[Recap] Polygon Q2 2023 State of the Ecosystem

On April 5th 2023, Colin Butler, Global Head of Institutional Capital, and Matt Blumberg, VP of Institutional Capital at Polygon, discussed Polygon’s Q2 2023 outlook, its latest technical developments, and upcoming platform updates with Joshua Frank, Co-Founder and CEO of The Tie. Polygon, a layer-2 Ethereum scaling solution, focuses on providing inexpensive and fast access to the Ethereum global settlement layer while maintaining high levels of security.

The call focused on three topics:

You can catch the full replay here.

The recent rollout of Polygon’s zkEVM on mainnet is considered a significant development in the blockchain industry by most within the Ethereum community. Their zkEVM aims to address the challenges faced by sidechains and optimistic rollups by providing secure scalability and privacy at the execution layer. Polygon’s zkEVM offers a more secure way to transfer assets between layer 2 and layer 1 blockchains with faster transaction times, driving user adoption and enabling institutional-grade scaling for the Ethereum ecosystem.

Polygon’s zkEVM provides opportunities for users, builders, and projects, offering scalability and EVM compatibility that allows developers to easily deploy their applications on Ethereum with layer 1 security. This enables the development of advanced financial infrastructure, such as central limit order books, and is crucial for achieving mass adoption among traditional financial players. Over the next 12 months, the Polygon team expects large financial institutions to announce specific use cases for their zkEVM technology, demonstrating its wide range of applications in the institutional space.

Specifically, Colin Butler and Matt Blumberg see three key milestones for evaluating the progress of Polygon’s zkEVM: DeFi growth, composability, and a large user base. The recent partnership between Polygon and Immutable X aims to make zkEVM technology accessible for additional use cases, creating a secure and easy-to-deploy environment for Immutable X developers and partners in the gaming industry. This partnership aspires to become the largest in the gaming space, with network and flywheel effects allowing them to reach many millions of players.

Polygon’s success in partnering with blue-chip brands such as Starbucks, Disney, Reddit, and Salesforce can be attributed to their global scale, strong business development, reliability, and community focus. This community-centric approach extends to traditional finance names as well.

Real-world tokenization is becoming more prevalent, with Polygon noting examples like Siemens’ tokenized 60 million euro bond. The primary drivers for tokenization are cost savings, revenue optimization, and derisking. Colin Butler believes that despite some nervousness surrounding tokenization and digital assets, 90% of institutions are moving forward with the technology.

Major institutions have been preparing for blockchain adoption for years, and now they are ready to implement solutions such as those offered by Polygon to save costs and improve efficiency. Geographical differences in the speed of adoption and technology improvements contribute to institutions’ increasing comfort with entering the space.

Matt Blumberg highlights that tokenized assets provide a low-risk way for institutions to explore the blockchain space. Many employees at major financial institutions are familiar with crypto and blockchain, and they are eager to apply it to their business models using Polygon’s technology. The main challenge now is determining what can legally be done with the technology.

In the final part of the Polygon interview, Matt, Colin, and Joshua discuss Polygon ID, Polygon dApp Store Kit, and what they are most excited about in the near future.

Polygon ID is a technology that allows users to selectively disclose aspects of their data without revealing anything else. It uses zero-knowledge proof (ZKP) technology for privacy purposes. This enables users to prove specific credentials without sacrificing privacy. Polygon ID has many potential use cases, such as opening a bank account, real estate deals, or voting in a DAO without disclosing one’s identity. It can also be used for KYC purposes in the institutional space.

Polygon dApp Store Kit is a set of tools for building app stores for decentralized applications. It addresses the challenge of discovering and curating dApps by providing a framework for building app stores that work well with mobile wallets. Influencers and curators can recommend apps, and users can discover new dApps based on these recommendations.

Colin is most excited about the gaming aspect of Polygon and the advancements in institutional DeFi. He envisions a future where users have a one-stop shop for various financial products, including tokenized securities, government bonds, and real estate. Matt is enthusiastic about the zkEVM, which will unlock secure scalability for blockchain technology, and account abstraction, which will improve user-level security in the crypto space. Account abstraction will lead to better mobile experiences and more secure interactions with contracts.

You can catch the full replay here.

The information contained in this call is for informational purposes only and should not be considered investment advice.