chain.
Like Ethereum and Bitcoin, Matic Chain enables security and consistency. That is to say people are incentivized to constantly process Matic transactions and maintain an internal provably creditable copy of the ledger computer.
In Matic, these people are called validators, and their motivation for running these computers is, as long as they prove themselves Freshly minted Matic tokens can be earned by maintaining a correct distributed ledger of all processed transactions, and node validators need to stake Matic tokens to participate.
If the system finds that a certain verifier is doing evil, it will confiscate the Matic tokens mortgaged by it, thereby reducing node verification Human bad behavior, guaranteed authenticity.
Currently, Matic has become the preferred scaling solution for many Ethereum-based projects, including Decentraland, OpenSea, PolyMarket, Aavegotchi et al. The list of partners and use cases is constantly growing, and Matic will soon expand support to other popular layer 1 blockchains beyond Ethereum.
As things stand, users have deposited around $400 million in tokens into the Matic deposit manager, The price of MATIC token has increased by almost 20 times. (Note: This is the data at the beginning of April. Currently, the deposited funds exceed 7 billion US dollars, and the tokens have increased by more than 100 times.)
4.Matic How to improve transaction throughput?
Matic offloads the computational burden of Ethereum transactions to the Matic sidechain. Here's how it works:
1) First, suppose the user wants to use ETH to make a bunch of fast and low-cost transactions on Decentraland
2) Due to high fees and slow processing time, this user cannot perform these transactions on the Ethereum main chain Transaction;
3) The user takes the money they wish to spend, say 100 ETH, and sends it to the ether A special smart contract named Matic Deposit Manager (deposit manager) on Fangzhuan Chain;
4) The deposit manager is basically It is like a vault, after the user sends 100 ETH to the deposit manager, the user will no longer be able to access the ETH on the Ethereum main chain;
5) This transaction happens on the Ethereum main chain and suffers from high fees and slow times like every other Ethereum transaction, but don't worry, it's better to start here.
6) After the user transfers to the deposit manager, the Matic sidechain will continuously scan the Ethereum ledger to track the deposit management involved transaction on the server contract, see the transfer of 100 ETH and record the 100 ETH to a new account on the Matic sidechain.
7) The Matic chain is built as a mirror image of Ethereum, users can use it on Matic and in Ethereum The same wallet as the wallet used on. So this mirror account on the Matic chain will be credited with 100 ETH once a deposit transaction is made on the main chain.
8) Now users have 100 ETH in the Matic chain, they can make as many transactions as they want . They can send money to Matic wallets on Decentraland and enjoy fast and cheap transactions.
9) Whenever users wish to transfer their funds back to the Ethereum main chain, they can Tokens are sent to a special "burn address" on Matic. This basically amounts to a public destruction of those funds. In our example, let's say a user spends 20 ETH in Decentraland, and then they send the remaining 80 ETH to the burn address.
10) After burning a token on the Matic chain, the user must send the mathematical proof of this burning back to the main chain Deposit Manager contract on . The deposit manager is able to calculate whether the burn actually happened on the sidechain, and after a successful calculation, the user can receive the remaining 80 ETH from their ETH wallet.
This is a super-simplified version of events, leaving out many details, but it is the nature of the system. Matic basically provides a parallel transaction processing layer with low fees and fast confirmation times. Assets can move back and forth between the Parallel Layer and the Ethereum main chain using the bridge created by the deposit manager.
5. What is the value of MATIC tokens?
As we saw earlier, Matic actually runs its own proof-of-stake blockchain. Any blockchain needs to incentivize people to secure the network and ensure that the collective ledger is maintained honestly and fairly.
On a public network like Matic or Bitcoin, everyone can be anonymous. No one is obligated to maintain a true copy of the distributed ledger, especially if doing so takes some time (such as server time or computing hardware). This is why blockchains secure the network to miners (in a proof-of-work system) or validators (in a proof-of-stake system) by validating transactions and maintaining a mathematically provable internal record of all those transactions in order. The reason for offering the monetary reward.
Since the correct state of the ledger can always be verified mathematically, no bad guy can get away with falsifying numbers. There will always be enough "honest" nodes with their own copy of the distributed ledger that they will ignore the fraud and continue to build an honest distributed ledger safe, provided that all other sane and profit-seeking people will converge on on a generic, provably true version.
On Matic, validators will be rewarded with MATIC tokens created by the protocol to maintain alignment with the incentive structure control. The supply of these new MATIC tokens will continue to decrease over time until no new tokens are created by the protocol.
However, in order to obtain these newly minted MATIC tokens, validators need to stake their MATIC tokens. The more MATIC you stake, the more MATIC rewards you get. That sounds good, but validators could have their deposits slashed if they accidentally mess up the ledger's accounting records.
Therefore, this is a usage scenario of MATIC tokens, you need to pledge tokens in order to have the opportunity to Produce blocks on the block chain and get MATIC rewards. Another use case is gas fees, anyone wishing to transact on the Matic chain must pay the fee with MATIC to enable validators to extract their transactions and include them in the ledger.
Actually, you need to buy and use MATIC tokens to use the Matic blockchain. In the future, MATIC tokens will also be used as a governance mechanism, so those who own MATIC can essentially vote in proportion to their stake to take certain actions on the network, such as distributing community funds or deploying software updates.
6. Summary
In my opinion, this story has some interesting lessons. The first lesson is to always be curious and trust yourself: just follow the thread of thought in your head and it will always keep you in a steady state. You'll definitely learn something, possibly meet like-minded people, and maybe even build life-changing things with them!
This is especially true in the cryptocurrency industry, a global industry with no barriers to entry. Any kid from a small corner of the world can come up with an idea, deploy it to this global computer system, and see it quickly adopted.
Second, it always pays to contribute to the community. Life and entrepreneurship should not be a zero-sum game where all growth has to be at the expense of someone else. JD and Matic engineers made a name for themselves by building one of the most popular free developer tools in the Ethereum ecosystem.
Many key connections and ideas emerged from the first act of building for the public good. It doesn't matter if you're producing content, designing assets or software projects. Contribute to the community and you will be rewarded.
Finally, while the cryptocurrency industry does have some scammers, it also attracts some of the brightest minds and Generated some of the most groundbreaking ideas of our time. Furthermore, this community is made up of many people who only want to improve the society we all live in.
The best example is Sandeep Nailwal, the co-founder of Matic, who was frustrated with the misery around him and founded India's new crown crypto relief fund in an attempt to combat the pandemic sweeping India. As of this writing, Sandeep has raised hundreds of millions of dollars to do so.
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