New token and stablecoin by Sony: how Polygon (MATIC) is evolving
Polygon's key network metrics and market data
Even though Polygon lost its position in the capitalization ranking, the network remains one of the most sought-after in terms of the number of active users. For example, according to Flipside Crypto's 2023 report, Polygon has almost caught up with Ethereum, the leading blockchain in the DeFi segment, regarding the number of users attracted to the ecosystem. Polygon had 15.24 million users, while Ethereum had slightly more at 15.4 million.
Also, according to Coin98, Polygon is in second place after BNB Chain regarding the number of unique addresses, which reached 452.4 million as of September 2024. Even Ethereum has only 277.7 million, while Tron has 247.8 million.
The reason is that Polygon's L2 network is one of the fastest and cheapest for transactions, which is why it is so popular, especially among those who regularly make transfers with stablecoins like Tether (USDT) and USD Coin (USDC).
However, between July and September 2024, activity on Polygon's L2 network roughly halved from 1.6 million to 800,000 daily active users. In addition to the general collapse of the crypto market, which started just in July, the reason could also be a drop in interest in retro drops after a number of unsuccessful giveaways. As a result, some investors started selling off their MATIC tokens, increasing the pressure on their price.
Regarding the number of assets locked in DeFi protocols (TVL), Polygon is in 7th place, behind Base and Arbitrum: according to DeFi Llama, this figure exceeds $868 million as of September 2024. However, Polygon ranks 4th among blockchain networks in terms of the number of DeFi protocols included in the ecosystem, which is more than 570.
Despite the positive dynamics in terms of users and TVL, the rate of the Polygon MATIC network cryptocurrency itself shows the opposite picture: unlike most major altcoins, whose price has increased over the past year, the value of the MATIC token, on the contrary, has reached a yearly low of $0.38 as of September 2024. However, back in March 2024, the price of MATIC reached a local high of $1.27 amid the general rise of the crypto market, but since then, the token has collapsed more than three times.
Polygon updates and plans
In March 2024, a major update to the Ethereum network codenamed Dencun, was rolled out. This update came from the merger of Cancun + Deneb. One of the key elements of the Dencun update was the reduction of commissions on L2 networks, including Polygon. Since the update was released, commissions on L2 networks have fallen by dozens, and some have even fallen by hundreds of times. As of September 2024, the commission for sending tokens on the Polygon blockchain averaged less than a cent.
In parallel with Polygon's L2 solution, the project team is developing another platform for scaling and improving Ethereum performance called Polygon zkEVM, based on ZK-rollups (zero-disclosure proof-of-stake). Polygon zkEVM improves performance by combining several thousand transactions into a single packet for fast validation. The platform itself is compatible with the Ethereum Virtual Machine (EVM) and supports all the functionality of the Ethereum network related to smart contracts and decentralized applications (DApps).
In July, the Polygon team announced an upcoming major upgrade to its ecosystem, one of the milestones in the transition to Polygon 2.0. As part of the upcoming update, Polygon developers will replace MATIC with a new POL token, which will be used to pay for network commissions upon release. The update is scheduled for September 4, 2024.
According to the project team, MATIC cryptocurrency owners in the Polygon native network will not need to do anything: MATIC tokens are converted to POL automatically.
Users who store MATIC in other places, such as centralized exchanges (CEX) or networks other than Polygon (Ethereum, Polygon zkEVM, Arbitrum, and others), must migrate their tokens to the native network. As the developers state, in some cases, additional actions with a particular smart contract may be required.
Polygon's prospects
As of September 2024, Polygon remains in the top five in terms of capitalization of Tier 2 solutions for scaling the Ethereum blockchain and is among the leaders in terms of the number of partnerships signed with major Web2 companies, including:
- Sony,
- Stripe,
- eBay,
- Robinhood,
- Adobe,
- Walt Disney,
- Mastercard,
- Reddit,
- Starbucks,
- Mercedes and others.
For example, in April 2024, technology giant Sony, specifically its banking division Sony Bank, announced plans to launch its yen-linked stablecoin on the Polygon network. According to Sony Bank, this move will reduce bank payment fees for users and protect them from the impact of exchange rate differences between currencies during conversion (in the blockchain, you can directly exchange stablecoins without intermediaries and additional fees).
Despite the temporarily negative market dynamics, MATIC remains a strong enough project with reliable partners that will only contribute to the development of the ecosystem, especially when the crypto market returns to an upward trend after the current correction.