Polygon Layer 2 is a breath of fresh air for Ethereum Maxis like me
My first hand experience bridging some Ethereum to Polygon/MATIC Layer 2.
Ethereum can be expensive. During the recent (May 18, 2021) market correction (yes, in crypto, we call 40-50% drops “corrections” unlike in stocks where a 4-5% drop is a catastrophe. These paper hands ngmi) gas prices exceeded 1,000 GWEI. That is crazy. We’re talking 500-$1500 in transactions costs. It was so bad, I couldn’t sell even if I wanted to because the costs of selling exceeded some of my position sizes!
I’ve gotten into why Ethereum is popular despite these insane transaction sizes before, so I won’t do that rant again. Suffice to say, decentralization is hard, and security as a service is paramount.
But in a highly volatile market how can the small fish compete? Typically, they use centralized services like Coinbase or Binance to pay small transaction costs (~0.5% with discounts for more trade volume) regardless of the transaction fees of the network of the coin they’re trading in. This trades security for reduced cost (because a single company controls their portfolio).
Well, unfortunately, those services are not immune to volatile markets and had downtime and withdrawal suspensions on the May 18th correction.
Decentralized Finance, while insanely expensive during the correction, held up because it pays for its security directly:
So I ask again, what is a small fish supposed to do?
Enter- Layer 2 solutions.
Layer 2 solutions attempt to bundle transactions on their layer to reduce transaction costs prior to submitting updates to the Ethereum blockchain. This is an oversimplified explainer, but you can dive deeper into different types of layer 2s within the ethereum documentation (including zero-knowledge versus optimistic roll ups) and look into Polygon’s specific technical implementations (Proof of Stake side-chain with commits to Layer 1) separately.
To make this work, Layer 2 (separated blockchains) need to be isolated from Layer 1 (Ethereum blockchain) so that they can adequately maintain, test, and confirm validity of their transactions prior to submitting the Layer 1. This requires bridging bringing your Ethereum wallet address and specific coins (e.g. some Ethereum) to their blockchain which costs gas.
Here is my experience bridging to Polygon yesterday to test out layer 2s.
I noticed which way the wind was blowing
I noticed the MATIC/ETH chart + general sentiment online for MATIC as completely insane.
So, I wanted to try it out.
I had 1.25 ETH accessible to pull from my Coinbase Pro trading account (using some advanced tax strategies, i.e. accepting a loss LOL) and I wanted to put it to work on Polygon.
I used Zapper to bridge my ETH from Ethereum to Polygon
Zapper is an awesome product for managing your decentralized finance portfolio across multiple blockchains including the ability to transfer assets across chains (i.e. bridging).
I Bridged 1.25 ETH as wrapped ETH onto Polygon.
It cost about 75 gwei in ETH (~$30). It was a quick success and then I waited 8 mins as requested for Polygon & Zapper to be synced (I don't really understand this wait time but no big deal).
I heard you get 0.001 MATIC for free when you bridge over and your ETH wallet gets confirmed on Polygon. This is to help you test out the network and do some very cheap transactions (literally < $0.01!).
I got trapped on Polygon with no way to use my ETH.
That didn't happen. I was stuck with ETH but no MATIC for gas lol. I found the polygon website and found an FAQ of my exact problem. Bridged but no freebie gas.
It said to go to matic.supply (a real live faucet!) and request 0.001 MATIC ( <$0.01).
The faucet worked!
You can get a drip from the faucet for free 3x/day. (Has captcha and time delays, not worth botting to steal the free MATIC right now lmao).
I found an interesting liquidity pool opportunity with a high estimated APY
So I used Zapper again, and zapped (clicked the invest button) into the WMATIC/WETH pool costing like .0002 MATIC. Literally less than a penny. $100M in liquidity and >100% APY right now. But it gets better!
I took my Liquidity Pool token and gave it to Sushi in exchange for Sushi rewards
Sushiswap - a decentralized exchange on Layer 1 Ethereum, decided to partner with Polygon (as opposed to other Layer 2 solutions) to bring Sushiswap pools and yield farming opportunities to the small fish on Layer 2 who can’t afford Layer 1 fees!
AAVE, another major DeFi giant (>$1B lending platform) also chose Polygon for their Layer 2 support.
All this and I still have leftover MATIC from the faucet!
Knowing that I can un-stake, switch pools, or even convert to USDC for under a penny at any time is awesome.
Although the fiat onramp/offramp could be improved (and zapper can't bridge back to ETH, so I'll have to use Polygon’s wallet to bridge if I want to get these funds back to Ethereum and then back to a bank account) I definitely see the value of the Polygon/Sushi/AAVE team up and I'm sure it'll continue to grow as ETH fees continue to be crazy!
Like stuff like this or know someone else who might?
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