The discussions related to the scaling of public blockchain has dominated the digital currency banter forums for the longest of time. The scalability issues of smart contract platforms are talked about more than the primary factors of accelerating higher adoption. The constraining variable of scalability is too big of a deal for the community to ignore which is why many in the space are finding ways to make the amends.
One such company that stands out is – Matic.
If you’ve heard about Matic the chances are you know it was an IEO launched on Binance. Till now Binance has launched 8 IEO’s and Matic is one of them.
What is Matic? The basics.
Matic is NOT a blockchain but is a Layer 2 scaling solution [with a blockchain] that uses sidechains for off-chain computation. The company achieves this by ensuring asset security using a Plasma framework and a decentralized network of PoS [Proof-of-Stake] validators.
What’s the need for a Second Layer?
Every public blockchain has scalability issues due to its predetermined block sizes. Every transaction gets in more data to store and with the maximum block size of 1MB, this gets pretty difficult in the case of Bitcoin. But to the rescue comes Lighting network which is a layer 2 solution to scale Bitcoin’s blockchain. When it comes to Ethereum, it has a GAS limit rather than a block size. The gas limit is a cap on both processing and storage/bandwidth because the cost of a transaction/function is fixed in units of gas for each type of instruction.
Okay, cool. Why not just increase the block/gas capacity?
Technically, that’s not how it works!
Albeit the vast majority in the crypto world concur that scalability and versatility should be tended to if the business gets an opportunity of surpassing fiat money related foundations [financial institutions], thinking of arrangements requires some investment and a ton of exertion.
Mostly because every proposal has to have the support of miners, developers, businesses and other stakeholders before it can be enforced — a process which can take months and, even then, not end with consensus.
Additionally, many critics have argued that the layer 2 changes make operating full nodes more expensive, and this, in turn, could cause less decentralization on the network.
This is where Matic plays its card as it brings in a Layer 2 while being decentralization and giving faster than lightning transactions. How does Matic do it? With Plasma and PoS!
Understanding Plasma and PoS, how Matic gets it rollin’
Plasma is an off-chain solution that is built to increase the overall performance of the Ethereum network. It creates a tree-like structure of numerous smaller chains that alleviate the work of the main chain.
Essentially, it is a system of ‘child’ blockchains. It allows the creation of children blockchain that use the main chain of Ethereum as the trust and arbitration layer and their own chain for the rest. Child chains can be configured to match the requirements of use cases mostly when they are not feasible on the Ethereum mainchain.
User sends crypto from the Ethereum main chain to the plasma child chain
User receives its funds
User uses funds on the Plasma chain
User submits an exit request when it needs to withdraw funds
User gets its tokens after the 7-day waiting period
Now, the issue pops in when you need to use cryptocurrencies and accelerate its higher adoption. Waiting for 7 days just to get your own funds is not scalable. The challenge period guarantees security and provides a window in which exits can be challenged, but this creates so much hassle and extremely poor user experience [something that all the crypto/blockchain companies REALLY need work on.]
Matic battles limitations with better solutions.
The exit tokens that plasma gives its users are now NFTs [non-fungible tokens] that hold the value of the assets that are still serving its 7-day lock-in period.
This NFT can be used for crypto-based loans by keeping the NFT as collateral or can even be sold in secondary markets.
How is Matic decentralized with no blockchain?
When a blockchain is developed using Proof-of-Stake as its consensus mechanism it automatically becomes slow with validating transactions and low on data storage while being decentralized [in most cases]. But when Proof-of-Stake comes in the picture these limitations are fought with efficiency but [sometimes] this also risks the decentralized aspect of the blockchain.
The Matic Network’s consensus is carried through a particular selection of block producers [BP] who are chosen by the set of stakers [validators]. Proof-of-stake then acts as a layer that validated the blocks and publishes Merkle roots of the child chain blocks unto the Ethereum main chain. This keeps the network decentralized and at the same time keeps block confirmations under 2 seconds.
[We reached out to the Matic team and here’s what they said]
“The Matic side chain is secured by Proof-of-stake. So people (called validators) can stake amount on the main chain, become a validator and can start producing blocks. However, this is only one part of the Matic chain security. Matic is implementing the plasma protocol that introduces a mechanism for users to exit the side chain, if and when validators are indulging in malicious behaviour. There are mechanisms to slash these validators as well.”– Arpit Agrawal, Blockchain Engineer, Matic
DeFi and Gaming
“Matic is an EVM compatible chain, which means any application that works on Ethereum can work on Matic. We are improving our plasma spec to be able to support these dapps with complete plasma security in addition to the existing security derived from PoS.”– Team at Matic
Any application that works on Ethereum including its dApps, gaming apps, wallets, etc can scale better through Matic as its EVM [Ethereum Virtual Machine] compliant.
Now if you ask if Matic was in a position to scale why didn’t it launch its own blockchain?
There are a lot of projects out there who already do the same thing, they launch a blockchain, give out open source codes for people to build solutions etc. End result – nobody really BUIDLs and why? Because scalability!
“Historically, games have been run by companies who control the supply and sale of in-game currencies as well as digital assets and collectibles.Users do not own the assets they buy or win on traditional gaming platforms. Blockchain offers us a credible way of users taking control of their assets for ownership and trade. Matic can help increase the efficiency of performing transactions of gaming networks over a blockchain. Transactions such as buying or selling in-game currencies and buying and digital assets can be significantly sped up.”-Matic Network | Source
Matic leverages Ethereums existing resources to accelerate higher adoption by adding their tech to it. Plus communities like Ethereum are strong and packed. The community loves gaming and building stuff except they all are trying to break the scale code which now Matic does for them!