Why co-founders are leaving Polygon and what its new version will be (2024)

A year after its mega-funding round of $450 million from 40 global marquee investors, blockchain unicorn Polygon has restructured some business units, appointed a new leadership team and laid off some of its employees as it prepares to take off to achieve its long-term plans.

Two of the three earliest co-founders, Jaynti Kanani and Anurag Arjun, left the startup in March and after a leadership reshuffle, chief legal officer Marc Boiron took over as the new CEO. Kanani took to social media site X to announce his exit on October 4.

Beyond its success in the crypto world, what made Polygon stand out were the journeys of its co-founders Kanani and Sandeep Nailwal, who came from humble backgrounds and changed the status quo of the IIT-IIM pedigree obsession in the Indian startup ecosystem.

While the exit of Kanani and Arjun was unexpected, Nailwal told Moneycontrol that they had decided to pursue other interests and they had already given six years to Polygon, which could have been very 'taxing' and 'tiring'.

Six years of Polygon's journey

More suitable

“For me, it's been a very mission-focused thing and where I want to take Polygon. Right now, we have like 10 co-founders. Anurag (Arjun) and JD (Kanani) had built generation one of Polygon, which was a side chain. But now the world is moving to zk (zero-knowledge proof) and the other co-founders we have are the zk experts. So, technologically, they contribute more over there. JD and Anurag might not have been the most suitable persons to contribute to zk internally,” he said.

Zk protocol, or zero-knowledge proof, is used in cryptography as a verification method between a prover and a verifier during transactions.

According to Nailwal, this is more of a change of guard on the technology side and he remains active on the business side for the foreseeable future.

Nailwal will continue as chairman in the foundation, with the CEO and other leaders reporting to him.

Both the co-founders are working on different startups. Kanani, according to his LinkedIn profile, is building Mozak, a new web or a Web 3 startup founded in April, and Morphic, a content-developing startup that started in June.

Arjun founded Avail, a scalable data availability layer on blockchain which he started in 2020 while working with Polygon. Avail was spun off into a separate entity outside Polygon Labs and Polygon Foundation in 2023.

“Anurag was doing Avail, which Polygon internally did not want to pursue, because it's data availability… and we did not want to get into the data availability side or a product where global data will be retained. He wanted to continue with that project. So he said that he can do it outside,” said Nailwal.

“JD wanted to do something in AI. It's been six years in Polygon… it can become tiring. He thought maybe AI is a better and a new field to go into and create your own thing,” he added.

New appointments

Nailwal said that after building a startup from scratch and reaching Polygon’s scale, one needs people with strong organisational skills to manage it.

So Nailwal was aiming for a leader from the tech world, especially from the US, to lead the business. Among its several new leaders were Ryan Wyatt, who was the gaming head for YouTube, and Boiron, who first joined as chief legal officer from Dydx.

In July 2023, Boiron was appointed as CEO, while Wyatt left as president to take up an advisory role in Polygon.

“In the US, the storytelling and marketing DNA in people is also very good. Beyond a certain time for all the big brands, it becomes more about storytelling. So we worked with Ryan and it was also great, but he came from the gaming community,” he said.

Nailwal added that Boiron had expertise in DeFi (decentralised finance), which is one of the biggest spaces in blockchain and NFT.

“Marc is more experienced in the Web 3.0 world, I would say. He was already working with all the support functions as a legal counsel. And we realised people would think that due to regulatory things, we made the legal person as the head of this business, but it's absolutely an understatement for Marc. He is an absolute beast when it comes to business, and he's doing a good job for now,” he said.

According to Nailwal, the shuffling at Polygon is not different from those at other startups that have grown to become a mainstream “blue chip” product.

“When you have bigger teams and bigger players in the bull market, you scale very aggressively. And then in the bear markets you have to adjust your plans accordingly. So all these kinds of optimisations, lay-offs, shuffling, all are a part of taking Polygon slowly to the direction wherein, we know that this is the long-term direction for a Polygon,” he explained.

In February, Polygon said it was laying off about 100 employees, which is 20 percent of its workforce.

Path to Polygon 2.0

“We want Polygon to be the backbone of this new internet (Web 3.0),” said Nailwal.

Polygon went from having 7,000 decentralised apps being developed on its network and 7-8 product lines in 2022, to 60,000-70,000 decentralised applications on its network and four major product line segments at present.

“We realised our product line was fragmented. So we have kind of consolidated our product line into four major product lines. One is our flagship Polygon PoS chain. Then we have ZkEVM chain, which is a roll-up on top of Ethereum. And then we have Polygon CDK (chain development kit), using which people can launch their own chains. And then we also have Polygon Miden, which is a separate VM,” he said.

ZkEVM, or zero-knowledge Ethereum Virtual Machine, executes smart contract transactions and is compatible with both zero-knowledge-proof computations and the existing Ethereum infrastructure.

Polygon Miden is a zero-knowledge rollup running on the Miden VM (virtual machine) that prioritises zk-friendliness over EVM compatibility.
As Web 3 takes centre stage, Polygon wants to be a value layer or application layer over Ethereum’s settlement layer – where applications can be built and live.

“This involves a lot of organic community building, having a large ecosystem which contributes to each other. Previously, when we were a small company and a small project, we were doing a lot of things ourselves, but now we need to move into a place where we are doing a lot of things which are core protocol, but then we give out more and more value to the ecosystem. That's what we've been trying to do now,” he said.

Asked if he would need additional funds for these plans, Nailwal said the company has a decent runway of funds for the foreseeable future. This includes about a billion dollars in MATIC tokens and $170-200 million from its previous funding round.

“We are not raising funds, but again, we are always open for any strategic partnerships. If a very large institution wants to invest in Polygon and become a strong partner then we can consider,” Nailwal said. “But this might change because the bear market, and also the Fed rates, like people are now talking about, will be higher for longer.”