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Ethereum vs. Polygon and how they complement each other

The key features businesses exploring tokenization should know about

by Alex Broudy, Technical & Financial Writer
Sep 20, 2022

When the Ethereum Merge occurred last week, it made transactions on the world’s second largest blockchain more scalable, secure, and sustainable than ever before. Prior to “The Merge,” a blockchain called Polygon spearheaded these goals using what’s commonly referred to as a Layer 2 chain (more on that below). Now, with The Merge complete, Polygon continues to complement the Ethereum ecosystem by efficiently executing transactions at a global scale. What makes them different, and how do they complement each other?

Polygon is a Layer 2 protocol that runs in parallel with Ethereum, a Layer 1 blockchain. Whereas Layer 1 blockchains establish network security using consensus mechanisms such as Proof-of-Stake, Layer 2 protocols bootstrap that security to perform functions faster and at less cost than executing them on a Layer 1 blockchain such as Ethereum. In other words, the Polygon network provides the same features as Ethereum (including its stronger security) and is fully compatible with the Ethereum ecosystem.

Polygon is designed to natively interact with the Ethereum Virtual Machine (EVM), the code execution environment in which smart contracts run. Polygon's EVM-compatibility enables access to an extensive ecosystem of decentralized applications (dApps) built on the Ethereum blockchain.

Polygon also offers end users lower fees and increased scalability. While Ethereum’s Merge drastically reduced the Layer 1 blockchain’s carbon footprint and set it up for faster transactions with lower fees, these features are not expected to be live until sometime in 2023 or 2024 when sharding is introduced. Sharding is the process of parallelizing computation across many nodes so that each node performs an aspect of the computation needed instead of all nodes performing and verifying the same computation independently. While sharding is not yet live in Ethereum, Polygon already delivers many of the features that sharding is expected to introduce. How does this work?

Polygon scales transactions by offloading records of completed transactions to a sidechain that periodically synchronizes with Ethereum. The sidechain acts as both a bridge and a traffic light, directing transactional records to their proper destination so that all transactions are punctual and accounted for. This way, what happens on Polygon is recorded on Ethereum and the computational cost of executing transactions doesn't sacrifice speed for security.

EVM-Compatibility Broadens Ecosystem Access

For businesses exploring tokenization for the first time, choosing the right blockchain can be difficult. One key consideration should be EVM-compatibility. By choosing a blockchain that is EVM-compatible, businesses are able to enjoy access to an interoperable ecosystem and the network effects that come with an increasingly popular code execution environment. 

While each solution has its own benefits and limitations, together, Polygon and Ethereum enable scalable, low-cost, green transactions. That’s a win-win for businesses tokenizing on Polygon and their users. To learn more about blockchain technology and Layer 2 solutions for tokenization, subscribe for updates below.

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