Matic Network

Fundamental Analysis

TryBravado.com
Matic Network Marketcap: $55,510,000
Circulating Supply: 2,160,114,068 MATIC
Token Supply: 10,000,000,000 MATIC
Fundamental Analysis Price: $0.025698

Overview

Perhaps Matic Network caught your eye after posting 400%+ gains post IEO. Matic’s debut on
Binance lived up to hype as buyers arrived in droves to push it higher and higher in a run that
resembled the 30x ICO days of 2017. Is the hype justified? What is Matic Network in the first place?
Let’s take a look at one of 2019’s hottest new digital assets to see if strong fundamentals are
fueling its meteoric rise.

By now, the scalability trope is getting a bit repetitive in crypto. However, it’s justifiably mentioned
because, as these are the early days of blockchain, the scaling problem is one that is uniformly
faced by all decentralized networks.

Scaling refers to increased throughput (in terms of transactions per second) to meet the demands
placed on blockchain networks by applications that are built on them. To put this into context,
think of the Visa network. Millions of people worldwide use Visa’s payment network. On any given
day, Visa transactions total around 150 million, breaking down to about 1,600 transactions per
second.

For the Visa network to handle those transactions, it needs to scale up to the demand so that
transactions happen in as close to real-time as possible. Now, compare that with the Ethereum
network. Ethereum maxes out at around 15 to 20 transactions per second. If Ethereum suddenly
dealt with Visa-like transaction totals under its current limitations, we’d quickly be faced with
disaster. Transactions would not only become expensive, but network congestion would also reach
peak levels that left us aging while transactions confirmed. Think CryptoKitties 2017 meltdown —
now multiply that by a cartoonishly incomprehensible number, and that’s the type of disaster we’d
be talking about.

Website: https://matic.network/
Exchange: https://www.binance.com/en/trade/MATIC_BTC 1
So, how to bring Ethereum and other blockchains up to speed? When we’re talking about
blockchain transaction scaling, we don’t mean to imply that scaling is only necessary for currency
applications. Decentralized applications send massive volumes of smart contract transactions
through the network and will only increase their transactional bloat as they aggregate users.
Ethereum, as a host network, needs to scale up its TPS to give these decentralized apps the
firepower they need to run services.

When considering the scaling issue and needs of decentralized applications hoping to run on the
blockchain, one needs to also look at concrete gas costs. Gas is the fuel of the Ethereum network
and is needed to power every single transaction. All gas fees are paid in ETH, and depending on
the network’s capacity combined with the transactional demands of your DApp, those fees can
become sky-high, making the financial feasibility of your project nil. Enabling high-scalability on a
blockchain network means that the network has throughput for plenty of action and will,
therefore, cost less to build on.

TLDR: Scaling is central to the mainstream use and adoption of blockchain

technology/cryptocurrency because without it, the decentralized apps that will form the next
generation of the internet (sometimes referred to as Web 3.0) can’t:

1. Offer their services to a mass of users

2. Afford to build and host their services on blockchain

Enter Matic Network. You’ve probably heard of Plasma, a scaling solution that was built with the
OmiseGo Network in mind. Matic has throttled the development of Plasma and is the first known
iteration of Plasma scaling technology. Put simply, it’s what is known as a layer 2 scaling
technology which means that it doesn’t scale directly on the blockchain itself — it takes the
transactional load off of blockchain mainchains (aka basechains) and runs it through what are
known as sidechains. Let’s take a look at the concept with greater depth.

TryBravado.com 2
Plasma Layer 2 Scaling Solution

The Ethereum mainchain has a serious performance bottleneck. After about 15 transactions per
second, the network becomes congested, confirmation wait times become extended, and gas
prices rise. Sharding, Ethereum’s solution to the problem, is likely years away. However, the DApps,
especially those centered around decentralized finance (DeFi) are nearly here — so what to do?

Matic Network wants to take fast, continuous, and high volume transactions away from the
Ethereum mainchain and place them on off/sidechains where they can be processed much faster.
While the transactions run free along sidechains, their finality occurs on the mainchain (translation:
the fact that a transaction happened and is immutable post-network confirmation is recorded to
the basechain).

The way a Matic/Plasma transaction works is basically like this: Let’s say you’re a regular at a bar.
Every night or two, after work, you head into the bar and drink a beer to blow off some steam and
mingle. Under the centralized paradigm, every time you buy a beer and pay with a card, you’re
making a broadcast to VisaNet and there are payment processing fees. Under the current
blockchain paradigm, every time you buy a beer you broadcast the transaction to the entire
network which creates congestion and higher gas prices.

Under the Matic sidechain paradigm, you’ll top up a wallet that is maintained between you and the
bar. Every time you pay, you do a micro-transaction that just goes between you and the bar on a
sidechain. You might do 300 transactions before one day deciding to move to another town and
close your ledger with the bar. At that point, the sidechain broadcasts all of the transactions in a
single transaction, thus condensing what might have been additional network bloat into one TX.

Using Matic sidechains, the Ethereum network can support 10,000 TPS on a single sidechain.
Multiplying sidechains isn’t, in theory, a roadblock, so Matic Network might be the scaling solution
that enables the beginning of true high-throughput blockchains today. In the Matic team’s own
words, sidechains “...are essentially EVM-enabled chains and are conducive to the ready
deployment of solidity smart contracts, essentially making it an easy tool for Ethereum Developers
to use it for scaling their DApps/Protocols.”

TryBravado.com 3
We’ve only discussed Matic Network in relation to Ethereum, but it’s important to note that Matic is
not Ethereum-specific. They’ve chosen Ethereum as the first basechain to launch and showcase
their solution and will be rolling it out for other basechains in the future.

Because of the nature of decentralized applications and finance, Matic’s scaling solution is
specifically geared toward creating a conducive environment for micro-transactions. One can also
imagine that owing to its use in micro-transactions, Matic is also a great resource for IoT solutions as
well.

Simple UX for Developers

What’s Matic’s scaling solution really all about? At the end of the day, they’re working to bring
enterprise adoption of the Ethereum blockchain about. They want to make scaling a reality so that
decentralized applications can compete with or outperform centralized ones. That’s interesting
because creating parity between centralized and decentralized apps pushes the pendulum in
favor of decentralized ones. The reason is that decentralized networks have far more robust
security than their centralized counterparts.

With a scaling solution in the bag, Matic’s team concluded that a total ecosystem approach would
also require an easy user interface experience to improve the productivity of developers building
on blockchain. That, in turn, should also bring about greater adoption since those same
developers are the ones building services for enterprise users.

TryBravado.com 4
Tendermint-Based Proof of Stake & Digital Asset Security

Taking transactions off of a blockchain’s mainchain might seem like a daunting prospect rife with
security risks for some. To assuage the idea that there is danger lurking when transacting away
from the mainchain, Matic Network has gone through plenty of trouble and technical innovation.

Matic Network sidechain operators double as stakers to ensure that they have skin in the game.
Because sidechain operators are staking MATIC, it's in their best financial interest that the network
remains honest.

More importantly, it's fair to wonder how digital assets secured on the Matic Network. If we’re
trading around high-value assets like ETH and BTC on a Matic sidechain and a network failure
occurs, what happens to the assets? Plasma’s basic premise is built around asset security. In effect,
if something happens to the sidechain, then the basechain is referred back to and is used as the
arbiter. As long as the basechain (Bitcoin, Ethereum, EOS, Cardano) isn’t corrupt, then your assets
are safe and sound.

TryBravado.com 5
Use Cases

If you’re familiar with the Lightning network scaling solution for Bitcoin, then Matic might sound
very similar. It is — with the exception of being stakable (PoS) and being built using the Plasma
framework which excels in digital asset security. While we don’t mean to take away from
Lightning’s innovations, Matic may be an attractive alternative that is marketing itself far better
than Lightning.

Payments. Matic’s over-arching use case is found in any situation involving transactions on a
micro/high-frequency level. In the cryptocurrency world, making payments is far from sorted out
and, if we see an uptick in usage soon, it’ll also be far from handling the traffic. That’s why the Matic
team is focusing on making the network primed for handling payments beginning with
Ethereum-based assets before branching into atomic swaps/cross-chain payments and transfers.
Down the road, Matic wants to integrate fiat liquidity pools into the network so that fiat users can
take advantage of all of the benefits of blockchain enjoyed by the crypto world.

TryBravado.com 6
Gaming. With its ultra-high throughput, Matic also envisions a day on the horizon when game
developers will build decentralized games on their sidechains. In the near term, Matic’s at least
expecting in-game asset transactions to account for huge volume on the network.

IoT. Anytime the conversation is about micro-payments, the elephant in the room is IoT. Obviously,
with the ability to handle a seemingly unlimited number of transactions, Matic Network is a prime
candidate for handling IoT applications. There are currently 7 billion IoT devices, but that number is
projected to parabolically rise to 75 billion by the year 2025. While Matic Foundation itself won’t be
developing specific solutions for specific IoT apps, third-party apps that are can do so using Matic’s
toolbox and network.

DEX. A big part of the future as seen by Matic is the freeing up of global value via decentralized
exchanges operating behind wallets of every kind. Suppose that you want to send ETH and your
friend wants to receive JPY — Matic can handle that conversion instantly and in the background so
that your friend doesn’t need to have any knowledge of crypto whatsoever.

Wallet. Tying the Matic Network’s suite of features and possibilities together is their Plasma Wallet.
Anything you can do or would want to do over the Matic network is accessible through the wallet,
making it a simple portal to a powerful array of tools.

TryBravado.com 7
Roadmap, Backers, and Partners

Can the Matic team deliver? That’s what we want to know. After years of hearing about the elusive
Plasma, seeing the first iteration of it is both exciting and a bit scary since, having been teased for
so long, we’re not sure if it’s reality or myth.

However, the Matic team is already quite far along on its roadmap. In August of last year, testnet
payments had already been successfully committed. ERC721 token support for in-game assets, API
and SDK kits, PoS implementation, a block explorer, an alpha mainnet, and WBTC support have all
been crossed off the checklist. Still to come is a beta mainnet in July before the real thing in
September — but considering the way the team has handily met its milestones thus far, the odds
of the team delivering are high.

TryBravado.com 8
We’re not the only ones who are convinced about Matic’s potential to deliver. Coinbase Ventures
invested in Matic Network during a seed funding round, making Matic just one of a few elite
projects being backed by Coinbase’s nascent investment arm. Additionally, Matic has been
endorsed on more than one occasion by CZ, Binance’s beloved CEO.

Since its IEO, Matic has partnered with several well-known crypto properties. Decentraland, Celer,
Quarkchain, Ankr Network, Ripio, Zebi, and MakerDao are amongst the first of a (probable) many
partners to climb aboard.

TryBravado.com 9
Team

If you look over the Matic team page, you might be left wondering who any of these people are. In
crypto, we’ve long grown accustomed to seeing big names and industry insiders bringing projects
about. Any time that isn’t the case, we become suspicious. Such has been the case when looking
over the Matic team. Sure, they look good and all have plenty of experience to offer, but not much
of that experience comes from blockchain-based ventures.

Does that disqualify the team? Both Jaynti Kunani and Sandeep Nailwal, two of Matic’s three
co-founders, have blockchain experience and even contributed to projects at Web3 and Plasma.
The rest of the team, despite having a few ex-Google devs on hand, seems a bit thin. That might
lend to a greater scrappiness and, considering that Coinbase Ventures heavily vetted the project
before backing it, they must feel confident that the team is capable of achieving its targets.

TryBravado.com 10
SWOT Analysis

Strength:

Matic has a few apparent advantages going for it. First and foremost, it’s hitting the market well
before any other comparable scaling solutions. Sharding is years away, Lightning Network is still
mired in testing, and Plasma went from being OmiseGo’s scaling solutions to a digital asset
framework being used by the community. Sure, one can argue that Loom Network is a competitor
— but their focus is almost strictly on games, they’re Ethereum only, and they’ve unfortunately
dubbed themselves “EOS on Ethereum.” There just isn’t a clear/direct competitor to Matic Network
at this time, and that plays into the potential of the project overall.

Secondly, Matic has solid backing and a roadmap full of met milestones. That bodes very well for
the project and takes it lightyears ahead of other whitepaper projects out there.

Finally, gaming is going to be huge for blockchain, and Matic knows this. That’s why
Decentraland’s founders are on the team as advisors and why Matic has placed focus on ERC721
token support. Sure, payments are important, but cross-border payment solutions like Ripple and
Stellar have significantly more infrastructure in that regard (though their main focus isn’t on digital
assets as is Matic’s). Owing to that, it’s a smart play by Matic to go after the gaming industry as
they’ll be the most likely to adopt blockchain after finance.

With so many active use cases, staking MATIC will be an appealing value proposition to plenty of
investors.

Weakness:

The Matic team’s freshman look is a bit concerning, but again, Coinbase didn’t invest in them
blindly. The main concern for Matic is longevity. Once onchain scaling hits networks like Ethereum,
how do they continue to justify offchain solutions like theirs? Matic may just be a temporary fix for
a problem that is eventually going to have much more elegant solutions that make their
third-party bandaid nonessential.

TryBravado.com 11
Opportunity:

Matic is picking up partners faster than you can blink. The prospect of having a highly scalable
network with incredible Plasma-backed digital asset security and staking is not one to pass up
without consideration. Using Matic, third-party apps can make the most of Ethereum and other
blockchain networks now, even though they have slow throughput mainchains. That’s an
innovation worth taking a long look at — especially if Matic continues accruing endorsements and
partners.

Threat:

As previously mentioned, the threat to Matic is an existential one. This may only be a temporary
solution that will be fixed by the big blockchains like Ethereum, NEO, ADA, and EOS quite soon. If
sharding brings the kind of transactional throughput that’s expected of it, there won’t be much
cause for layer 2 scaling solutions anymore (unless the whole of IoT’s billions of devices migrates to
blockchains).

Token Metrics

Marketcap: $55,510,000
Circulating Supply: 2,160,114,068 MATIC
Token Supply: 10,000,000,000 MATIC
Price: $0.025698

TryBravado.com 12