Polygon Never Left: Introducing the AggLayer
A High-Speed Railroad Connecting Blockchains
TL;DR
Polygon's Evolution and Growth: Despite misconceptions, Polygon protocols have continuously grown successful dApps like Polymarket and Courtyard that drive attention.
AggLayer Revolution: AggLayer is a planned innovation that unifies liquidity, users, and state across blockchains. It makes cross-chain transactions seamless and enables a more integrated and efficient blockchain ecosystem.
$MATIC to $POL Transition: The transition from $MATIC to $POL marks a significant upgrade. $POL will be positioned as the cornerstone of the AggLayer ecosystem and drive the vision of blockchain interoperability.
1. Is Polygon Back in the Market?
The Polygon ecosystem has recently been in the spotlight, mainly driven by the success of two decentralized applications (dApps): Polymarket and Courtyard. This has prompted a question within the blockchain community: "Is Polygon back in the market?"
Polymarket has been especially popular recently. As a platform facilitating predictions and bets across various topics, it has surpassed 9 million bets with trading volume exceeding $1.6 billion. Its credibility has been further bolstered by Bloomberg’s integration of Polymarket’s election data into its financial terminals, signaling the increasing value of its data within traditional financial markets. Ethereum co-founder Vitalik Buterin also weighed in, noting that Polymarket should not be seen merely as a gambling or prediction market but as a “social epistemic tool”— a significant indicator of its broader impact beyond the Web3 sphere.
Courtyard, another Polygon PoS-based dApp, offers the NFTization of physical trading cards and has facilitated over 480,000 real-world transactions. Weekly bids and listings for tokenized Pokémon cards have reached 200,000. These are numbers that show the popularity of the platform’s ability to bridge the digital and physical worlds. This connection between digital assets and traditional card trading demonstrates a compelling real-world use case for blockchain technology and speaks to its practical value beyond speculative markets.
In light of these developments, it’s clear that the Polygon ecosystem continues to make significant strides, not just in terms of raw numbers but in fostering meaningful advancements for decentralized applications. The notion that "Polygon is back" is a misperception, as the network has steadily evolved and remained a critical player within the blockchain landscape. In fact, Polygon has never left.
2. Polygon Has Never Left the Market
Polygon protocols have maintained a strong presence in the market with a consistent performance. Since 2021, the number of monthly active wallets on the Polygon PoS network has steadily increased and transaction volumes have shown signs of recovery. Despite these positive indicators, the perception regarding Polygon is that "Polygon is back". This notion can largely be attributed to a shift in market attention toward new chains, airdrops, and staking in the latter half of 2023, coupled with prevailing misconceptions about Polygon’s position in the market.
In 2022, Polygon Labs captured significant attention through high-profile collaborations with companies like Starbucks and Reddit alongside its announcements of technological developments such as Polygon zkEVM and Polygon CDK. However, market interest waned as the NFT market cooled and collaborations slowed. Delays in development further exacerbated this problem.
Nevertheless, Polygon protocol’s standing among major players remains steadfast. For instance, Reddit continues to use Polygon for its collectible avatars. There are also notable collaborations in finance, gaming, and the metaverse. Key examples include Stripe’s integration with USDC, and JPMorgan’s execution of cross-border trades using DeFi on Polygon PoS.
On the technological front, Polygon zkEVM successfully launched its mainnet beta. Daily trading volumes are steadily rising and many leading DeFi protocols are joining the platform. Additionally, various projects, including Ronin Network, Immutable, and OKX’s X Layer, are already adopting the Polygon CDK to develop their blockchains.
As can be seen, Polygon protocols never left the market. In fact, they have quietly continued to grow and innovate by investing in the future of web3 with major acquisitions and developments in ZK technology. Its recent achievements reflect its sustained efforts, and the network is poised to remain a key player in the blockchain ecosystem.
3. What’s in store for Polygon?
Polygon's future builds upon the foundation of its past innovations. Initially introduced as a Layer2 (L2) solution to address Ethereum's scalability challenges, Polygon PoS enabled faster and more cost-effective transactions with the launch of Polygon zkEVM. The introduction of the Polygon CDK further simplified the process for developers to create their sovereign blockchains. Now, Polygon Labs and a lot of contributors in the Polygon ecosystem are developing the AggLayer to integrate these advancements in the future.
The AggLayer represents a significant evolution. It is designed to bring together user bases and fragmented liquidity across multiple connected chains while leveraging Ethereum as the settlement layer. This next phase will focus on creating a unified and secure environment, ensuring seamless interoperability between various blockchain ecosystems.
3.1. A High-Speed Railroad Connecting Blockchains: The AggLayer
The AggLayer is a future innovative system designed to connect multiple independent blockchains It will unify assets, users, and information while preserving the autonomy of each chain. In essence, it will provide the user experience of a unified network, despite the distinct characteristics of each blockchain. An apt analogy for AggLayer would be a high-speed railroad that links different countries and facilitates the seamless movement of resources across borders, and one where native assets were native to every country alike.
Under this framework, each blockchain functions as an independent entity with its own governance and operational rules. With AggLayer, assets and tokens will move across chains as effortlessly without requiring asset wrapping for cross-chain transfers. Services and information are exchanged fluidly—much like cultural exchange—without the friction of navigating complex barriers. This system has the potential to transform the complex blockchain ecosystem into a cohesive economic community.
For users, the experience is akin to using international shipping. It will streamline traversing multiple blockchains, allowing users to focus on their intended actions without worrying about the underlying infrastructure. Moreover, a new blockchain joins the network can immediately interact with all other participating blockchains, much like a new country joining the global community.
Ultimately, the AggLayer is set to revolutionize the blockchain ecosystem. It promises to reshape how blockchains interoperate and collaborate just as high-speed rail transformed international travel and commerce.
3.2. A New Experience with One Click
To better understand how the AggLayer aims to simplify blockchain interactions, consider the following example scenario involving a Web3 gamer. The player learns about a new NFT game called ‘Tiger Legends’ on the Ronin zkEVM L2, powered by Polygon CDK, where players can collect and breed rare tiger character NFTs. A particular NFT, the "Tiger Knight," catches the gamer's attention. It is priced at 500 $RON. However, the gamer's assets only consist of $POL tokens on the Polygon PoS.
Without the AggLayer, acquiring this NFT would require a complex process:
Transfer $POL from Polygon PoS to a centralized exchange (incurring fees and waiting for confirmation)
Convert $POL to $RON (incurring transaction fees and potential slippage)
Withdraw $RON to the Ronin Network (with additional fees and confirmation time)
Access the Tiger Legends marketplace on the Ronin Network
Purchase the "Tiger Knight" NFT (paying gas costs)
Each of these steps introduces time delays, costs, and potential security risks. With the AggLayer, the entire process could be simplified into a single transaction:
Access the Tiger Legends marketplace connected with AggLayer
Purchase the "Tiger Knight" NFT
Within seconds, the $POL balance from the gamer’s Polygon PoS wallet is spent, and their Ronin wallet now holds the "Tiger Knight" NFT. They can immediately start playing Tiger Legends with their new character.
This streamlined, cross-chain experience is one example of the convenience that AggLayer can provide. By transforming a complicated, multi-step process into an intuitive, single-click transaction, AggLayer will enhance the usability of Web3 applications and make blockchain networks more accessible to a wider audience.
3.3. User Convenience Enabled by the Unified Bridge
The seamless process described here is part of AggLayer's vision for the future. The key to this vision lies in the unified bridge that will underpin the AggLayer system. Let's say this vision comes to pass, how will this seamless process take place?
Each blockchain—whether it's Polygon PoS, Ronin, or another—is expected to deposit its assets (such as $POL, $RON, etc.) into an Ethereum-based unified bridge, which serves as the core foundation of the AggLayer's infrastructure. When a gamer attempts to purchase Ronin’s "Tiger Knight" NFT using $POL tokens on Polygon PoS, the AggLayer mechanism will be activated.
At this point, both the Polygon PoS network and the Ronin network report their respective states to the AggLayer, including details such as the user’s $POL balance and the ownership status of the NFT. The AggLayer then rigorously verifies this data using a process known as pessimistic proofs. Once verified, the AggLayer generates a global state that reflects the status of the entire network, such as the gamer's updated $POL balance and the availability of the "Tiger Knight" NFT within the Tiger Legends game.
This global state is updated in real-time as the transaction is processed. The gamer’s $POL balance is reduced, and ownership of the "Tiger Knight" NFT is transferred from the Ronin Network to the gamer, all within a single transaction completed in seconds. This streamlined system allows users to purchase NFTs from blockchains without navigating complex processes.
For developers, the AggLayer will not only simplify cross-chain interactions but also open up access to a broader user base and increased liquidity, which can facilitate the growth of blockchain games like Tiger Legends.
3.4. AggLayer Innovations Becoming a Reality
The innovations introduced by AggLayer are swiftly materializing, offering a competitive advantage over alternative blockchain scaling solutions. This non-extractive framework enables chains to retain their sovereignty while capitalizing on shared liquidity and network effects, which will ultimately foster a more collaborative and efficient blockchain ecosystem.
In April 2024, OKX, a major cryptocurrency exchange, developed its ZK Layer-2 solution called X Layer using Polygon CDK and connected it to the AggLayer unifying bridge. This strategic move will give OKX's 50 million users access to AggLayer's network effects and liquidity, without OKX having to pay fees to join. It marks a pivotal moment for the blockchain ecosystem, as it showcases how major players can integrate without sacrificing autonomy or profitability.
This integration not only enhances transaction efficiency and reduces costs for OKX users, but also highlights the AggLayer’s growing potential and industry recognition. For AggLayer, this is a significant achievement in gaining massive liquidity from one of the largest centralized exchanges.
While many projects have announced connections with AggLayer, two other standout examples in 2024 showcase its versatility and widespread adoption:
On June 18, Ronin Network, the gaming blockchain with 1.5 million daily active users, announced plans to use Polygon CDK to build a zkEVM L2 connected to AggLayer. This integrates one of the largest blockchain gaming communities into the network.
On July 30, Movement Labs revealed plans to connect all MoveVM-based rollups to AggLayer, bridging 'AltVMs' (non-Ethereum Virtual Machine virtual machines) with the EVM ecosystem, and showcasing AggLayer's ability to unify diverse blockchain technologies.
These integrations underscore AggLayer’s expanding role across blockchain ecosystems. As more exchanges and projects join the AggLayer network, its reach and influence will continue to grow. This momentum potentially revolutionizes how blockchain ecosystems interact and share liquidity.
4. Powerful New Fuel for the Future: $MATIC to $POL Conversion
The evolution of the Polygon ecosystem necessitated a more powerful "fuel," leading to an upgrade from $MATIC to $POL on September 4, 2024. Far from being a mere name change, this transition represents a significant upgrade aimed at realizing the full vision of Polygon as an aggregated network.
What makes this transition particularly significant is that $POL is designed as a hyperproductive token, which introduces several key features that make it vital to Polygon's future:
Multi-Chain Staking: With a future Staking Hub, this functionality enables validators to secure multiple chains in the Polygon ecosystem simultaneously. This will increase network resilience and integrity.
Gas Token: As the native token for Polygon PoS, $POL powers all transactions and dApp interactions. This incentivizes validators to maintain network security and functionality.
Governance: $POL is designed for stakers to play a key role in network improvements and decentralization through community consensus.
Community Fuel: A portion of $POL emissions supports community-driven initiatives via the Grants Program. The total budget is 1B in $POL over 10 years to foster ongoing development and innovation.
With these features, $POL is set to drive and help Polygon thrive into the future. The new token name aligns with the AggLayer and will enhance security, scalability, and overall productivity across the network. This transition is a critical step toward mainstream blockchain adoption that solidifies $POL's role in the future of Web3.
5. Polygon Rises to the Top of the Market
Polygon PoS initially gained recognition as a solution to Ethereum's scalability challenges. Since then, it has advanced the ecosystem by enabling faster, more cost-effective transactions through Polygon zkEVM and providing developers with the tools to create blockchains easily using its Polygon CDK. The introduction of the AggLayer marks a big step towards uniting the broader blockchain ecosystem. AggLayer is not just an extension of Polygon protocols; it is a transformative solution aimed at connecting fragmented blockchains and facilitating interoperability.
At a time when the demand for mass adoption of blockchain technology is intensifying, AggLayer emerges as a critical enabler of that vision. It provides users with a seamless environment where they can easily move assets and access services across multiple blockchains, making true cross-chain use cases, such as those for dApps like Moonveil, a reality. For developers, AggLayer unlocks new opportunities by offering access to a broader user base and increased liquidity, which in turn drives the creation of innovative services and fosters ecosystem-wide growth.
AggLayer aims to break down barriers between blockchains and create a better interconnected and efficient ecosystem. These advancements mark an important milestone in bringing blockchain technology closer to everyday use. Polygon Labs remains a resilient and influential force in the market, continuing its role as a key contributor to the evolution of blockchain technology.
🐯 More from Tiger Research
Read more reports related to this research.Disclaimer
This report was partially funded by Polygon. It was independently produced by our researchers using credible sources. The findings, recommendations, and opinions are based on information available at publication time and may change without notice. We disclaim liability for any losses from using this report or its contents and do not warrant its accuracy or completeness. The information may differ from others' views. This report is for informational purposes only and is not legal, business, investment, or tax advice. References to securities or digital assets are for illustration only, not investment advice or offers. This material is not intended for investors.
Terms of Usage
Tiger Research allows the fair use of its reports. ‘Fair use’ is a principle that broadly permits the use of specific content for public interest purposes, as long as it doesn't harm the commercial value of the material. If the use aligns with the purpose of fair use, the reports can be utilized without prior permission. However, when citing Tiger Research's reports, it is mandatory to 1) clearly state 'Tiger Research' as the source, 2) include the Tiger Research logo(Black/White). If the material is to be restructured and published, separate negotiations are required. Unauthorized use of the reports may result in legal action.