Today on the show we welcome back Sandeep and Mihalo, the Co-Founders of Polygon. 
 Polygon is one of the most used chains in crypto. That in itself is a massive accomplishment. However, there’s been criticism of Polygon in the past, that it’s “just a sidechain.” That it’s not “Ethereum aligned.” The release of Polygon 2.0 will silence these critics. Tune in to understand why. 
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 TIMESTAMPS
 0:00 Intro
 6:35 EthCC 
 11:35 Polygon 2.0 
 20:00 PoS to zkEVM 
 33:50 What Will Users Have To Do? 
 37:10 Validiums & Wen Upgrade? 
 43:00 How $MATIC is Evolving?  
 47:00 The Evolution of Crypto Networks 
 48:50 $MATIC to $POL
 50:27 Work Token
 53:14 Why $POL Naming? 
 54:20 The Governance Framework 
 59:50 Is This Polygon’s Endgame? 
 1:08:48 zkSupernets
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 RESOURCES
 Polygon Roadmap
 https://polygon.technology/roadmap 
 Polygon PoS to a zkEVM - https://twitter.com/0xPolygonLabs/status/1671208777784209441 
 The Stack
 https://twitter.com/0xPolygonLabs/status/1668312616459030528
 The Token
 https://twitter.com/0xPolygonLabs/status/1679427540790681600
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 Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research.
 Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here:
  https://www.bankless.com/disclosures ⁠ 

Thankless Nation, today we've got an episode for you with the founders of Polygon.

We are talking about the Polygon endgame, this release, this software release, this upgrade that Polygon is doing.

Well, Polygon is 1 of the most used chains in crypto.

And I think that in itself is a massive accomplishment.

There's also been some criticism of Polygon in the past, some critiques that it's just a side chain, and maybe it doesn't have the Ethereum alignment that the marketing says it does, I think the release of Polygon 2.0 will silence the critics.

There's a lot of decentralization going on in today's conversation, including a path forward for the Polygon Proof of Stake chain.

Number 1, how Polygon is scaling Ethereum using ZK technology.

Number 2, a promise Polygon made to the community to upgrade the Polygon proof of stake chain and change it to a rollup.

We'll talk about what they're doing there.

Number 3, we'll talk about Polygon's big token upgrade, what they're doing with the MATIC token.

They're converting it to even more of a work token.

They don't see MATIC being a money token.

And number 4, we conclude with What is going on with Layer 2s, the infrastructure wars, as they were called in today's episode?

David, what were your takes on this episode?

Well, we all know that we are in the middle of the Layer 2 wars.

The Layer 2 wars are definitely heating up, especially here at ECC.

And Polygon's transition to Polygon 2 also enters into the game their strategy for going from a single chain to many, many, many chains.

We of course have the OP stack, the ZK stack.

Now Polygon has their fully fledged ecosystem to have what they call super nets to also fit into the world of all of these layer 2 platforms that want to turn into standards for horizontal scaling.

So we could all have infinite block space, especially by the time this next bull market comes around, which lately seems to be coming a little bit closer than a little bit sooner than I think we all anticipated.

So I think listeners are going to learn a ton in this episode about Polygon, about 1 of the most used networks that we have on Ethereum.

Before we get into the episode, quick disclosures.

I also have some small amount of poly tokens as well.

Polygon has been around for a while and we're big fans.

You can see all of our disclosures at bankless.com slash disclosures.

All right, let's go in here from Sandeep and Mihalo, the 2 co-founders of Polygon.

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Introducing Polygon 2.0, the value layer for the internet.

For too long, the Limitations of blockchains have held back app development and stifled user adoption.

The internet allows anyone to create and exchange information.

What's missing is a value layer that lets anyone exchange, store, and program value.

Polygon Labs has unveiled a series of innovations that will radically alter the Polygon ecosystem and Web3 as a whole.

By leveraging groundbreaking ZK innovations such as Polygon ZK EVM, the next iteration of the best-in-class Plonky2 Proving System, and a first-of-its-kind ZK-powered interoperability layer, Polygon 2.0 will give users and devs unlimited scalability and unified liquidity.

Right now, there is a Polygon improvement proposal regarding a potential ZK-powered upgrade of Polygon Proof of Stake.

If approved, Polygon Proof of Stake would become a layer 2 ZK-EVM Validium.

So make your voice heard on this proposal by joining the Polygon discord today.

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Bankless Nation, we are super excited to introduce you once again to Sandeep and Mahalo.

They are beaming in from ECC, the conference.

Well, except for me, of course, I'm always at home, never on the conference scene.

And yeah like just hustling through the CC is like Arguably the best event in that

Less It's been good for you guys David's been filling me in and we've got a whole bunch of conversations coming out of that.

But that tattoo, I'm a little concerned, Sandeep, that it's temporary because, you know, we're all about immutability in crypto here.

So I'm waiting for the immutable Polygon tattoo that is inked and cannot be removed.

So in this episode, we're going to get into all of Polygon 2.0 because there's a big update.

We're getting some changes to the Polygon token.

We're going to talk about the technology transition from the Proof of Stake to the ZK-EVM.

But before, just a little bit more on ECC.

I've had a fantastic ECC, but I want to get your guys' perceptions as to who is asking you guys about what, about Polygon?

Because this announcement went out, you know, earlier than ECC.

So when people come up to talk to you guys and ask you guys questions, what are they what are they poking around about?

Like, what's the hype about Polygon when they come to talk to you?

I think generally, like the Polygon 2.0 has been received very, very well in the industry, like much beyond the expectations that we were thinking.

And everybody's like, you know, this is like, I actually met like some of the researchers, which, you know, including, you know, I mean, a lot of researchers from the from from Ethereum Foundation to Cosmos to to like various different ecosystems.

And, you know, many of them said that, you know, the polygon 2.0 architecture that this receives, it feels like the most, you know, kind of practical and probable architecture, like Whether Polygon builds that or somebody else builds that, that's a separate thing, but point being that using the power of ZK, this looks to be the architecture which can actually provide this infinitely scaling Web3 trustless computation.

And also, even though you are scaling infinitely, while providing a level of proven composability or cross-chain, as we say, unified liquidity across this value layer of Internet that

So I think that has been the highlight for us.

And definitely a lot of discussion around ZK, because arguably now our Polygon ZK stuff is absolutely state of the art.

So yeah, a lot of ZK related discussions and developers coming up to us.

I think In addition to that, I think it's kind of becoming obvious.

We at some point became not really irritated, but we felt a little bit sad that we were not really able to communicate all the great development that's happening on the ZK front within Polygon now.

And I think now finally community understands how strong Polygon ZK team is and how exciting everything that you're working on is.

So that was my maybe second biggest kind of impression that people are starting to kind of realize that.

the feedback has been really, really great.

And we are very excited to move forward with the whole concept.

1 of my favorite memories of ECC Mahalo was in 2021.

A lot of people had already left, and it was just us 3 left, it felt like.

Yeah, and we were just grabbing some beers, and I remember you get a phone call, and you jump up from the table and go take this phone call for 5 to 10 minutes and just me and Mariano just like chatting, just chatting, drinking our beers and then you come back and you sit down and it goes, oh, really good news guys, really good news.

And you go, I can't say, I can't say I'm like, Mahalo, come on, bro.

And then like 6 weeks, 8 weeks later, Polygon announces the acquisition of Hermes, which later turned into Polygon Hermes, which is of course Jordi's project.

And then next EC, a year later, was the announcement of Polygon ZK EVM.

And then now here we are at the ZK EVM Polygon 2.0 stack.

So it's just a nice little quick story about ECC and the progression of these systems over the years and the players that stick around through the years and relentlessly build forward.

And then at that point, as you know, and as you understood later, I had that kind of oath of NDA type of oath, because Hermes had a token, right?

And we could not have publicly said anything in order to avoid any sort of speculation and whatnot.

Otherwise, of course, I would have shared with you with pleasure.

But yeah, Paris is very significant kind of for development of Polygon and this short, but very exciting history.

And yeah, we also announced ZKVM here in Paris.

And now we're kind of wrapping up the whole polygon 2.0 thing here as well.

Yeah, and I think for Jordi, it's even more historical.

Like, You know, he actually presented the first time the idea of a ZK based rollup.

Like he's the many people don't know that he's the 1 who came up with this idea.

He originally presented it here next year, presented like the Hermes 1.0, which was only a payment thing launched that Then next year we announced the Polygon, you know, working together.

And they announced last year, they had announced Testnet, I think, right?

Last year was the completion of the code.

It's incredible how crypto has kind of grown.

I remember a time where I could keep track of all of the major projects.

the major projects that we're building on Ethereum, right?

And now it's getting difficult to even keep up with all of the major projects on top of Polygon, right?

Like the Polygon ecosystem is probably bigger than the entire Ethereum ecosystem circa 2019, 2020.

And so I think we want to start this conversation because this is a conversation to really unpack this thing called Polygon 2.0.

And I want to make sure that listeners understand what Polygon 2.0 is and what it contains.

Because there's a lot going on here, right?

And I think the way I understand this is maybe divided into 3 parts that we want to touch on today.

The first part is Polygon Proof of Stake moving to a ZK EVM and what that means.

So that's the first thread we'll pull on.

Secondly, I think we want to talk about the holistic stack here, the tech stack, the layers and what you're doing here because this will give people a sense for what the capabilities of the Polygon ecosystem and architecture are.

And then thirdly, I think we wanna talk about token economics, the token economics of Matic and where this is moving forward.

So those are the 3 kind of pillars we're gonna touch.

And there's a fourth 1, which is the governance, the release of the new governance framework that you're proposing for the whole ecosystem, for governing 3 important or 3 pillars as we define them of Polygon ecosystem and Polygon governance.

Okay, so we got 3 pillars and then we got this governance wrapper around those 3 pillars that we're going to talk about.

So I mean, the Polygon 2.0, like I'll first take a stab at it like at a high level.

And then Mihailo can, you know, go more deeper into technical stuff.

But basically, the whole design of Polygon 2.0 is the philosophy is exactly how or as derived from the current Web 2 Internet.

Like, you know, this is Web 3, and we want to say that if Web 3 is going to achieve or we want Web 3 to achieve that level of scale of Web 2, then it needs to have 2 key characteristics that Web2 has.

The first key characteristic that Web2 has is practically infinitely scalable.

More websites, more apps, more softwares need to be created.

You create more and more servers, and you know, it keeps on growing, like, you know, every year we have like millions of millions of apps join the system.

Second, the second part is even more important is that this is, this web 2 is basically this Internet of information Internet of data where the information can seamlessly flow from like it doesn't matter whether I am you know sitting in Paris and you guys in the US and the website that we are accessing in between is from some other part of the world.

And we can seamlessly use this or share and create and exchange that information with each other, right?

Whether it's video content, this content, that content, it's seamless, basically.

It wasn't like that 30, 40 years back when the internet actually came.

It was named internet because it was a network of networks.

Previous to that there was a lot of networks but they were like DARPA net and things like that.

They were die separate networks and previously if you wanted to have some information or data moving from 1 kind of network to another network, it almost felt like that, like it feels today when you have to bridge your USDT into other chain and things like that, right?

So the information also was not seamless, but today it's seamless.

So these 2 should be the characteristics, like infinitely scalable and unified liquidity.

Because it's an Internet of Value, we say unified liquidity means value can move from 1 layer to another layer seamlessly.

And how we achieve that is basically, you know, we have a very nice diagram also very simply, which says that we show that you know, polygon is basically is going to become this multi chain network of layer twos secured by ZK.

So everything needs to be secured by ZK and we will discuss about like our Polygon POS converting into ZK and all that.

All that combines and aligns into this vision that all the chains here, whether it's supernets, supernets previously used to be like individual side chains and eventually they were going to have ZK proofs.

So that moment has arrived now that where all you can have like polygon POS chain, like chain public chains, ZKVM chain or these supernets, everything acts as a layer 2 proven on Ethereum on top of Ethereum using the power of ZK.

And then we have an aggregator layer, which actually combines the ZK proofs in 1 recursively and puts 1 single proof on Ethereum.

What happens with these recursive combination in this aggregator layer is that 1 chain, like let's say you are on a chain number 100 and you want to swap some value from chain number 10 to chain number 100, right?

Essentially, there is simply the moment the chain number 10 has put the ZK proof on the aggregator layer, the chain number 100 can easily see that ZK proof and knows that the XYZ transaction that is coming on chain number

is a part of this ZK proof that has been submitted.

That means you can allow that cross-chain transaction to happen.

Imagine how big this concept is that you don't care whether that chain has 1 validator, 2 validator, 100 validator doesn't matter.

It's a private chain doesn't matter for you.

As far as the transaction can be proven that this transaction is a part of this ZK proof, the other chains in the ecosystem will be able to simply take that.

First, you can have as much block space if you want, like as many chains can be seen, so it's infinitely scalable.

Second, because of the power of these ZK proofs, all the value is seamlessly able to move across these chains.

And this is the architecture using this power of ZK and recursion, what we have figured out in the last 2 years with these multiple ZK teams.

This brings us to this combination of this Polygon 2.0, which is like infinitely scalable and unified liquidity.

And yeah, like, you know, that's why, you know, some of these interoperability features and these features, like this all aligns into whatever next things we said, like PolygonPOS becoming ZK and things like that.

Maybe I can just say that we are very, very kind of happy and confident about this tech stack that you're proposing now.

And it is the result of this practically 2 years long period of, I would say, divergence that we have had in Polygon.

So we understood that we shouldn't really try to predict the future, to, from the get-go, propose 1 single approach, 1 single tech stack.

And that has played out pretty badly for some of the projects out there in the past.

And proposing or creating the architecture that is indeed that can support mainstream adoption, that can support practically unlimited scalability and seamless interoperability is not an easy task, obviously.

And we have intentionally encouraged this period of experimentation.

And as I said, it has lasted for almost 2 years and we have had multiple client development efforts, multiple ZK projects, experimenting even with data availability and whatnot.

And we have really learned a lot during that period.

And we slowly, some time ago, started converging, so to say, towards a more concrete architecture.

And now we are, I would say, very confident that this is the way to go.

And yeah, by leveraging, as Sandeep said, the power of ZK and advanced implementations like ZK-AVM that we have been able to ship and this advanced and in my, to the best of my knowledge, the only interoperability protocol that allows scalability and global consistency across the whole ecosystem.

We are very confident that this is the optimal architecture to build basically the value layer of the internet.

There's 2 themes I'm kind of drawing upon, maybe for the listener and what you're describing for Polygon 2.0 here.

You know, The first is what you were just talking about, Mahalo, is this journey for Polygon from divergence to convergence.

And I'll just say 1 of the strengths of Polygon has always been, I think it's practicality in that you guys didn't just test 1 approach.

You tested all of the approaches at once.

Even I remember for a while when it kind of MADEC was doing the plasma based approach as well.

And so you had side chains, you had plasma, you had proof of stake, you have roll ups, you're doing all of the approaches at once.

And the concern about that, the benefit of that kind of divergence is you get to test all the experiments, you don't have to bet on a single experiment.

The concern about that is, well, what if it fractures?

What if we're not able to create a unified experience?

And so now the next move, and why this is a 1.0 to a 2.0, is because this is a move towards convergence, where you can unify all of these approaches.

And I've heard you say it so many times that I want to emphasize, it feels like ZK, this term, 0 knowledge, these ZK proofs have been kind of the unlock that allows for that convergence.

And I don't know that I sufficiently understand how that works.

I'm hopeful I get a better understanding by the end of this episode.

But that if we can unlock ZK, that gives us the scalability and the unified 1 network type of user experience that we're all looking for.

And I think a lot of listeners will be familiar with or will have used Polygon's proof of stake network at some point in time, you know, with it with Matic tokens and doing all sorts of DeFi types of things on top of Polygon proof of stake chain.

That is moving to ZK EVM type of technology?

Or actually, why don't you guys describe what this proof of stake chain to ZK transition is going to look like?

So the before state and the after state and the increased kind of unification security guarantees that we get after this change is in place.

So, basically, first I want to give a very, you know, kind of layman definition of ZK.

Like what exactly, like why are we able to use ZK for the 0 knowledge technology, which was used to be a privacy technology, like which was initially popular for privacy technology, how it is used for scaling.

Essentially in ZK, what you are doing is that, what you do is that you prove to someone that you have something or you did something.

It's a very simple way, especially in the case of competition.

Like it might sound simple, but let's say today if let's say Ryan like you said that some deep I'm going to pay for your if I was a student you say I'm going to pay for your all your education bill for next 1 year right and at the end of the year I came to you and I gave you 1000 bills and I said that Ryan like total was a total expense was $20, 000 right.

The only way you can actually verify that this is actually

is you have to go through all the bills and then you have to do the total yourself right if it's plotted in Excel you have to total it yourself There is no other way.

Now imagine if my whole billing process was a bigger computational process like I was doing a lot of things right and I wanted to prove to you there is only 1 way I have to give you all the data you have to run the whole program yourself and then prove something right And when we are trying to scale Ethereum, now think of it from Ethereum's point of view, we are trying to scale the execution power on Ethereum.

The only way, like for example, how it works in, let's say, in case of previously, like, you know, ZK or the Solidity, SolVM and all those attempts were there.

And kind of like optimistic rollups also, they don't execute the whole data, but what they do is an optimistic rollups, you put all the data and all the state route and everything on Ethereum.

And then you expect that somebody will run the whole chain and if there is something wrong is found you will raise the fraud proof.

This is why there is a limit to the scalability optimistic rollups can provide and that's why you have a 7 day withdrawal period because it's inherently optimistic in nature.

But with the power of ZK, I can prove you a full blown computation.

Like in the same example, if I was a student and you paid 20, 000, I had 1000 bills, But we can agree on a simple, you know, kind of a proof in between or a proof layer in between.

And I will just give you a proof like Ryan, I need 20, 000, I will need $20, 000 because this was a bill.

I give you that succinct proof, you put it on that validity proof layer, and you are 100% sure that Sandeep is saying correct, he's not fudging the bills.

Like if I am a layer 2, and I am doing a lot of computation, like you know, the smart contracts are happening and billions of dollars are being transacted.

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Polygon’s Endgame: Polygon 2.0 with Sandeep Nailwal & Mihailo Bjelic