Overview - How do Polygon and Ethereum Differ?
Polygon and Ethereum are both popular blockchain projects. Polygon is a scaling solution for the Ethereum network, while Ethereum is an open-source, public blockchain platform that supports smart contracts and decentralized applications (dApps).
Polygon seeks to solve many of the scalability problems faced by Ethereum. It uses second-layer solutions such as Plasma, Optimistic Rollups and zkRollups to increase transaction throughput and decrease costs. Polygon is designed to be compatible with Ethereum, allowing developers to deploy their dApps on the network without needing to modify their code.
In contrast, Ethereum is primarily focused on providing a platform for decentralized applications (dApps). It enables developers to build, deploy and run smart contracts on its blockchain. Ethereum also supports the creation of digital assets (tokens) as well as decentralized exchanges, lending protocols and stablecoins.
Ultimately, Polygon is designed to be a complementary layer to the Ethereum network, while Ethereum itself is focused on providing an open platform for developers to create dApps. Both projects are important in their own right and together they offer a powerful combination of scalability, security and interoperability.
Blockchain Transaction Fees
One of the primary differences underpinning Polygon vs Ethereum are the transaction fees. Polygon is a Layer 2 network that sits on top of Ethereum and borrows its security. This ultimately makes Polygon a slightly less ‘secure’ network, but makes up for it with extremely low transaction fees.
Polygon vs Ethereum: NFTs
Recently, the OpenSea platform has added support for Polygon NFTs as well as Ethereum NFTs. The addition of Polygon NFTs was due to the fact that the cost to swap on Ethereum became too expensive for normal investors and they needed an alternative.
Although Polygon is a cheaper alternative, the NFTs available on their network are significantly worse and have little cultural significance. All of the main popular NFTS like Cryptopunks, Bored Ape Yacht Club, Azuki’s and Pudgy Penguins live on Ethereum and are not available on secondary chains like Polygon.
Polygon vs Ethereum: DeFi
If you are managing under $1 million of capital, it is inefficient to use DeFi products on Ethereum because the cost to deposit and withdraw coins or liquidity is too high. The gas fees on Ethereum end up significantly reducing your yields, and subsequently making your yield farming on the network redundant.
For example, you can use the AAVE platform on Polygon instead of Ethereum and earn the same yield, while paying significantly less transaction fees. Polygon is by far the best way to interact with DeFi for smaller accounts for this reason.
Polygon vs Ethereum: GameFi
Because the cost to transact on Ethereum is so high, the gaming sector has completely moved away from the ETH blockchain. We have seen popular GameFi games like CryptoRaiders and CryptoUnicorns move natively to the Polygon blockchain thanks to the sub 1-cent fees and fast finality.
This ultimately means that if you are looking to play blockchain games, Polygon is your best bet here again.
Ethereum is the best blockchain for high-net worth investors to leverage the wide variety of DeFi products to earn yield and farm new tokens. If you are a smaller account, we would recommend that you use the Polygon blockchain to make the most of the lower fees, despite there being lower overall yields and fewer top tier on-chain products.