Why are large companies increasingly integrating Polygon (MATIC)?

Polygon has become one of the leading Layer 2 solutions for scaling the Ethereum network, the largest smart contract-based blockchain platform in the crypto industry. Polygon also works with Web2 companies to integrate blockchain solutions into their platforms and services.

What is Polygon?

Polygon is a second-level blockchain protocol, previously known as Matic Network, and launched in 2020. The developers' goal of this solution was to create an ecosystem or, as they stated, an "Ethereum blockchain internet."

Like other solutions like Arbitrum and Optimism, Polygon uses zk-Rollups to generate transaction packets and send them to the leading Ethereum network for confirmation, thus reducing the load on the blockchain and scaling its ecosystem.

Polygon statistics and metrics

By capitalization, the Polygon MATIC token holds steady in the top 20 largest cryptocurrencies. In December 2021, when MATIC reached a peak capitalization of $20.59 billion, the token was ranked 14th in the overall CoinMarketCap ranking. By the end of 2022, it even climbed to 10th place at a time when some significant altcoins, such as Solana and Terra, gave up their positions.

Polygon is the leader among all L2 blockchains with a strong lead. For example, Polygon's capitalization is almost 2.5 times more significant than the subsequent Optimism, ranked 27th in the overall CMC ranking.

The MATIC token now sits at number 15 in the ranking, with a capitalization of $7.47 billion, down more than 2.7 times from its peak. Between the beginning of the year and October 2023, MATIC's capitalization fell 28% from $6.62 billion to $4.76 billion. Still, it rose nearly 57% in just one quarter amid a local growing trend in the crypto market.

The MATIC token exchange rate rose more than 50% from $0.51 to $0.77 over the same period, but the price has fallen by about a quarter over the past year and by nearly 74% from its all-time high of $2.92 in December 2021.

Despite the local correction, users' activity in the Polygon network shows positive dynamics. Over the month, their average daily number increased by 37% to more than 518 thousand, indicating a high demand for MATIC tokens. At the same time, the number of MATIC holders has grown by 92% to 449 thousand over the last year.

According to the DeFi Llama service, Polygon is among the top six most-used networks, with over 500 DeFi protocols and over $847 million in blocked assets (TVL). Polygon was ranked No. 5 by TVL a couple of months ago. Still, it recently ceded it to Solana, which has started to grow rapidly amid a local bullish trend and active ecosystem development.

This high demand is due to at least two factors:

• Fast speed and low transaction costs. On average, transfer fees on the Polygon network are less than a cent and only go higher during periods of very high blockchain load;
• Integration with large and well-known companies that use the Polygon network and the MATIC token for various tasks, such as making payments or exchanging NFTs. Hundreds of merchants worldwide accept MATIC tokens for payment, which continues to grow.

Updates and other developments that have happened with Polygon

In the summer of 2023, the team released a significant update to Polygon 2.0, introducing zk-Rollups technology to the network to increase blockchain throughput. The developers also divided the blockchain into several tiers:

• Proof-of-Stake based consensus layer for token staking;
• Interaction layer for exchanging messages between different blockchains;
• Execution layer for creating transaction or blockchain packets, consisting of several components including P2P communication protocol, consensus mechanisms for validators, mempool for transaction collection and synchronization, and others;
• A zero-disclosure proof-based validation layer (zk-SNARKs) that supports various transaction types.

Also, one of the critical updates was the addition of a new cryptocurrency, POL, which is planned to replace the current native MATIC token over the next four years. The POL token has already been launched, and proposals to replace the MATIC cryptocurrency were put forward back in September. Still, the new asset has no use in the Polygon ecosystem.

The team is working on creating its ecosystem of interoperable blockchains under the common name Polygon zkEVM. Once the POL token is officially launched, MATIC holders can convert at a 1-to-1 ratio. Initially, 10 billion POL tokens will be issued, and the issuance of the new cryptocurrency will increase by 2% every year.

Polygon's outlook for 2024

Imposing is the list of strategic partners from the Web2 sphere, according to which Polygon is one of the leaders in the crypto industry. Among them meet:

• the most famous coffee chain, Starbucks,
• the popular Walt Disney Studios,
• appliance manufacturer Samsung,
• Adidas and Nike,
• international payment systems Visa and Mastercard,
• Google Cloud and dozens of others.

Moreover, some companies began cooperating with the Polygon project as early as 2021.

In November 2023, the list of Polygon partners was expanded by Amazon Web Services, providing Polygon with its Amazon Managed Blockchain (AMB) Access service. Thanks to the blockchain project team's partnership with AWS, AMB Access supports the Polygon PoS core network and the Mumbai testnet. AWS has announced further plans to expand its Web3 infrastructure to provide fast and secure service access.

In January 2024, another world-renowned Fox Corporation began working with Polygon to launch its own Verify platform based on this blockchain to verify and validate the originality of copyrighted media content. All these integrations open up enormous prospects for developing the Polygon ecosystem. In 2024, we are likely to see even more project partners, which may positively impact the dynamics of the MATIC exchange rate.