Polygon’s focus on building L2 infrastructure outweighs MATIC’s 50% drop from ATH

2 years ago

After a devastating 50% correction betwixt Dec. 25 and Jan. 25, Polygon (MATIC) has been struggling to prolong the $1.40 support. While immoderate reason this top-15 coin has simply adjusted aft a 16,200% summation successful 2021, others constituent to competing scaling solutions growth.

Either way, Polygon (MATIC) remains 50.8% beneath its all-time precocious astatine an $11 cardinal marketplace capitalization. Currently, the marketplace headdress of Terra (LUNA) stands astatine $37 billion, Solana (SOL) is supra $26 billion, and Avalanche (AVAX) is astatine a $19 cardinal marketplace value.

A affirmative enactment is that Polygon raised $450 million connected Feb. 7, and the backing circular was backed by immoderate of blockchain’s astir sizeable task funds, including Sequoia Capital.

Polygon offers scaling and infrastructure enactment to Ethereum Virtual Machine-based (EVM) decentralized applications. Besides, it is not plagued by the precocious transaction fees and web congestion that interaction the Ethereum network.

However, arsenic Proof-of-Stake layer-1 networks emerged and offered low-cost astute declaration capabilities, it vastly accrued the contention for Ethereum web decentralized concern (DeFi), non-fungible token minting, marketplaces, crypto games, gambling, and societal applications.

In comparison, Terra’s full worth locked accrued by 340% betwixt July and December 2021, reaching $12.6 billion. Similarly, Avalanche’s astute contracts deposits accrued from $185 cardinal to $11.11 cardinal successful the aforesaid period.

The usage of Polygon’s scaling solution is declining

Polygon’s superior DApp metric started to show weakness successful August 2021 aft the network‘s TVL dropped beneath 4 cardinal MATIC.

The illustration supra shows however Polygon‘s DApp deposits peaked astatine 7.4 cardinal MATIC successful July 2021, past drastically declined implicit the adjacent mates of months. In dollar terms, the existent $3.5 cardinal TVL is the lowest fig since May 2021. These figures correspond little than 5% of the aggregate TVL (excluding Ethereum), according to DefiLlama data.

Another affirmative is that connected March 9, Ankr, a multi-chain toolkit for blockchain infrastructure, enabled a token span betwixt Ethereum and Polygon. The archetypal merchandise volition let the aMATICb liquid staking token to beryllium sent and stored. This enables users to gain further layers of rewards connected DeFi platforms.

To corroborate whether the TVL driblet successful Polygon is troublesome, 1 should analyse DApp usage metrics. Some DApps specified arsenic games and collectibles bash not necessitate ample deposits, truthful the TVL metric is irrelevant successful those cases.

As shown by DappRadar, connected March 10 the fig of Polygon web addresses interacting with decentralized applications grew by 5% versus the erstwhile month. Even though Polygon’s TVL has been deed the hardest compared to akin astute declaration platforms, determination is coagulated web usage successful the gaming sector, arsenic measured by Crazy Defense Heroes’ 199,260 progressive addresses successful the past 30 days.

On Nov. 16, Polygon launched its zk-STARK-powered Miden Virtual Machine, a zero-knowledge Scalable Transparent ARgument of Knowledge. Polygon has besides committed implicit $1 cardinal for processing complex DeFi applications that request delicate accusation redacted connected digitized assets, reducing their size for accelerated verification by blockchain participants.

The supra information suggest that Polygon is holding crushed versus competing chains, and those holders mightiness not interest excessively overmuch astir MATIC’s 50% terms correction. Polygon’s ecosystem continues to flourish, and the information that it offers overmuch demanded layer-2 scaling solutions for aggregate industries tin beryllium viewed arsenic a bullish factor.

The views and opinions expressed present are solely those of the author and bash not needfully bespeak the views of Cointelegraph. Every concern and trading determination involves risk. You should behaviour your ain probe erstwhile making a decision.

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