In this article we want to try to make you understand a little better; what is the Polygon network in which the JamonSwap project currently circulates, as well as its MATIC token, the PoS (Proof of Stake) and the validators nodes. And the benefits that we can obtain by being part of this ecosystem.
On 19 May 2019 Polygon (MATIC) was born, but what exactly is it?
Polygon (MATIC) is a scalability project that allows decentralised applications to run on a network with lower fees and higher speed without compromising the security and interoperability offered by the Ethereum platform. The Polygon network operates through a sidechain that connects to the Ethereum network allowing for further processing of the Blockchain.
Polygon also allows both public and private cross-chain operation.
How does MATIC make scalability and processing faster and at a lower cost?
Polygon uses a side-chain PoS (side-chain or parallel) where transactions are processed and uses Plasma technology to bridge all operations from the parallel chain or the main chain (Ethereum) creating a record of the transactions that ensures that they have taken place.
In other words, it verifies and processes transactions in parallel on its chain at a low cost and then sends them to the blockchain where they are to be stored, thus minimising transaction costs and allowing a huge ecosystem of DApps (decentralised applications) to be born and grow using this technology.
MATIC is clearly at the forefront of projects seeking interoperability, connecting different blockchains with each other, although its competitors are also powerful, such as Polkadot, Cosmos and Kusama.
The $MATIC token
It currently has a circulating supply of 6,877,830,774 MATIC tokens and a maximum supply of 10,000,000,000 MATIC tokens.
The token was offered in private investment rounds (seed capital) where in the first round 209,000,000 MATIC were sold for $163,000.
Then there was an offer to early supporters of 171,000,000 MATIC for $444,000.
And an IEO of 1,900,000,000,000 MATIC for $5,000,000. What is an IEO? It is like an ICO but offered through an initial exchange offering.
What is proof of stake?
A proof of stake algorithm, also known by the acronym PoS, is a distributed consensus protocol for distributed networks that secures a network of a cryptocurrency by requesting proof of ownership of those coins.
With PoS, the probability of finding a block of transactions – and receiving the corresponding reward – is directly proportional to the amount of coins one has accumulated. In the Proof of Stake system, the creator of the next block is determined by a random system. This system is based on how many cryptocurrencies a user has and, in some cases, also takes into account how long they have held those coins.
Translated as proof of participation, this technology is based on the trust that is given to a participant within a network, based on their own interests within the network.
In this way, they are allowed to validate transactions, giving more power to those who have more coins, assuming that they will act correctly, since otherwise they would jeopardise their own interests.
However, being a random system avoids centralisation; otherwise, the richest individual would always create the next block by constantly increasing his wealth and control.
Where are transactions validated? – Validators nodes
Proof of Stake (PoS) is a mechanism that determines which node approves the addition of a new block to the blockchain based on the amount of assets held.
Validators nodes in cryptocurrencies are all the hardware (computers) that are connected to a network on which the blockchain of a cryptocurrency is supported. These nodes are the ones that run the software on which the blockchain and therefore the cryptocurrency is based.
Proof of Stake demands that the user proves possession of a certain amount of coins (their stake) in order to claim. validate additional blocks on the blockchain and receive the reward.
What are the benefits of having validators nodes on the Polygon (MATIC) network?
MATIC staking can be done by operating your own node, delegating your staking to another node, or third party staking funds.
The selected validator will receive their reward as a transaction fee on the network, the maximum APY (annual percentage yield) for this coin is just over 14%.
Who has custody of the tokens that are staked?
Tokens that are staked are locked into a smart contract deployed on the Ethereum blockchain. Validators do not have actual custody of the tokens delegated to them.
Some of the validators nodes of major exchanges and companies
|Exchange||Current rate||Lock-up period||Limit|
|JamonSwap||11%||No Lock-up / Flexible|
What does JamonSwap offer with its validator node?
Network participants who create their own validator nodes have the ability to choose what fee they keep from the returns generated by the total stake tokens in the node; although the usual fee is 5%; giving users who make stakes an APY of around 9.5%. JamonSwap is going to reduce this fee to 3% and will be able to offer an APY of 11%; based on the performance of the node taking into account the current calculations.
This 3% fee could be used to pay the gas commissions that the node generates when interacting between the side-chain and the Ethereum blockchain in this case. Or the maintenance of the PC where the node is located, whether physical or in the cloud; but this fee will be used as a system for re-buying and burning the native token of the DEX JamonSwap ($JAMON). Thus seeking the greatest benefit for the members of the community both by receiving a higher APY; when making stakes, as well as by burning the $JAMON token itself using the profits generated by the node.