[MATIC behind the camera: Why is Polygon so busy but not making money? 】
Polygon (MATIC) is in a compelling position as a Layer-2 scaling solution for the Ethereum blockchain. According to the latest data from Messari, the network has seen a nearly 120% increase in daily active addresses, a 70% increase in new user registrations, and a staggering 4 million daily transactions. Behind those booms, however, hides a worrying fact: Quarterly revenue is down 19% from the previous quarter and 40% from the same period last year.
Clearly, Polygon's user base is growing rapidly. In the first quarter of 2024, the influx of new addresses reached an unprecedented rate, and this user growth translated into a trading frenzy, with daily interactions on the platform quadrupling. The decentralized finance (DeFi) sector on Polygon is also booming, with the total value locked (TVL) of DeFi projects growing by 30% compared to the previous quarter. In addition, the non-fungible token (NFT) ecosystem on Polygon also received a boost, with sales growing by 20%.
However, despite the surge in activity, Polygon's revenue has taken a hit. Revenue for the first quarter of 2024 was just $7 million, down from $10 million in the previous quarter and $12 million in the same period last year. This disconnect between booming activity and falling revenue has analysts baffled.
The two main reasons for this income paradox may be:
1. Transaction fee structure: In order to attract more users, Polygon may have lowered its fees, resulting in a decrease in overall revenue despite a significant increase in transaction volume.
2. Shifting revenue sources: Reductions in revenue from specific sources, such as grants or partnerships, are not offset by growth in other industries.
Polygon faces a critical moment. The network’s ability to attract users and facilitate the prosperity of the DeFi and NFT ecosystem is undeniable. However, if revenue issues are not addressed, its long-term sustainability will be at risk. Going forward, Polygon's transparency about its fee structure and revenue sources will be critical to allay investor concerns. Additionally, exploring alternative revenue models, such as offering premium services or entering into strategic partnerships, may be key to unlocking Polygon's full financial potential.