Polygon generated $450 million during a funding round led by Sequoia Capital India and 40 other major investors in the blockchain ecosystem. Billed as a private token sale, the successful funding which comes off as the Layer-2 protocol’s major funding round ever was announced on Monday.
Polygon, whose native token is MATIC, is an Ethereum scaling solution, which makes use of Layer 2 side chains to make transactions cheaper and faster. Polygon has increased its valuation to $2 billion after the $450 million raised in the funding round and MATIC now sits at a market capitalization of $14.5 billion at the time of writing according to data from CoinMarketCap.
The other investors that participated in the round include Tiger Global, Republic Capital, Galaxy Digital, SoftBank Vision Fund 2, and Reddit co-founder Alexis Ohanian’s venture capital firm Seven Seven Six. Following the growing popularity of the metaverse, Web3, and non-fungible tokens (NFTs), such investors have shoved funds into digital asset companies. Kevin O’Leary was also one of those that contributed to the upgrade.
Polygon plans to utilize this fund in increasing its scalability, which is one of the purposes of Ethereum 2.0. The firm hired the former head of gaming at YouTube Ryan Wyatt in January, he leads the Polygon Studio to improve the gaming and NFT presence of the company.
As time passes, the Ethereum blockchain has become swarmed as several users have joined in, resulting in slow transaction speed and elevated processing charges. The emergence of the Polygon protocol was to offer a functional alternative to this challenge.
Ethereum Scalability Improvement
MATIC allows users to stake a token as a validator, unlike Ethereum which makes use of complicated power-consuming operations to validate transactions. Polygon is an improvement or boost to Ethereum.
Polygon takes on over a billion transactions in seconds when compared to Ethereum which takes on just 15 transactions per second. Ethereum 2.0 as noted earlier has scalability that could accommodate all of DeFi applications and run them without hitch, however, until ETH 2.0 is finally floated, Polygon seems to be the perfect gateway for users looking to operate on the Ethereum blockchain.
The Proof-of-Work (PoW) framework from Ethereum is not reliable to run all of DeFi applications on the Ethereum network due to its lack of scalability and this has made DeFi applications pitch tents with other blockchain networks, as well as Layer-2 protocols like Polygon.