Ethereum layer-2 scaling solution Polygon is used by an array of decentralized finance (DeFi) services and platforms to conduct cheaper and faster transactions than Ethereum’s mainnet can handle.
DeFi is essentially a catch-all term used to describe the peer-to-peer lending, borrowing, and trading action that happens on blockchain networks like Ethereum. It's grown from a tiny niche corner of crypto, worth a few hundred million dollars in 2019, to an $80 billion industry today.
Still, Polygon thinks there’s room for improvement.
Of course, Polygon wants to be at the heart of that action, and it’s forming a DAO to help make that happen. A DAO is a decentralized autonomous organization, which spreads governance responsibilities across a distributed network rather than in the hands of a centralized authority. In many cases, DAO token holders vote on governance proposals.
Today, Polygon announced plans for a DAO that it believes can “unite” disparate DeFi platforms and services via shared architecture, along with onboarding the “next 100 million” users to Polygon. In other words, what Polygon believes is good for DeFi should also be good for Polygon in return, and the project aims to pump money into the DAO to further those aims.
Polygon will tap the $100 million DeFi fund it announced this past April to fund the creation and maintenance of the organization, and help finance projects that users think can help push the DeFi industry forward. The project plans to airdrop new DAO governance tokens to existing Polygon users as the organization formalizes and takes shape.
“Polygon’s overarching intention is to decentralize specific internal decision-making and invite the community to have a say in the ongoing development of the Polygon DeFi sector,” reads the company’s announcement. “The venture also intends to foster greater cross-collaboration and compatibility within community projects.”
Already, Polygon has tapped several of its partners to help establish the DeFi DAO. Decentralized oracle network Chainlink is onboard, as is Polygon-driven lending market Aave plus the Ethereum-based decentralized exchanges SushiSwap and QuickSwap. Polygon’s announcement suggests that DAO funding could be used to create connections between DeFi platforms, build on-ramps to crypto wallets and institutions, and more.
Even with an announcement and partners in place, Polygon is still sorting out the fine details. In a lengthy post on Polygon’s blog today, the company discussed its reasoning behind the DAO creation and the potential benefits. However, Polygon’s announcement today suggested that it would be “evolving the Ecosystem DAO initiative in the coming weeks and months.”
Polygon began life as Matic Network, a layer-2 scaling solution for Ethereum, but rebranded in February as it announced additional solutions and platforms for developers to efficiently tap into the Ethereum ecosystem with their decentralized apps (dapps). Last week, Polygon announced plans to acquire fellow scaling solution Hermez for $250 million, “merge” the Hermez token into its network via a swap, and integrate its transaction-rollup tech within the Polygon suite.