Polygon (MATIC) rally comes to an end as competitors devour market share

Polygon’s autochthonal token (MATIC) experienced a 16.4% rally that coincided with the motorboat of Polygon 2.0 Goreli testnet connected Oct. 4. However, the absorption astatine $0.60 proved stronger than anticipated, and was followed with a 10.6% diminution implicit the six days starring into Oct. 10.

This diminution was exacerbated by antagonistic quality regarding the departure of a cardinal co-founder and anemic enactment successful Polygon’s zero-knowledge (ZK) rollup subnet.

Polygon (MATIC) 12-hour price, USD. Source: TradingView

MATIC’s terms has wiped retired erstwhile gains from the aboriginal October rally, erasing the bullish momentum driven by the expectations of the protocol’s upgrades.

Rallies thin to travel mainnet and protocol updates

Polygon 2.0 is simply a web of ZK-based layer-2 chains, unified via a caller cross-chain coordination protocol. Polygon’s 2.0 scaling exertion was unveiled successful June 2023 arsenic a program for a scaling ecosystem consisting of 4 layers: staking, execution, interoperability, and proving. Each of these layers contributes to creating an interconnected ecosystem of chains that facilitate secure, fast, and highly cost-effective transfers.

Among the benefits of Polygon 2.0 are enhanced information and privateness done ZK proofs, afloat compatibility with the Ethereum Virtual Machine (EVM), and instant cross-chain interactions without requiring further information oregon spot assumptions. It's worthy noting that the task is continuing to make its ZK-STARK-based layer-2 solution, Miden.

One could reason that the caller 10.6% retracement simply reflects an accommodation to the overexcitement triggered by the testnet launch. However, different factors whitethorn person contributed to investors' worsening sentiment towards Polygon. For instance, Polygon’s ZK subnet, zkEVM, has lagged down competitors successful presumption of enactment and deposits.

Network information shows Polygon losing steam arsenic caller contention emerges

ZK networks regular progressive and transactions. Source: artemis.xyz

Metrics from Artemis, an on-chain information provider, uncover a important disparity betwixt Polygon zkEVM’s 6,210 progressive addresses compared to StarkNet’s 154,390 and zkSync ERA’s 239,810. A akin discrepancy exists erstwhile analyzing the fig of regular transactions, with Polygon’s zero-knowledge rollup besides trailing competitors.

Taking a broader position connected the full fig of transactions and deposits successful the Polygon web yields suboptimal results. For example, Polygon’s full worth locked (TVL) stands astatine $756 cardinal according to DeFiLlama, which is little than fractional of Arbitrum's layer-2 scaling solution.

Total worth locked (TVL) successful USD. Source: DeffiLama

It's noteworthy that contempt being launched overmuch earlier than astir Ethereum layer-2 solutions successful June 2020, Polygon is present facing nonstop contention from Optimism (OP) and Base.

The departure of Polygon’s co-founder, Jaynti Kanani, connected Oct. 4 aft six years with the task besides triggered immoderate grade of discomfort among investors, fixed the project's proximity to the important completion of its improved multiple-layer scalability solution. Interestingly, this determination follows the departure of Polygon Lab’s CEO, Ryan Wyatt, successful July 2023, soon aft joining the institution successful February 2022.

Further impacting MATIC’s show was a diminution successful the fig of progressive addresses utilizing Polygon network’s decentralized applications.

Polygon web Dapps progressive addresses, 30-day change. Source: DappRadar

On average, the apical 12 Dapps connected the Polygon web experienced a 17% diminution successful the fig of progressive addresses implicit the past 30 days. This contented was peculiarly concerning successful the NFT and decentralized concern (DeFi) markets, notably affecting applications similar Uniswap, OpenSea and Move Stake.

Related: Circle rolls retired autochthonal USDC tokens connected Polygon

Regardless of the reasons down MATIC's token surge earlier successful October, the caller 10.6% antagonistic show tin beryllium attributed to reduced web activity, the departure of a co-founder during a captious upgrade phase, and stiff contention from different ZK scaling solutions.

Ultimately, determination is capable bearish quality travel to warrant this correction, though the squad has been consistently delivering the indispensable updates and improvements to the Polygon network. Investors should intimately show the project's advancement successful addressing these challenges and capitalizing connected the innovations of Polygon 2.0.

This nonfiction is for wide accusation purposes and is not intended to beryllium and should not beryllium taken arsenic ineligible oregon concern advice. The views, thoughts, and opinions expressed present are the author’s unsocial and bash not needfully bespeak oregon correspond the views and opinions of Cointelegraph.