Staking Circle
Staking Circle
Feb 28, 2024
12 min read

L2 Chains Deep dive w/ Polygon

L2 Chains Deep dive w/ Polygon

Polygon's recent AMA session revealed exciting developments that are set to reshape its ecosystem, including transitions to zk validium, a unified 'agg' liquidity layer, and the launch of the Polygon Staking Hub. As we navigate these transformative times, this blog post will dissect the AMA's insights, demonstrating Polygon's commitment to scalability, security, and improved user experience.

In case you missed our most recent AMA with Polygon, we're here to recap the key points, highlighting their innovative roadmap and strategic initiatives for a more cohesive and streamlined digital future.

Link to X Space: L2 Chains Deep dive with Polygon


  • Jack Melnick (X Profile): Head of DeFi @ Polygon


  1. Polygon Layer 2 Overview
  2. Upcoming Chain Developments
  3. Differences from Other L2 Solutions
  4. $MATIC vs $POL
  5. Staking on Polygon
  6. Polygon Staking Details
  7. Security Reliability Of Staking
  8. Polygon’s Solutions to Scalability
  9. Relationship with EigenLayer
  10. Encouraging Staking Adoption

1. Polygon Layer 2 Overview

Jack talked about the Polygon 2.0 vision, which includes the Chain Development Kit (CDK) to deploy Layer 2s easily:

“Yeah, so the way I would really think about it is reframing it a little bit in that with Polygon 2.0, everything that we do is put within the context of CDK, which is the Polygon Chain Development Kit, and that's functionally like an infrastructure roll-up as a service platform. You can deploy your own Layer 2s. We have RAS providers like Gelato and Gateway and many others that are already deploying on top of it. And the end result is that We're working towards this vision of a unified network of ZK-based chains. And within that framework sit the Polygon public chains. They're not distinct from the other things that are getting working on. They're a piece of this broader whole.”

2. Upcoming Chain Developments

The three major chains developed by Polygon Labs are Polygon POS, Polygon zkEVM, and Polygon Miden:

  • Polygon POS, currently known for low fees and high throughput, will transition to zk validium later this year to connect with the 'agg' liquidity layer:

“That's Polygon POS. uh which is the legacy public chain that everyone knows and loves low fees high throughput uh and we'll be transitioning over the course of this year using the new type 1 prover that we rolled out to a zk validium which will allow it to connect into the agg layer which is our unified liquidity solution as well as a number of the other things that we've been working on in the background”

  • Polygon zkEVM is in an infrastructure beta phase and is preparing to welcome DeFi applications in the near future:

“The second is polygon zkEVM That's been in kind of an infrastructure beta phase for around the last year, but we're starting to gear up in the next month or so here for a larger main activation and push on the DAP side, really starting to onboard a lot of DeFi applications and users in a pretty exciting way. That is the same exact stack right now that CDK chains are being built on. And so all of a sudden now as an application, you have this really clean pipeline of deploying on a public chain, gaining traction, moving on to your own Validium or Rollup via CDK down the line.”

  • Polygon Miden, is a VM agnostic ZK-based roll-up architecture that will support Rust-based contracts and features like parallel processing:

“But what Miden is, is a ZK-based roll-up architecture that is VM agnostic. ZK-EVM, as the name would suggest, is a ZK-based EVM virtual machine execution environment, whereas Miden will be agnostic. It'll support things like parallel processing. You'll be able to deploy Rust-based contracts, basically whatever you want. And so the end result is that you'll have a lot of different modular solutions for growth within the broader Polygon ecosystem, regardless of the type of dApp you are, regardless of what you want to do.”

3. Differences from Other L2 Solutions

  • Polygon's solution differs from optimistic and other ZK-based roll-ups due to its comprehensive ZK validity proofs: There’s a unique liquidity solution with the 'agg' layer, which is not like OP's model called Superchain but designed to be fundamentally modular and agnostic:

“The Agg layer is fundamentally different from OP's vision with Superchain, which is a shared sequencer where they take a margin based off of sequencer revenue from it. Whereas ours is like fundamentally modular and agnostic. You don't have to use a set of sequencer assumptions to join. There isn't any sacrificing of chain sovereignty, of sequencer customizability to join the AggLayer. As long as we can ZK prove the state of the chain, you're able to join. That's why the AltL1s can join. That's why a lot of these more interesting L2s like some of the BTC chains have been building on CDK. And so it's really designed to be like a much, much more flexible solution than optimistic style.”

  • L2 status allows direct security inheritance from Ethereum, whereas L3 environments have a weaker direct connection to Ethereum's security:

“And relative to something like Orbit, which is primarily based on L3s, like there were important kind of like trust assumptions that we didn't want to bake in there. And not like trust assumptions directly, but one from the perspective of like liquidity fragmentation on L3s with two seven-day optimistic windows. And two, like the real goal should be to remain as ETH adjacent and inherit as much security from ETH as possible. And so being an L2 rather than L3 that's dependent on another L2 from a trust perspective is obviously advantageous there.”

4. $MATIC vs. $POL

  • $MATIC can be exchanged for $$POLon a 1:1 basis on the Ethereum mainnet:

"The transition from $MATIC to $POL on Polygon POS, strategically planned for the end of Q2, aims to be simple for holders – hoping to emulate the user experience of the Ethereum merge transition. “You can redeem $MATIC for pull one to one today on Ethereum mainnet. I think the current plan is kind of by the end of Q2 to really transition a lot of the $MATIC that is on Polygon POS to pull.”

  • Polygon Staking Hub is in planning and is designed to allow staking $POL to secure a variety of networks and potentially earn yields in diverse assets:

“It will have very similar functionality to what $MATIC does today, with a major difference being what it enables down the line for both Polygon staking hub, which is kind of similar to restaking and as well as what it enables from the potential upgrade of tokenomics down the line.”

5. Staking on Polygon

  • Staking $POL will allow securing the $MATIC network and potentially a variety of networks in the future. There are future developments for stakers to earn yields in other assets and modalities, through mechanisms that will include Staking Hub once it is established:

“And so as a $POL staker, all of a sudden, you know, it's not just I'm staking a $POL, I'm getting paid out and pull yield for securing the $MATIC chain, which is kind of reflexive, right? Like you're, you're earning in kind for securing the chain. It will be kind of more utility based as like a basket of different assets. Right. And so like. When slash if ZK EVM decentralizes the sequencer, $POL validators that are sticking to be a portion of that decentralization process will able to earn yield in ETH.”

  • Staking Hub also aims to cater to a broader range of functions beyond securing networks, such as forming data availability committees.

“So it can be used for chain level validity, but it can also be used to, say, set up a data availability committee if you have a requirement for like somewhat decentralized data availability, but you don't want to fully move off into an alt DA and you don't want to pay the cost for full Ethereum DA. Well, you can say I'm looking for validators with at least X stake that are interested in securing, interested in being a data availability committee for my chain.”

6. Polygon Staking Details

  • Staking on Polygon is handled on Ethereum mainnet:

“Yeah, so right now the staking process is pretty straightforward. Staking is handled on L1. I actually played around and did this last week. And so there's a set of validators that you can either set up your own validator for or stake with slash delegate to another validator. I actually delegated to one last week. And so all of the polygon staking happens on Ethereum mainnet. That's going to functionally be the same thing post transition. “

  • Validators’ commission rates, checkpoint percentages, and health status are displayed for delegators:

“ Ideally, you don't just sort by the validators with the top stake as we're trying to get some good validator diversity in. But it shows you the commission, the number or the percentage of checkpoints that they've signed, the health status of the delegator.”

  • Delegating involves approving the amount of $MATIC for staking and then completing the process. Small stakers can swap $MATIC for liquid staking tokens $MATICX or $STMATIC on Polygon's Proof of Stake, which has lower gas fees than Ethereum:

“Delegating is as simple as clicking delegate, selecting the amount of $MATIC that you want to approve and then delegate into and then finalizing it. I think I paid thirty dollars in gas fees to get it done. And so, you know, for really small stakers, it might not be totally feasible. But if you're a smaller staker that wants to participate today, you can accomplish that really easily by going to Polygon POS, which obviously has that really low gas fee environment and simply swapping vanilla $MATIC into one of the $MATIC LSTs, be it $MATICX or $STMATIC that are available. Both have pretty deep liquidity, low slippage. And so it should be more cost effective than staking directly via a validator.”

7. Security and Reliability of Staking

  • Jack highlighted that Polygon's staking security has been established for some time and is reliable. Liquid staking tokens (LSTs) are staked into diverse validators, spreading risk and acting like an index of validators:

“ The goal is to effectively create a diversified basket of different validators, which helps spread the risk of slashing or exposure to any single validator out over the basket. And so what an LST functionally is for this is a index of different validators, all that have good track records and low commissions that you are utilizing as your kind of core counterparty for validation.”

  • Polygon's node and governance team work closely with validators to ensure they receive updates.

“Our node and governance team does a ton of work with validators, ensuring that they have all the most recent updates on Polygon POS upgrades, whether it's hard forks or other chain level updates. And then as a user, when you're going to the Polygon staking page, you do get that view into the number of checkpoints signed to validate whether... This validator is actually active or not.”

  • Information about validator activity and commission rates is available to users for making informed decisions.

“You also see the commission rate that the validator charges for delegation such that you can optimize for either treating a validator as an opportunity for like public goods funding, right? Like I'm going to delegate my stake to this value validator. That's doing a ton of public goods work within the Polygon ecosystem. And so they can utilize that stake effectively to continue that good work. Or you can optimize for a validator that has a really low commission rate if you are optimizing for your own rewards profile.”

8. Polygon's Solutions to Scalability

  • Jack identified block space as the original scalability challenge for blockchain networks. Talked about the launch of CDK (Chain Development Kit) and aggregation (Agg) layer as solutions for expanding block space and unifying it under one umbrella:

“And so for Polygon 2.0, that was actually the entirety of what we are trying to do. Like if you were going to distill the Polygon roadmap into two line items, it would be really simple. It would be CDK and the aggregation layer, where CDK allows for the proliferation of block space and the agg layer connects and unifies all that block space under a single umbrella.”

  • Agg layer has a unified bridge to handle the bridging of assets more efficiently.

“There is a unified bridge, which has a set of escrow contracts on ETH mainnet that are taken as the kind of de facto canonical set of assets that have been bridged into the AggLayer. That right off the bat helps with issues from like wrapping assets cross-chain, right? Like you see on Cosmos with IDC. And so the end result there is you're able to run basically like a mint and burn-based bridge for assets that are bridged into the AggLayerfrom ETH mainnet. And then that then allows you to bridge assets across any L2 that's connected into the Agglayer.”

9. Relationship with Eigenlayer

  • Jack clarified that Polygon's relationship with Eigenlayer is symbiotic, not dependent. Chains using Eigenlayer for data availability or restaking can integrate with Polygon's aggregation layer:

“I would say that Polygon is highly symbiotic with EigenLayer in that chains that are using EigenLayer for DA or restaking can still submit into the AggLayer, right? There's actually no concession that needs to be made for using EigenLayer relative to using the AggLayer.”

  • Modularity enables different technical combinations to benefit from the shared liquidity that Polygon offers:

“When we say that this system is designed to be modular, we really mean it. You can use any combination of different parts on data availability, on execution, on core infrastructure stack, and still utilize all the benefits and gain all the benefits of shared liquidity.”

10. Encouraging Staking Adoption

  • Jack talked about the need to give stakers something valuable to secure. Highlighting the importance of creating a compelling value proposition to encourage participation:

“And the first thing is giving them something valuable to secure. Your proof of stake network is only as effective as the value of the state that you're securing. And so that's why proof of stake on Ethereum is so meaningful. That's why proof of stake on, you know, this random chain that has only 5 million of TVL and has no user activity for two years isn't meaningful, right? Those two things are kind of directly correlated. And so the first thing is giving them something valuable secure.”

  • Highlighted liquid staking tokens like $stMATIC and $MATICX, which assist users in staking with diversified validator exposure:

“And then the final way is through a few different models on the liquid staking token side that make it easier for users to interact. And at a base level, tokens like... The $stMATIC and $MATICX LSTs are fantastic examples of this in that they offer users the ability to, in small or very large size, get diversified validator exposure to the broader Polygon ecosystem.”

  • These tokens support user onboarding and risk mitigation by allowing the creation of structured products like validator-based index tokens.

“You can use an LRT like that to actually build that basket and effectively start to create validator-based index tokens with diversification for the core chain, which ultimately makes the process of onboarding users as well as helping them mitigate their risk when they don't necessarily understand the intricacies of these things much, much easier.”

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