Ethereum’s network is growing rapidly, but it still can’t match the transaction capacity of other cryptocurrencies. Various solutions have been proposed that would allow Ethereum to handle more transactions per second, thereby reducing congestion. One such solution is known as Polygon, which utilizes state channels to enhance functionality on the Ethereum blockchain.
Polygon is an upgrade to Ethereum’s state channels
By integrating state channels into the Ethereum network, Polygon is able to increase speed and efficiency of transactions as well as reduce costs. This increased functionality is made possible by an off-chain payment channel that enables users to send a series of smart contract commands without committing those changes directly onto the blockchain.
State channels move transactions off the main blockchain and into a separate channel. This allows for much faster, cheaper transactions as compared to on-chain ones.
Because transactions occur off-chain, state channels are a private and secure way to conduct business. This reduces the cost and time associated with processing each transaction on-chain.
State channels are a good solution for applications that need real-time updates but do not want to pay the high transaction fees associated with Ethereum’s current network structure.
Blockchains do not offer fast processing
The blockchain is an immutable and decentralized ledger for recording all transactions. Blockchains are an excellent way to record information, but they don’t have the capacity for fast processing. That’s why it can take up to an hour or more before a transaction is confirmed—a wait that isn’t ideal in most applications.
State channels are a way of conducting faster transactions on the blockchain
State channels let users make multiple transactions without the need to pay for each one individually. This is done by conducting them on a separate, off-chain system—instead of Ethereum’s blockchain network itself.
The blockchain only needs to process transactions when the state channel is closed, reducing cost and increasing speed.
State channels allow for faster transaction speeds, because they don’t have to pass through the same processing delays as on-chain transactions.
They offer lower transaction costs because the costs of each transaction are spread over multiple trades rather than being incurred for individual trades.
State channels also provide more privacy, as they do not leave a public record of every transaction on the blockchain. This makes them the best option for transactions that a user prefers to keep private—such as financial dealings or smart contracts.
There are a variety of different options for scaling Ethereum
There are a variety of different options for scaling Ethereum than just state channels, including sharding, plasma, and sidechains.
Sharding
Sharding is a method of dividing the blockchain into smaller sections so that each node does not have to process every transaction in order for the database as a whole to remain valid.
Plasma
Plasma is another proposal for scaling blockchain technology, which would increase transaction speed and cost while also enabling privacy; however, this approach requires extensive infrastructure to be implemented on top of existing blockchains like Bitcoin or Ethereum.
Sidechains
One way to make blockchains more scalable is through sidechains. This proposal calls for users to move their assets from a main chain (for example Bitcoin or Ethereum) onto a separate secondary one that runs in parallel with it.
Polygon increases the functionality of Ethereum by adding state channel functionality
Polygon is a scaling solution for the Ethereum network that increases its functionality by adding state channel functionality.
While state channels are not the only way to process off-chain transactions, they do offer a high degree of scalability and security. Moreover, state channels do not rely on the concept of payment channels. Rather, they are built into the Ethereum network and are insulated from other transactions occurring on it.
This allows for a high degree of versatility when using state channels for transactions and micropayments.