Macy’s (M), which is best known by the younger crowd as the sponsor of that Thanksgiving parade your parents made you watch and, fascinatingly, as a clothing retailer by the brick and mortar generations, has become the latest company to create an NFT project.
Macy’s minted their Thanksgiving parade non-fungible tokens, which includes 10 unique NFTs and 9,500 total NFTs that commemorate past parades. All proceeds from the auction go to the Make-A-Wish foundation while ten percent of any future sales of the NFTs will be donated to the Make-A-Wish foundation as well.
I do have questions here. Like, since you don’t pay taxes on cryptos, can you write this off your taxes as a donation?
The project as a whole is pretty cool if you like NFTs or commemorative philanthropy, but the most interesting thing to crypto followers is which blockchain landed the project: which was Polygon.
What is Polygon?
Polygon is an ERC-20, layer-two scaling network, which means it runs on another blockchain and is meant to help projects scale more efficiently on the layer-one network’s blockchain. Blockchains, such as Ethereum, need scaling efforts to remain competitive as the demand for completed transactions - and the accompanying gas fees - on the network grow.
In Polygon’s case, it runs on a side-chain to the Ethereum blockchain and was created to solve scalability issues with the most used blockchain, Ethereum. Why is this important? Well, Ethereum can only handle about 30 transactions per second, which is slow considering the number of projects running on the Ethereum blockchain.
Polygon, on the other hand, is able to handle up to 65,000 transactions per second and confirms new blocks in less than two seconds.
Polygon is able to accomplish this by utilizing a “commit chain” which functions as a transaction network by working alongside the Ethereum blockchain. The commit chain is the only chain on the Polygon network that communicates with the Ethereum blockchain directly and its consensus mechanism uses a Proof of Stake protocol.
Polygon groups clusters of transactions that occur on its blockchain into a single snapshot. This snapshot then gets sent to and recorded on the Ethereum blockchain. This allows very large numbers of transactions to get recorded in one swoop, speeding up transaction times and lowering fees per transaction as the Ethereum gas fees can now be divided amongst 65,000 transactions, rather than per transaction. Visual learners can learn more here.
By doing this, Polygon is able to create a framework for blockchain networks that has access to the benefits of the Ethereum network, namely its security and the Ethereum Virtual Machine (EVM), which is a platform made to empower developers to build their own dApps, while increasing transaction speeds and creating an environmentally friendly solution.
Will ETH 2.0 Fix the Need for Polygon?
ETH 2.0 will migrate Ethereum’s blockchain from a Proof of Work model into a Proof of Stake model. This will help fix the problems that Polygon is aiming to fix, but will not entirely rid the need for Polygon as the snapshot reporting, via added security from a second Proof of Stake validation step on the commit chain, will always increase Ethereum’s scalability and be relevant since it decreases the fees by spreading them amongst more transactions.
Polygon is essentially a glue between blockchains that keeps them connected with the Ethereum blockchain as a whole. With ETH 2.0 still a ways off, Polygon offers a similar and cheaper solution that captures the best of both worlds.