On the 19 April 2019, Picolo Research released an independent review report on Matic Network (MATIC). View the full report here.

A Scalable Solution Modified from Plasma Framework

Matic Network is a Layer 2 scaling solution that seeks to solve scalability issues while maintaining the network’s true decentralised nature. The underlying framework is an adaption of the Plasma technology, and Matic seeks to address several limitations of Plasma. Their value proposition also includes providing better user experiences through smooth UX and a suite of support tools.

Company Overview

Incorporated in 2017, with its core team in India, Matic Network has the vision to provide off/side chain scaling solutions without compromising on decentralisation. Adapted from the Plasma technology, Ethereum will be the first platform that Matic will implement its scalability integrations on.

Here are several issues that Matic Network seeks to resolve:

Limitations of Plasma MVP

Stability with high throughput, while maintaining a high level of decentralisation

An added focus to refine user experience on existing platforms

Enabling business to create large-scale dApps that reduces friction on real-world adoption

Cross chain interoperability

Commercial & Technical Strategy

Matic Network utilises a two-prong approach to achieve high transaction speeds and decentralisation; 1) PoS (Proof of Stake) at the checkpoint level, 2) Block Producers at the block producing level. The team will deploy an enhanced version of the Plasma structure that will allow seamless, low-cost and fast transactions on the mainchain. Aside from Matic protocol, the team will also provide support by developing tools to help the ecosystem. The product is currently in testnet with the Alpha version of the mainnet launching soon.

Several core components of the product include:

Checkpoints using PoS mechanism to provide finality on the mainchain

Blocks are generated at ~1s intervals at negligible transaction fees

65k tps in a single sidechain

Multi Chain support via horizontal scaling with side chains

Interoperability across different blockchains, providing support for large DEX

Support tools include:

Wallet — utilising WalletConnect Protocol, users can manage accounts easily with user-friendly interfaces Dagger — real-time updates and notifications from Ethereum blockchain Browser extensions

Figure: Matic Network model

Roadmap

Matic Network has tracked their roadmap very closely, delivering all their milestones on time with some earlier than stipulated. Although most deliverables are on the technical front, they have also been active on the business front working closely with their partners and attending community meet-ups, summits and hackathons.

Team

The project compromise of a relatively small team of 12 employees, most of whom have less than 10 years of experience. However, the team’s practical contributions in code developments on GitHub highlights their capabilities to an extent.

Jaynti Kanani (CEO) — 7+ years of work experience and an expert in software engineering. Core contributor of first Plasma MVP, and WalletConnect Protocol. Past experiences include Housing.com, Function Space, and Persistent Systems. He graduated from Dharmsinh Desai University with a bachelor’s in information technology.

Sandeep Naiwal (COO) — 9+ years of experience with a background in Business Development and Consulting. Prior experiences include Deloitte, Welspun Group, and Founder of ScopeWeaver.com. He graduated from NITIE with an MBA in Technology, Finance and Supply Chain.

Anurag Arjun (CPO) — 12+ years of experience mainly in software product management. Previously with companies such as IRIS Business Services, SNL Financial, Dexter Consultancy (Co-Founder and Exited), Cognizant Technology Solutions. He holds a bachelor’s in computing engineering from Nirma Institute of Technology.

Siddhartha Jain (VP, Operations & Marketing) — 2+ years of experience in project management. Previously worked as an intern in Shell, assistant project manager in EXL, and Data scientist at Mu Sigma. He holds a post-graduate diploma in business management from XLRI.

Bhavir Shah (Head of Engineering) — 5+ years of experience in software engineering. Past experiences include PaySense, Housing.com, Freestone Infotech. Graduated with a bachelor’s in information technology from the University of Mumbai.

Addition team members include:

5 Blockchain/ Application Engineers

1 Project Manager

1 Community Manager

Advisors

There are currently 3 advisors for Matic Network.

Esteban Ordano (Advisor) — Founder & CTO @ Decentraland

Pete Kim (Advisor) — Head of Engineering, Wallet @ Coinbase

Ari Meilich (Advisor) — Project Lead @ Decentraland

Token Sale

Matic Network raised a total of $615k ($165k in Seed, $450k in Private) in prior capital raising rounds. Total token supply is fixed with 22.8% allocated for all token sale rounds and 12% for staking rewards.

The main token functionalities of MATIC are of 2 folds:

Currency/ payment transaction — MATICs circulated on the network will be used as a unit of exchange to quantify and pay fees associated with the consumption of computational resources

Staking/ Mining — Users will be able to earn MATIC tokens through the PoS mining (Checkpoint layer) and validating blocks (Block Producer layer) by depositing their tokens

Partnerships

Decentraland — A virtual reality platform powered by Ethereum. The partnership will enable Matic’s scaling technology to increase efficiency on Decentraland’s platform. They will also collaborate on research and generalised smart contracts.

0x Protocol — 0x is an open protocol for decentralised exchanges on Ethereum. Matic will work with 0x to enable instant, decentralised low-cost trades.

Quarkchain — Quarkchain is a permissionless blockchain with sharding technology. This collaboration will allow Matic to explore L2 scaling research and develop Plasma sidechain on top of Quarkchain.

Zebi — A platform that protects sensitive data, Zebi specialises in providing blockchain solutions to governments and corporates. Matic and Zebi will work together on privacy solutions and enterprise blockchains.

MakerDao — A decentralised autonomous organisation that governs DAI, a stable coin. Matic will allow DAI to scale using its sidechains.

Ankr Network — A distributed cloud computing platform that will utilise Matic’s scaling technology to offer better user experience.

Portis — Portis seeks to streamline dApps into mainstream adoption and Matic will help Portis achieve scale and user experience.

Ripio Credit Network — A P2P microlending platform. Matic is working with Ripio to enable microloans using its plasma sidechains.

Matic has several DApps that are actively being developed:

Decentraland marketplace Cryptostaw — A P2P payments application using DAI Pocket Full of Quarters — A universal currency used across different gaming platforms Chainbreakers — A strategy-RPG game build on Decentraland universe Bitwords — An advertisement exchange for publishers and advertisers Plentix — A decentralised platform for the referral economy Bankit — Fiat payments company looking to store transactions on a blockchain Audacious Games — Developing a turned-based game on Ethereum Dappos — Point of sale dApp for retail

Community Engagement / Social Media

Matic Network has a couple of employees focusing on marketing and community developments. The team has constantly provided updates on Twitter and educating their community with weekly updates and articles on their Medium page. Albeit having both a Facebook and YouTube page, Matic did not list them officially on their website. On the community engagement front, Matic is focused on building the developer pool by sponsoring hackathons, hosting community meetups and collaborating with universities.

Here are the project social media statistics as per the report date:

Telegram (English) — 9,900+ members

Twitter — 2,460+ followers

YouTube — 3,700+ views

Medium — 290 Followers

Competitor Analysis

There are several types of layer-2 scaling solutions in the market and Matic Network falls within the Sidechain/Plasma category. In our comparative analysis, we identified 2 specific peers that display technological similarities, whose tokens have been trading in the market for a decent amount of time.

Strengths

Matic solves several limitations of the initial Plasma technology such as EVM compatibility (not just with UTXO) and ensuring smooth Plasma Exits

The product can achieve 65k tps theoretically with internal testnet having speeds of 10k tps on a single sidechain, much higher than its peers

A vision of a better UI/UX and support tools such as Dagger (with Zapier integration) creates efficiency and enable 1,400+ apps through real-time updates from Ethereum Blockchain

CEO a core contributor to Plasma MVP and WalletConnect Protocol

Tractions of dApps built on top of their platform have been growing and coming to fruition

Great deal structure with a low hardcap ($5m), a high proportion of tokens (19%) sold to the public (vs 6% sold in previous IEOs on Binance), and a low initial market cap of $8.5m

Weaknesses

Community and social media engagement have been relatively weak for the most part of 2018, however, it has improved over the past few months

Private sale and Seed investors have 50% tokens unlocked in the first month

On the whole, the project team and advisors lack depth and commercial experience compared to their competitors

Opportunities

Scaling off other scalability solutions — Even though Matic Network provides off-chain scalability, it can be used in conjunction with other Layer 1 and Layer 2 scaling solutions such as Sharding (e.g. Quarkchain) and State Channels (e.g. Celer, Raiden). Matic Network will have the ability to stack on top of other solutions, multiplying the total throughput factor of the parent chain.

Targeting the Decentralized Finance (DeFi) market — Matic envisions DeFi as the major use case for their platform and is confident they will be able to generate value for their network participants. The DeFi market has a huge potential and is segregated by sectors such as lending, issuance & investing, derivatives, prediction, payments, etc. Using the number of internet users as a proxy, 3.9b users were reported to have internet access in 2018 with a CAGR of 8.75% since 2010. Therefore, an imminent need for scalability is required to enable platforms to handle the volume of users, who have every right to access DeFi services and eventually banking the unbanked.

Threats

Aside from sidechains/plasma sector, the competition to provide scaling solutions is immense especially in other areas such as state channel, and sharding.

Usage of ‘fraud proofs’ implements a trust assumption that everything is correct until proven otherwise, allowing parent chain miners to censor transactions, which is a fundamental issue with sidechain architecture.

Conclusion

In conclusion, Picolo Research presents a ‘Spec Buy’ and 4 stars rating on Matic Network. Adopting an alternative approach to the Plasma framework, the team has a unique proposition to solve several inefficiencies of scaling solutions. Aside from that, their focus on redefining user experience differentiates them from their peers and would eventually create value for their community and ecosystem.

Overall, for the reasons listed, Picolo highlights several reasons that affirm our rating:

Achieved 10k TPS in their testnet on a single sidechain, ranking them above their peers

Providing support tools such as Dagger creates intangible value for the ecosystem

Strong partnerships with an increasing number of dApps developed on their platform

Tracking their roadmap closely and meeting their deliverables on time

Decent deal structure with a low initial market cap ($8.5m) and a high proportion of tokens (19%) allocated for IEO

Not withstanding the above, Picolo acknowledges several concerns regarding Matic Network. Both the team and advisors lack years of experience as compared to other blockchain projects, not to mention the strong competition that lies within scalability solutions. Furthermore, both private and seed investors have 50% of their tokens unlocked during the first month, which could entice greater volatility upon token listing. Nevertheless, our analysts perceived that the deal structure did compensate for the tradeoffs on several weaknesses displayed by the project.

In light of the preceding, Picolo Research affirms a ‘Spec Buy’ rating on Matic Network.