The path of Polygon's scaling solution: an investment of $1 billion, aiming for 1 billion users

Author: Nianqing, Chain Catcher

For a long time, Polygon, leveraging its first-mover advantage, attracted a large number of users in the first half of this year amid ongoing congestion on Ethereum, with its TVL rising from tens of millions of dollars at the beginning of the year to $10.5 billion in June. However, following the explosion of Layer 2 solutions like Optimistic and Layer 1 projects such as Solana and Fantom, the TVL has now dropped to $4.8 billion, ranking seventh among all chains.

The reasons for this are twofold: on one hand, there is fierce competition from other chain ecosystems; on the other hand, Polygon's sidechain route solution is not as favored by the market. Compared to Layer 2 solutions, it has drawbacks such as long waiting times and poor security (i.e., how to prove the authenticity of data).

Therefore, since mid-year, Polygon has been seeking new scaling solutions and growth paths. The zk summit held on December 10 was an important milestone in this exploration.

At this summit, Polygon announced the acquisition of zero-knowledge technology developer Mir for $400 million, which will be integrated into the existing Polygon ecosystem after being renamed "Polygon Zero," operating alongside other Polygon solutions. The team members of Mir, including founders Brendan Farmer and Daniel Lubarov, have joined Polygon and become the main leaders of the Polygon Zero project.

In addition, Polygon reiterated its determination to prioritize zk as a strategic deployment focus at the summit. Mihailo Bjelic, one of the co-founders of Polygon, stated that they believe zk technology and scaling solutions are currently the only way for Polygon to maintain a leading position in the blockchain platform space. zk is an important engine for the development of Polygon and will certainly be a trend for future development.

Four Key Steps

Polygon's foray into Layer 2 solutions began earlier this year in February, when it announced plans to combine various Layer 2 solutions such as Plasma, PoS chains, Optimistic Rollups, zkRollups, and Validium to become a Layer 2 aggregator, providing various scaling options for developers' projects.

In August, Polygon acquired Hermez for $250 million, which was renamed Polygon Hermez, becoming the fourth scaling solution following Polygon Commit Chain, Polygon SDK, and Polygon Avail, and also Polygon's first Ethereum Layer-2 scaling solution based on ZK-Rollups. This acquisition completed Polygon's scaling technology based on zero-knowledge proofs (ZK), bringing it one step closer to the full-stack scaling solution they envisioned.

The Hermez team was previously the development team for the decentralized identity system iden3, where they gradually developed the idea of exploring ZK Rollup scaling solutions. They had previously received support from the Ethereum Foundation. With the completion of this merger, StarkWare and zkSync have become some of the few competitors capable of challenging Polygon in providing a full suite of scaling solutions, both offering two-tiered solutions from which users can freely choose between lower costs and greater security.

On September 13, Polygon established a partnership with global professional services and technology firm Ernst & Young (EY) and subsequently launched Polygon Nightfall.

Polygon Nightfall is a unique, privacy-focused Rollup that effectively combines the core concepts of Optimistic Rollup with the commonly used zero-knowledge (ZK) cryptography in ZK-Rollups, thus achieving a blend of two popular scalable and private technologies. Privacy is a fundamental requirement for enterprises and one of the most needed features for all blockchain users.

EY announced the initial version of Nightfall in 2019, which served as a set of protocols for enabling private transactions on the Ethereum mainnet. This marked the first significant contribution by a large enterprise to the development of Ethereum infrastructure, and EY quickly positioned Nightfall as one of the most prominent privacy solutions on Ethereum.

As Ethereum's usage has expanded, network congestion and high transaction costs (i.e., gas fees) have become challenges that any project built on the Ethereum mainnet must face. This prompted the EY team to explore Ethereum scaling solutions to alleviate this situation and enhance Ethereum's scalability. Nightfall 3 is a phased outcome, representing the next scalable version of Nightfall. During this process, the EY team began collaborating with Polygon and conceived the idea of Nightfall 3 (also known as Polygon Nightfall) as a public example.

On November 17, Polygon announced the launch of the zk-STARKs-based scaling solution Miden. This project is led by a former core zero-knowledge proof researcher from Facebook who previously led the development of Winterfell technology.

Polygon Miden is a ZK Rollup based on STARK. Rollups can reduce congestion and lower transaction fees, but currently, they struggle to support arbitrary logic and transactions, which affects their ability to validate all off-chain transactions. Polygon Miden will address this challenge by using its core component, the Miden virtual machine (VM), to tackle one of the biggest issues facing today's ZK Rollups.

The Polygon Miden VM is the first fully open-source STARK-based virtual machine. Its role is to verify program execution and provide enhanced due diligence for dapp deployment. Its launch advances and accelerates Polygon's mission to alleviate Ethereum's scalability issues without sacrificing security, such as high gas fees and slow speeds.

Any program executed on the Miden virtual machine will be verified through automatically generated STARK-based execution proofs, eliminating the need to re-execute the program, greatly simplifying and accelerating the secure deployment of DeFi applications and cryptocurrencies.

On December 9, Polygon announced the acquisition of zero-knowledge technology developer Mir for $400 million, adding Polygon Zero to its Ethereum scaling team. Development of Polygon Zero is already underway, with part of the solution being a translator that will make Solidity contracts compatible with the zero VM. This design is conceptually similar to zkSync 2.0 but features significant optimizations and high proof efficiency. The proof system based on PLONK and FRI, plonky 2, can achieve recursive proofs in just 170 milliseconds on a laptop.

Additionally, the unique features of plonky 2 open the door to horizontal scaling technology for blockchain networks. Currently, the throughput of each blockchain (including each scaling solution) is limited by the capacity of the weakest node in the network, as each node must handle every transaction. With horizontal scaling technology, throughput can be proportional to the total computational power available in the network. This could fundamentally change scalability attributes, as throughput increases with the addition of network nodes.

"ZK scaling technology represents the future of Ethereum, but there is currently no scalable, EVM-compatible ZK rollup technology. The most lacking aspect is efficient recursive proof technology, which allows us to generate proofs in parallel for better performance. Unfortunately, the existing recursive proof systems supported by Ethereum are too inefficient and slow."

Polygon founder Mihailo Bjelic stated that the acquisition of Mir is a key step in its $1 billion Ethereum scaling strategy. Overall, one of the key components needed to build efficient scalability solutions is a performance recursive proof system, and Mir is several orders of magnitude faster than several other systems and can be verified on Ethereum.

In the future, Polygon will strive to become the largest contributor to ZK research and development work, "but this does not mean competition; rather, it promotes collaborative win-win," Mihailo emphasized at the end.

However, despite Polygon clearly positioning zk scaling technology as its primary scaling solution, its officials still state that they will not bet on any single solution.

"At Polygon, our strategic decision at this stage is to explore and encourage all meaningful scaling methods and technologies. We believe this is the only way to make Polygon a leading blockchain platform and bring the first billion users to Ethereum."