Switching to Layer-2: Polygon Rises to Dominance
Gas is expensive. Whether it is gas for your car or gas to use Ethereum, demand is currently very high. These prices have caused fledgling crypto participants to have problems interacting with the system. With this issue, the users are being priced out of Ethereum, causing them to move to other avenues for DeFi, such as Solana and Binance smart chain.
This war between chains has become a significant discussion point as users onboard to other platforms offering PoS (proof of stake) systems with less decentralization because of Ethereum’s growing pains. Many layer-2’s have been in development, but Polygon has been gaining the most traction.
Polygon is a PoS system that acts as a bridge between other blockchains. It uses a smart contract to hold your tokens and mints a polygon version of them. This system allows you to interact with the layer-2 version of your favorite Ethereum DeFi apps, with many planning to release this quarter. The entry into the PoS system takes minutes, but for security purposes exiting the bridge takes 3 hours to verify all transactions before minting your layer-1 assets.
The system is not as decentralized as Ethereum, as the validator nodes are mostly large exchanges, but the growth has been rapid. As more projects deploy onto Polygon, this will further decentralize the nodes. With all the background out of the way, Let’s see it in action.
How to transfer Ethereum to Polygon Layer-2
- Download Metamask from here if you don’t have it already. Metamask is an Ethereum wallet with easy-to-use browser functions. If you already have a ledger or Trezor hard wallet, they integrate easily.
- Once you finish creating your account (make sure to securely save your seed phrase or print out a hard copy), we need to switch to the polygon network by clicking the circled icon, select custom RPC.
Copy the following information:
You now have an account on the Polygon PoS chain. If you are using a hardware wallet, you can now use the bridge. If you are not, send Ethereum to your new wallet address and wait for funds to confirm.
Next, we access the bridge to Polygon here. Choose the amount you want to send. It would be wise to send a small amount for trading and think of layer-2 as a trading account. The initial deposit fees were $21.50 in gas, but check gas info for sending on lower demand timeframe to save on gas costs (Currently, it is $4).
After transferring to Polygon, you need gas to make transfers. Head to here for a polygon faucet. This site gives you .001 matic, which will be more than enough to make multiple transactions.
At this point, We are ready to enjoy Polygon.
Sushiswap, Quickswap, or Dfyn are currently the leading exchanges on Polygon. Once you see what assets you want to exchange, select Approve ETH, each traded asset has to be approved for trading once in your Polygon wallet, just like on the Ethereum mainnet.
DEXs are among the cheapest DeFi protocols to use; they are still not suitable for small trades. At current gas prices, trading on any mainnet exchange costs around $30–80+, and the cost to provide liquidity to these protocols is usually over $100.
- The cost of a swap and to provide liquidity are both $0.0002, meaning that it is 43,500,000% cheaper to trade and 7,8500,000% cheaper to initiate an LP position on Polygon than on Ethereum mainnet. Just a tad bit more affordable.
- AAVE variable lending- You can view all lending options by clicking the polygon lending pools shown below. Again gas is ridiculously low, so providing small amounts can be worth participating in the bonus Matic yield, shown below the deposit APY.
- One activity I was always priced out of was the crypto lottery. PoolTogether offers a no-loss lottery that accrues interest over a week, and the winner receives the total interest collected. In the end, everyone receives their deposit back. This last week only had 1,100 participants, so odds are a lot better than Ethereum mainnet.
These are just a few of the fun things you can access through Polygon. It makes transacting on Ethereum a joy again instead of the exorbitant gas fees around every corner. Experience Ethereum properly; a secure base layer with a secondary layer to have high throughput.