Polygon proposes implementing EIP-1559 on its network; so what changes?
Polygon (MATIC) a coin that saw an almost 6962% growth since the beginning of 2021, still continues to be one of the top 20 coins. It is making new implementations that can drastically improve the network.
The development team behind Polygon (MATIC) recently laid out a proposal for the implementation of EIP-1559 on its network, as soon as it is implemented on the Ethereum blockchain with the London Network Upgrade.
At the time of writing, MATIC was trading at $1.12 and saw a considerable price drop after the June 21 dip. However, it was quick to recover and maintained its stature as the Top coin of the week, preceded only by Bitcoin, in the US, as per CoinGecko.
New Week, New Top 10 Coins! ??
Did you search up any of these coins? pic.twitter.com/yvH2aqd4od
— CoinGecko (@coingecko) June 18, 2021
What entails the EIP-1559 implementation?
Polygon’s development team recently announced implementing a revised version of an Ethereum Improvement Plan (EIP-1559) on its network, once the proposal is implemented in the next London upgrade.
In general, EIP-1559 on Ethereum introduces a base fee that would be burnt with each transaction, alongside a priority fee that incentivizes miners to process each transaction. However, there won’t be any burning of base fees for the implementation of the EIP 1559 on the Polygon network since MATIC has a fixed supply.
As underlined by the team, instead of burning the base fee, it will be sent to the core contract account where Polygon’s DAO would let the community decide what to do with it. This process of depositing funds into the new contract as outlined by the Polygon team is similar to the future payment strategy for validators.
Additionally, any sort of deflationary mechanism would mean realigning payouts, which will allow DAOs to spend money on improving and maintaining the network. According to the Polygon team that will bring long-term benefits to all validators.
Proposal for implementing EIP-1559 on Polygon is open for discussion on the forum https://t.co/SlN5xWT3dA
— Polygon (@0xPolygon) June 19, 2021
EIP-1559 intends to improve Ethereum’s transaction fees with the current auction method to be changed from the standardized fee for the entire network to the method set by the algorithm.
As of now, Ethereum has a no-issuance limit, whereas, the issuance limit on Polygon’s MATIC token is set at 10 billion MATIC. The fixed supply of MATIC which allows burning for each transaction will theoretically be zero. Hence, it’s necessary to restructure the method of paying compensation.
Will Ethereum 2.0 render MATIC useless?
While this question about Polygon’s popularity and need has surfaced a lot lately, MATIC’s founders have a different notion on the same. In a recent discussion, Jaynti Kanani, co-founder, and CEO of Polygon acknowledged this much-debated question. Even though Ethereum 2.0 will become 64 times more scalable than ETH is now, the real issue will be demand. To this, Kanani said:
“The demand is 1,000 X than where we are. You will need L2 scalability. I’m 100% sure ETH 2.0 will get jammed in a few weeks with the demand.”
That being said, there are no doubts about MATIC’s success, the currency has depicted a massive growth in the last year. Following MATIC’s 9000% price hike, Mark Cuban had invested a significant undisclosed amount in the coin. Polygon’s founders and development team are optimistic about its future with zk-rollups, data-availability chains, and other developments in store for the alt.
In hindsight, despite the current drop in the gas fees on Ethereum, users preferred using the Polygon [MATIC] network. According to recent data, in the past week, the top 10 DeFi applications on the Polygon network attracted over 242,000 unique active wallets whereas Ethereum had just 100,000 unique active wallets, in the last week.