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    Why Polygon’s latest acquisition is important and what it means for MATIC

    Why Polygon’s latest acquisition is important and what it means for MATIC

    Why Polygon’s latest acquisition is important and what it means for MATIC
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    By CNBCTV18.com  IST (Published)

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    Polygon network has now acquired a zero-knowledge (ZK) protocol developer, Mir, for around USD 400 million. Polygon is a layer 2 scaling solution for ethereum or “ethereum’s internet of blockchains,” which means it aggregates various ethereum-based blockchains and allows them to communicate with one another.

    India-based Polygon network has been on an acquisition spree with a vision to scale up the ethereum ecosystem. The ethereum-powered network has now acquired a zero-knowledge (ZK) protocol developer, Mir, for around USD 400 million. In its native currency MATIC, this translates to around 250 million tokens priced at USD 1.6 each.
    The ZK protocol enables transaction authenticators to validate encrypted data without accessing the data. Mir has developed an iterative ZK algorithm that allows it to generate verification proofs within 170 milliseconds. This is the fastest proof generating capacity available in the crypto world and could have diverse applications across industries.
    The preservation of privacy is critical, particularly in industries such as healthcare, finance, communication, technology, etc. ZK technology puts people back in control of their data by not allowing anyone to access it directly, thus putting itself on the radar of several prominent crypto investors.

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    Polygon is a layer 2 scaling solution for ethereum or “ethereum’s internet of blockchains,” which means it aggregates various ethereum-based blockchains and allows them to communicate with one another. It was designed to reduce transaction fees while increasing the transaction processing speed. The Polygon network enables decentralised application (dApp) developers to address transaction bottlenecks on the main ethereum blockchain that is quickly filling up. DApps are applications that run on a blockchain network of computers instead of depending on one computer.
    These dApps can execute tasks autonomously based on triggers in a more secure and scalable manner on Polygon’s multi-chain network. The Polygon network thus retains the robust security protocols of the ethereum blockchain while adding scalability and immense speed to the equation.
    Mir is Polygon's second acquisition after its deal with Hermez network in August for USD 250 million. Hermez also helped in up-scaling architecture on the Polygon network.
    The blinding transaction speed comes from Polygon’s use of the ‘Proof-of-Stake’ model. Crypto investors can pledge a part of their crypto holdings to the development of the blockchain and become transaction validators in the process. This process called ‘staking’ helps them provide their assets on the blockchain and earn rewards in return for authenticating transactions.


    This design significantly reduces the use of computing power as compared to most other blockchains that require complex calculations to verify transactions. The Polygon network is therefore much greener and faster than the main ethereum network and thus a lucrative investment for institutional investors.
    A superior protocol means that a native cryptocurrency is needed to reward the validators and allow investors to pledge their assets on the new blockchain. MATIC currently takes the 14th spot on the crypto coin chart with a USD 15.46 billion market capitalisation.
    Enhanced blockchain capabilities complemented by a series of acquisitions have backed MATIC’s performance through the severe downturn in the crypto markets. Over the last month, the price of MATIC has risen by 20 percent to over USD 2. This is even as, bitcoin, the first and most popular cryptocurrency, has fallen sharply by over 27 percent in the same period.
    Polygon’s capabilities are reflected in the strong performance put up by MATIC despite the ongoing distress in the crypto markets. MATIC's rally could also be partly attributed to the excitement surrounding the recently held virtual event on Polygon ZK Day on December 10.
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