He was the son of a diamond factory worker who lived in a small house on the outskirts of Ahmedabad in Gujarat, often struggling to pay his school fees. His ambitions then were to land a decent, salaried job that would help pay off his father’s debt. However, destiny had better plans for Jaynti Kanani, the cofounder and CEO of Polygon, a made-in-India cryptocurrency protocol that crossed a market capitalisation of $10 billion recently.
Polygon shot into the limelight a couple of weeks ago when it announced an investment by billionaire Mark Cuban, star of the TV show Shark Tank. Polygon, which is also backed by angel investor Balaji Srinivasan, aims to provide faster and cheaper transactions on the Ethereum blockchain and is among the top 20 crypto-tokens globally. Formerly called Matic Network, it was founded by Kanani, Sandeep Nailwal and Anurag Arjun in late 2017, with Serbian engineer Mihalio Bjelic joining later as a cofounder. Nailwal set up India’s COVID Crypto Relief Fund, which recently received a contribution of over 1 billion worth of Shiba Inu Coin from Ethereum creator Vitalik Buterin.
Moneycontrol’s Chandra R Srikanth spoke to Kanani and Nailwal recently on Cuban’s investment, Polygon’s origins and its ambitions.
How did you pitch to the shark of Shark Tank, Mark Cuban?
Kanani: Before Mark Cuban was an investor in Matic, he was a user. He has been using Poly applications very frequently. That also triggered the investment, to be honest. So we thought, let’s ask him if he’s interested or not, and then we reached out to him and he was more than happy to invest in Polygon. I think we are the first crypto projects out of India he has invested in. And with Mark on board, it’s a great moment for the Indian ecosystem as well.
Nailwal: You must have seen those NFTs, for example, Elon Musk’s and Jack Dorsey’s tweets. It was built using Dapps built on Polygon. So he already knew about our product-market fit in that sense.
Kanani: I think many people also don’t know the government of Maharashtra also, it uses the application COVID test results and that is also on Polygon. You can verify the results of COVID test on Polygon. So many people are using Polygon, but maybe they don’t know it.
Take us through the origins of Polygon or Matic Network as it was known then. How did it come about?
Kanani: I was in Housing.com in 2017. I started Matic at the end of 2017 after seeing the huge load Ethereum blockchain had. It was jammed because people were using CryptoKitties and I thought let us try to scale Ethereum. And whenever you try to deploy anything on Ethereum, you need scalability otherwise you will be paying a huge amount of cash as a fee and you will be waiting for a few minutes to confirm your transaction. So at that moment, I started with Matic and I knew Sandeep from our crypto community group. And I knew Anurag because he was working in the same co-working spaces as I was. And I pitched Matic to both of them, they agreed to come on board as cofounders and we started the whole thing together in early 2018.
Jaynti, you grew up in modest means, as the son of a diamond factory worker in Gujarat. Today, Matic’s market cap is over $10 billion. Take us through the journey that got you here.Kanani:
So I grew up on the outskirts of Ahmedabad. It’s not proper Ahmedabad and my father rented this small house on the outskirts and we grew up there. In my school days, we didn’t have money to pay school fees. But luckily I passed 10th, 12th and then joined a college nearby called Dharamsinh Desai University in Nadiad and did my engineering there. My goal was to have a decent job and to pay the debt my father took for our education and my sister’s marriage. So I joined Persistent Systems in Pune. My salary was Rs 6,000 per month. My father also retired due to vision problems and couldn’t see the shape of diamonds then. So I had to look for my next job and luckily I got a full-time job. I used to work on multiple side projects. I joined a startup of Sumit Maniyar then who later started Rupeek. Then I joined Housing.com and then started Matic. At some point in time, I was deep in debt because I also took loans to get married. I never thought I would start a billion-dollar company.
Sandeep, in February this year, Matic became Polygon in a bid to widen its scope from layer 2 chains to stand-chains or sidechains. Help us understand how Matic 2.0 will evolve.
Nailwal: So we originally started with a scaling solution, which we were just talking about, right? So it was built on Plasma and at that point, Plasma was really hot. And everybody wanted to have a Plasma scaling solution on top of Ethereum. But the Ethereum community moved into multiple different types of scaling solutions and today Optimistic rollups, ZK rollups have more researchers, visibility and all that.
The other thing is because we were starting from India, we did not have big VCs – both of us don’t come from the IITs. So, we don’t get immediate VC attention, especially in India plus crypto, you know, there are uncertainties in India.
So, we had to grind our way up. Projects like ours would raise $50 million, $100 million, and then start from the top in terms of their adoption. So, we had to grind our way up like, with applications one by one. So, we wanted to find a way we can support these multiple solutions. And we have more applications, than anybody in the space would have. We also brought Mihalio Bjelic, who was working on something similar, on board.
And we said that let’s offer various different kinds of scaling solutions on top of the medium. It is not just a rebrand but an expansion from a single-solution approach to a multi-solution approach. And, you know, also bringing Mihalio on board made us a global team.
Kanani: I agree with Sandeep, it wasn’t an overnight success. We had our crying moments.
India is also at a crucial juncture when it comes to cryptocurrency regulation. What are the best-case and worst-case scenarios for you? How will any future regulations impact Polygon and the Matic token?Kanani:
So for us, we already said multiple times in our community channels that the Polygon project, the actual network, is decentralised. Even we don’t have control because it is run by hundreds of validators and networks around the world. If you want to shut down or change anything, you can’t – that is the beauty of it. Currently, we are global – even the cofounders are around the world.
Nailwal: The way we set up the whole entities and everything is that it’s very immune from Indian irregularities. So I’ll explain to you. So our token entities are in the British Virgin Islands and our entity which interacts with the token entity is Singapore based. And then in India, we have a research company that gets money for the work that it does for the Singaporean, big entity. Indian employees receive money in their bank accounts directly.
What’s the scale today in terms of transactions and users?
Nailwal: Matic Network is doing 5 million transactions a day, Ethereum does 1.7 million a day. Polygon is a scaling network, transactions will be more but it’s already 3X of Ethereum…
And, apart from that, in terms of our tokens in circulation it’s like 60% of our total supply, which amounts to around $14 billion in valuation. In terms of the users, Aave is one of the largest DeFi applications launched on Polygon and they have 30,000-plus users compared to Ethereum, where they have 26,000 users. So overall, on Polygon we are approaching 1 million unique addresses, which is 30-50 percent of where Ethereum is today. Polygon is able to onboard these new users because it is a scaling platform, so we are able to onboard retail users.
One question that’s often asked is what’s the practical application of all this going to be in India?
Kanani: These COVID-related applications, which one startup created for the Maharashtra government. I think that is a great application where you can audit your test results on the blockchain without a third party. Using blockchain, you can also do remittances globally, where you can transfer money without any third party.
Nailwal: Yeah, for these remittance use-cases, for example, these startups have to take care of the FEMA regulations and all that.
For example, this Maharashtra government use-case, I’ll give you a real example, why, like somebody who’s not that deep into crypto will understand that. Imagine that I was a restaurant, right, and in Maharashtra somewhere and I want to verify whether you are vaccinated or not. I have two options… the government can launch a web page where I can put your Aadhaar card or something, and then I can scan. The problem is that in this application, the government has to maintain them, right? … you must have already seen that IRCTC and all these government sites, generally they are down because they can’t take that much traffic, right? But here… once the government takes your address and then puts it on blockchain that okay, you are vaccinated, then nobody needs to talk to the government… So that scaling is one thing that we have been pitching to a lot of, you know, especially the public goods data, the governments have a lot of this data which can be used for the public good. And those can be put on the blockchain, a country like India can benefit heavily from that.
Before we end, give us a sense of what you tell your family about your venture. How do you make them understand what Polygon and Matic are?
Kanani: To be honest, my family, they don’t understand Polygon. I am not sure if my parents understand what I do, to be honest, so there’s no way for me to make them understand. For people who can understand, I can just say I’m building, scaling, the next future of infrastructure for banking and everything.Nailwal:
I had a tough time convincing my in-laws. They asked my wife multiple times, is this legit and if this guy is legit. Only now when the news media has started covering it, they say okay, he is doing something.