According to CNBC, the Silicon Valley venture capital firm, Sequoia Capital, has led a $450 million investment in the blockchain network Polygon.
Polygon serves as a support layer to Ethereum, the platform behind the ether cryptocurrency, helping it process transactions at scale. The Ethereum network is different from bitcoin’s in that it supports applications for things like non-fungible tokens (NFTs) and decentralized finance (DeFi) services, not just peer-to-peer transfers.
Over the years, says CNBC, the Ethereum blockchain has become congested as more and more users have piled in, resulting in slower transaction times and higher processing fees. This has led to the creation of so-called “Layer 2” network like Polygon, which aim to take a load off the main blockchain.
Polygon sits on top of the Ethereum network as a proof-of-stake blockchain. Whereas Ethereum uses power-intensive crypto mining to verify transactions, participants in Polygon’s network just need to show they hold some tokens — in other words, a “stake” — to become validators.
The result is much faster transaction times, says the report, in the thousands per second, according to Polygon. In comparison, Ethereum’s network can handle about 15 transactions per second. Polygon says it’s completed over a billion transactions to date and has around 2.7 million monthly active users.
Ethereum is embarking on an upgrade, called Ethereum 2.0, that would make it faster and more efficient. The upgrade still has a way to go before becoming reality, but some experts fear it poses a threat to Polygon. For its part, Polygon says it expects demand for blockchain scaling services to remain strong even after Ethereum 2.0 is implemented.