What is MATIC crypto currency? Why is it increasing so fast?

The Matic Network and its MATIC token are two building blocks of the namesake Layer-2 solution designed to bring instant and scalable blockchain transactions paired with easier everyday payments and lower fees.

What Is Matic Network?

Following a recent price boom which propelled its coin to the crypto top hundred club, the Matic Network has made headlines based on its promise of delivering simpler interaction between users and decentralized financial applications and ecosystems. Self-described as a Layer 2 scaling solution (meaning that it does not seek to upgrade the basic blockchain layer), the Matic Network is all about reducing the complexity of this interaction which is identified as bringing down some crypto-based projects.

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To achieve this, the Matic Network is built as a decentralized platform running on a customized iteration of the Plasma framework which is seen as the solution tasked with bringing massive scaling capability to the Ethereum.

What Is Matic Network Trying To Achieve?

The Matic Network comes packed with features which its developers promote as solutions to the prominent issues faced by contemporary crypto technologies.

• Matic Network seeks to stimulate mass adoption by resolving problems with scalability. These issues stem from the fact that blockchain ecosystems have a hard time keeping pace with the popularity of decentralized apps, particularly in terms of scaling with the existing demand. Based on the projections presented in the Matic Network’s whitepaper, this platform will be able to achieve theoretical speeds of up to 65 000 transactions per second on a single side chain, combined with the block confirmation times of less than 2 seconds.
• Matic Network promises to make slow transactions a thing of the past without compromising the principles of decentralization.
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• Based on the Matic team’s projections, the Network’s implementation of Proof-of-Stake and its staking mechanism is supposed to clear the obstacles standing in the way of achieving high transaction throughput. Current levels of blockchain transactions are described as suffering from poor performance and limited throughput, partially based on their reliance on PoW (Proof-of-Work) protocols with their limited block sizes and protracted block generation time.
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• The Matic’s PoS consensus model is described as being implemented in a manner which will not harm decentralization and security at the same time. The consensus is ensured by a select team of block producers appointed for each checkpoint (i.e. header block) by the stakers.
• Matic Network promises to bring down transactions fees and improve user experience (UX).
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• In addition to purely technological considerations, some blockchain implementations are seen as preventing their mass adoption by applying high gas and similar fees. Considering that the payment of tokens in exchange for services or transactions is the backbone of many crypto projects’ micro-economy, the Matic Network team opted for the economy of scale as its solution. It features a dedicated layer on which the block producers handle a high number of transactions, thus keeping their costs down. The interoperability and smooth transition from the main chain to Matic chain should also improve the UX.
• Matic Network supports asset interoperability and multiple micropayment channels compatible with other off-chain solutions.
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• Assets on different sidechains are to achieve interoperability as long as they are provided for by the Matic Network. As the Matic Network runs on the state-based system of the Ethereum Virtual Machine (EVM), it does not need an opening of the payment channels between two parties. Thus, a valid Ethereum address is treated as equally valid Matic Network address, without requiring a customer to join the Matic chain in order to be able to receive payments. All that is needed in this case is the possession of a Matic wallet.

How Does Matic Network Operate?

The Matic Network’s technical architecture reflects what its developers defined as their priorities when designing their solution. For starters, it is supposed to reduce the waiting time associated with the transfer of ETH and ERC20 tokens on the Ethereum platform, particularly for the use cases involving small-time purchases and daily transactions (ranging anywhere from 14-20 seconds). High fees and peak time network clogging only exacerbate the issue which the Matic hopes to conquer with the following approach:

• Users make a deposit featuring a crypto asset with the help of the Matic contract on the main chain.
• Deposited tokens need to be confirmed on the main chain.
• Next, the tokens will be shown on the Matic chain with the help of the Matic Deposit bridge. These bridges function as components of the block producer nodes. They keep track of the root contract events on the main chain as well as any related token transfers. This is done with the help of the Matic Network’s dedicated tool designated as Dagger.
• Once this is done, the users can send tokens in an almost instantaneous manner at reduced fees. At the same time, there is an option to withdraw tokens to the main chain by verifying proof of remaining tokens on the root contract i.e. the one deployed on the Ethereum chain. The same approach is supported for ERC-20 tokens and other fungible assets existing on the Ethereum blockchain.

How Do Consensus and Checkpointing Work on the Matic?

The Matic Network’s Proof-of-Stake consensus mechanism is implemented on its checkpointing layer. This layer plays the role of the host of the PoS stakers. At the same time, the Matic blockchain layer is the home of the block producers whose numbers are kept low to increase block generation times.

• Any user can decide to deposit/stake their Matic tokens on the root contract in order to become a staker. In addition to validating transactions, the stakers make proposals regarding the deployment of checkpoints on the main chain. For every few blocks on the block layer, the stakers select a proposer to propose and create checkpoints. The underlying system is based on PoS, with 2/3 majority principle for the approval of a header block i.e. checkpoint.
• Stakers appoint block producers among themselves by voting and task them with creating the Matic blocks on the blockchain layer. The nomination is confirmed by the evidence of the existence of an adequate stake.
• In addition to securing finality on the main chain, the checkpoints also play a role in withdrawals since they handle the proof-of-burn i.e. withdrawal of tokens. Users can prove the remaining tokens while the withdrawal itself incurs the gas fees.