One of the promises of cryptocurrency is to create a open and free financial system. This is exactly what the world of decentralized applications provides, and most of the best defi dapps exist on ethereum. There's just one problem, and that's network fees. Well, ethereum gas fees aren't nearly as bad as they were a few weeks ago. Luckily, there's a cryptocurrency called Polygon, which hosts some of Ethereum's most popular defi apps and even leverages the Ethereum blockchain for security. Most importantly, Polygon makes it possible for you to store, transfer and use your favorite Ethereum tokens at a near 0 cost. Today I'm going to show you how to set-up your own Polygon wallet, how to transfer ERC 20 tokens to the Polygon chain, and how to use them in a couple of polygons. Most popular defi protocols. Before we get to it, there's something I need to admit. Financial advice is not what I do. Educational content is the only thing I can offer you. If you need financial guidance, call a financial advisor(which i am not) whose regulatory compliant. If this is your first time at the cryptolibrarynow,my name is "Mr Crypt"and Crypto is what I know. Cryptocurrencies, exchanges, DEFI protocols and news are just a few of the crypto topics I tackle here on this blog. Now that you know what's up, let's get into this Polygon stuff.
What is Polygon ?
If you've never heard of Polygon before, let me bring you up to speed. Polygon was founded in 2017 by a team of talented Ethereum developers who were instrumental in developing some of Ethereum's scaling technologies. Polygon was originally called Matic Network and rebranded to Polygon earlier this year to signal the project shift from just being a single layer two chain to providing a toolkit of scalability solutions for Ethereum. In plain English, scalability basically means speed and the whole purpose of Polygon is to increase the speed of the Ethereum blockchain while maintaining Ethereum security. The way Polygon achieves this is by creating a copy of the Ethereum blockchain called a child chain, which is more than 500 times faster than Ethereum. This child chain runs parallel to Ethereum and a middle layer of validator nodes periodically submits a snapshot of this child chain to the Ethereum blockchain. These snapshots make it possible to recover your cryptocurrency from the Polygon child chain if it suddenly goes offline. That said, it is important to note that Polygon does not protect you from any transaction manipulation that could occur on the child chain itself. This is really the only risk associated with using Polygon, and it's one that's extremely small. Because of Matic staking. The validator nodes that submit snapshots of the child chain to Ethereum need to stake Matic tokens if they try to manipulate their snapshots, then some of the tokens they staked get destroyed. The Matic token is also used to pay for gas fees on Polygon and polygons gas fees are thousands of times smaller than those on Ethereum. Polygon speed and low cost has made it a popular alternative to Ethereum, especially since many of Ethereum's most popular dates have been migrating to Polygon. Now if you want to see how a polygon wallet will look like , the link is just below - :
How to create Polygon wallet with MetaMask ?
To use Polygon, you're going to need the meta mask browser extension.Now the first thing we need to do is make our meta mask wallet compatible with the Polygon blockchain. Open up your meta mask wallet, click the three dots on the right hand side of your wallet address and click expand view. This should open up a new web page that looks like this.
The reason why we're doing this is to make it easier to enter information about the Polygon blockchain. Click on the top right of the web page where it says Ethereum main net. This should open a set of network options and at the bottom you'll see an option called custom RPC. Click on that. This will take you to a page where you can enter all the blockchain details for Polygon. Now be sure to enter all the information correctly. After you've done that, click the save button at the bottom. This should automatically add the Matic network to the blockchain options in your meta mask wallet, and you can closeout the window.
How to add Ethereum token to Polygon Wallet?
Once you've made your meta mask wallet compatible with Polygon, the next step is to load up your meta mask wallet with the Ethereum tokens you want to use on Polygon. Now this is easier said than done because you cannot send any Ethereum tokens directly to the Matic wallet address you just created on Meta Mask. You need to send these to your Ethereum wallet address on Meta mask first so that they can be converted using the Matic bridge. This conversion process is going to require some ETH and Matic. What this means is that you need to have ETH and Matic in addition to the other tokens you want to use on Polygon. Before you send any of these tokens to your meta mask, make sure you've changed the network back to Ethereum in your meta mask wallet. In this case, I've sent myself some ether, Matic and usdc. Next, head over to the Matic Wallet website. You should automatically be prompted to connect a wallet. Pro tip if the prompt doesn't show up and the page just keeps loading, it's because there seems to be a conflict between the meta mask wallet and Coinbase wallet browser extensions. So you'll have to uninstall the Coinbase wallet in extension if you have it, but make sure you have your seed phrase handy before you do that, or else you could lose your crypto on your Coinbase browser extension wallet. After clicking on Meta Mask, you'll need to sign the transaction. This will bring you to the main screen of the Matic AKA Polygon Wallet. Click on the blue button that says move funds to Matic mainnet. This will bring you to the Matic bridge where you can start swapping all the cryptocurrencies in your Ethereum Meta mask wallet to your matic meta mask wallet. Pro tip start by converting your Matic tokens so you can get a sense of how much the process will cost in each gas. The last thing you want is to send over your ETH and not have enough ETH for gas to do the same for the other tokens. To do this, click on where it says Ether. This will open up a search screen for other Ethereum tokens. In this case, I'm looking for a Matic token. As you can see, I've selected the maximum amount of magic tokens in my wallet. Next click transfer. You'll get a pop-up that tells you how long the process will take, and if you click continue it will tell you how much the conversion will cost in ETH gas. When you click continue again, you'll have to give permission to the Matic Bridge to access the Matic tokens in your Ethereum wallet, and this costs gas. After waiting for a bit, you'll be asked again to click continue to pay the gas fee in ETH for the actual conversion. Now while I wait for my Matic tokens to make it over, I'm going to go through the same conversion process with my usdc. This time I'll do it with more gas just to speed everything up. Once the transfers have confirmed, you can close out the window and click back to the wallet on the top left side of the screen. The balance of the cryptocurrencies you've transferred to your Matic address should be visible on the Polygon Wallet homepage.
How to fix missing Matic on Polygon wallet -:
Open your meta mask wallet browser extension and switch back to the Mattic blockchain. The balance of your tokens should show up automatically. If one of the tokens is missing, you'll have to get technical information about this token and this can easily be done using the Polygon Wallet homepage. Since my usdc isn't showing up, I'm going to click on those three dots on the right side where my usdc balance is showing on the Polygon Wallet homepage. This will let me add it to my Matic meta mask wallet. After clicking add to Meta Mask, a prompt should pop up but will ask you to add the token. As you can see my usdc is now in my matic Meta mask wallet and now I'm ready to play around on Polygon.
How to use AAVE on Polygon?
One of my favorite DEFI protocols on Ethereum is aave. An aave happens to be on Polygon as well. Now, Aave is a decentralized lending and borrowing protocol that lets you lend and borrow cryptocurrency without a bank or credit score. I don't have the time to get into how Aave works here, but you can read my complete guide article on AAVE . The advantage of using aave on Polygon is that it is more than 500 times faster and more than 10,000 times cheaper than it is on a ethereum. To connect to aave on Polygon, make sure you've selected the right market on the right hand side of the Aave website. Just above the markets option, you'll see a button that says connect when you click it, a window will pop up giving you all your web wallet options. You'll see that it gives you the option to switch from the Ethereum mainnet to the Polygon mainnet just underneath where it says connect your wallet. Because you're using a meta mask wallet, you'll need to click on browser wallet. This will automatically open up your meta mask wallet and ask you to confirm that you want to connect toAAVE. Once that's done, you're ready to start lending and borrowing. I happen to be pretty bullish on the Matic token, so I'm going to deposit some of my Matic tokens as collateral to get usdc and buy even more mattic tokens. When you click on the token you want to deposit on aave, you'll be given a big screen with a bunch of statistics. The only things you really need to take note of here are the interest rates for lending and borrowing on the right hand side, you'll see a small button that says deposit. Click on it. In this case, I'm going to deposit all but two of the Matic tokens I have to make sure I have enough for gas fees. Then I click continue , This will give me a meta mask wallet prompt to pay for the gas fee for the deposit. The fee right now is just 0.01 Matic tokens. Once the transaction has gone through, click on the dashboard button that lights up in purple. This will bring you to the borrowing terminal. Click on borrow now. Now you'll be able to choose which cryptocurrency you want to borrow. It doesn't have to be the same once you deposited, and you don't have to borrow if you don't want to. In this case, I want more usdc, so I'm going to click on usdc. This next screen is where you want to be extremely careful. At the bottom you can see that there's a mult icoloured slider with safer on the green end and riskier on the red end. As a rule of thumb, you want to avoid the risky end because if the cost of the cryptocurrency you're borrowing goes up past that red zone due to a price gain or an accumulation of debt. The cryptocurrency you deposited will be sold. Since I'm only going to be borrowing this usdc for a short time, I'm going to borrow 10 usdc, which is a bit deeper in the red zone. Next, I'll be given the choice to select my interest rate. Normally Aave gives you the option to have a stable or variable borrowing interest rate, but only the variable one is available right now apparently. After clicking on variable click continue this will bring you to the borough overview page where you pay the gas fee to move that crypto from aave into your Matic wallet on Meta mask. Once that's completed, you can click on dashboard and this will bring you to the overview of what cryptocurrencies you're lending and borrowing on our way. When you open up your meta mask wallet browser extension, you should see the cryptocurrency you've borrowed pop up in your balance. In this case, I have an extra 10 usdc that I can use to buy Matic.
How to use Uniswap on Polygon ?
Even if you've never used Defi before, you're probably familiar with Uni swap. Uni Swap is an automated market maker decentralized exchange. In plain English, it uses the ratio of two assets in a pool to determine their price and the entire exchange is decentralized because it exists on the Ethereum blockchain. Anyhow, Uni Swap doesn't actually exist outside of ethereum for the time being, that's why Polygon has its own version of uni swap called quick swap. Now. Quick swap is basically a carbon copy of Uni Swap with a few minor details that I won't go into here. As I mentioned earlier, I'm bullish on the Matic token and I want to get as much of it as I can while selling the least amount of crypto that I can because I'm using my existing Matic tokens as collateral. On average, this means I still technically own them. Those Matic tokens haven't been sold. All I've done is use them as collateral to get more usdc. Now I can use that extra usdc to buy even more magic tokens than if I had simply used the 40 usdc I had before, and I'm going to use quick swap to do that. Using quick swap is super straightforward. Just click Connect wallet on the top right hand corner, select Meta mask, confirm in your wallet that you want to connect two quick swap and you're all set. To swap their cryptocurrency, just select the one you want to swap from and the one you want to swap to. Select the amount, click approve, and then pay the miniscule gas fee in Matic tokens. After the approval is finished, you'll have to click swap, click confirm, swap and once again the gas fee in Matic tokens is so small that it doesn't even register as a dollar amount. The same transaction on Uni Swap would cost between 10 and $20. I now have 36 Matic tokens plus the 20 Matic tokens I deposited into aave. If I were a real gambler, I could deposit that 36 Matic and borrow even more usdc to borrow more Matic and so on. Once you're done with all your defi shenanigans, it's time to move those profits off Polygon and back onto Ethereum. So you can cash out somewhere.
How to move Polygon token back to ethereum ?
Moving your crypto off Polygon is just the reverse of the process you use to get your crypto onto Polygon. Start by going back to the Polygon AKA Matic Bridge. Where's the four you were swapping from ethereum to Polygon? This time you're going to swap from Polygon to ethereum. First click on the switch button in the middle of the swapping box, then click on the token option and find the token you want to swap back to Ethereum. I'm going to start with Usdc. When you click transfer, you'll be shown a similar window to the one when you were transferring from Ethereum to Polygon. The difference is that the reverse process takes around one hour for regular Polygon tokens and seven days for tokens that are noted as being on the plasma chain, such as the Matic token, the ETH gas. Key for this is quite expensive, so I'm just going to convert all of my matic into usdc so that I can do the entire withdrawal in one transaction. Thankfully, the fee to approve my usdc for transfer is cheap, since it's coming off the Polygon chain. As you can see, the reason why moving your funds from Polygon to Ethereum takes so long is because you must wait for the next snapshot to be submitted to the Ethereum blockchain. Once that snapshot has been completed, you'll have to open up the meta mask. As an extension wallet and switch back to the Ethereum blockchain when you click confirm, you'll have to pay that hefty fee in ETH, gas, and your token should be back in your ethereum wallet within 10 minutes, depending on how congested the blockchain is and how much gas you're paying. Now that your crypto is back in your ethereum wallet, you can send it to a crypto to Fiat payment gateway to cash out or back to an exchange for some more crypto trading.
Will Polygon Blow Up ?
Well, folks, that's all for today's tutorial. I will admit that using Polygon is not as practical as it seems. It takes quite a bit of time and costs quite a bit of money just to move your crypto from Ethereum to Polygon and it turns out that moving that cryptocurrency back to Ethereum is even more costly and time consuming. Now this seems to come down to the fact that polygon chain is not natively supported by exchanges the same way that other smart contract blockchains are. Native exchange support would mean that you could withdraw Ethereum assets directly from an exchange onto Polygon and deposit them directly from Polygon onto an exchange. This would bypass the need to manually bridge all of your Ethereum. Which is the most burdensome part of the process. Although the Polygon chain is slowly starting to get native support by small exchanges, polygons most prominent competitor will soon get native support by Coinbase. I am of course referring to optimism, which was initially supposed to launch a few months ago. Optimism will support some of Ethereum's largest Defi protocols like Uni Swap and Synthetics, and it's possible that we could see a lot of the daaps on Polygon start to deploy on optimism as well. When you combine that with the upcoming unlocked. For thematic token, things are perhaps looking slightly bearish for Polygon in my eyes. As we have seen, however, there is more than enough room in cryptocurrency for multiple smart contracts, blockchains, and that includes layer two scaling solutions for Ethereum. Now, whether these layer two scaling solutions will be required when Ethereum 2.0 rolls out remains to be seen, but I have a feeling that's not going to be a problem. Anytime soon. If you enjoyed today's tutorial, I request you to share this article with your friends and family.
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