Polygon Acquires Hermez Network, How They Will Improve Ethereum Scaling Solutions
Via their Twitter handle, protocol and cross-chain bridge Polygon announced a new area of interest, ZK-based scaling solutions. In order to contribute and improve this approach to aggregate transactions into a blockchain, the project also announced a merger with Hermez Network and a $1 billion investment.
Based on zero-knowledge proof, the layer 2 scaling solution called ZK-Rollups allows funds to be deposit into a smart contract on top of the Ethereum network. Thus, transactions can be securely processed off-chain and scalability can increase.
As its official announcement, there is a high demand for Ethereum to improve its scalability. The project claims that their PoS based chain is “the best immediate solution” and relief for the increase in transactions fees and network congestion. They added:
By establishing itself as one of the industry’s most popular and highest valued projects, Polygon proved that there is a lot of value to be created and captured by working on these hard challenges in symbiosis with Ethereum, instead of competing with it.
The $1 billion investment will come directly from Polygon’s treasury and will use to hired and acquired “world-class” ZK-based projects and teams. In addition, the funds will be used for research, building, and adopting ZK-based solutions.
Scaling solutions have 3 major challenges, the team argued security, decentralization, and privacy. These won’t be resolved immediately, but the Ethereum ecosystem is at a “stage of intense innovation and experimentation” with the potential to lay start creating solutions that will eventually meet those challenges.
Therefore, the project revealed that they will focus on two “major long-term” goals. The first one is “Shipping” or putting the solutions and innovation in “the hands of developers and users”. The second is to make Polygon the “innovation hub” for Ethereum. On scalability, they added:
Ethereum base layer fees reached levels that made Ethereum practically unusable for most users and use cases, and we already started seeing user outflow to competing projects that decided to make problematic compromises in terms of decentralization, security etc. We realized that something has to be done today, and thus we built and offered our Polygon PoS chain (…).
Polygon To Merge With Ethereum Based Hermez Network
As of today August 13th, Polygon and Hermez Network, a decentralized zk-rollup based scaling payments running on Ethereum, will begin a merger process. Thus, the solution will be rebranded as Polygon Hermez and will be part of this protocol ecosystem and solutions, such as Polygon PoS, SDK, and others.
The merger process will be supported by funds obtained from the protocol’s treasury, 250 million MATIC tokens or around $250 million have been committed to fulfilling this purpose.
We at Polygon are very aware of the importance of EVM-compatibility, and the fact that Hermez already has a roadmap and is actively working on introducing it was another big signal for us that joining forces makes sense.
At the time of writing, ETH trades at $3,230 with a 6% profit in the daily chart.
ETH with minor profits in the daily chart. Source: ETHUSD Tradingview