Polygon (MATIC), a Layer 2 scaling solution for the Ethereum blockchain, is currently trading at $0.9917, down 0.25% in the last 24 hours (As of March 30, 2024). While it boasts a healthy 24-hour trading volume of $340,165,804 USD and a circulating supply of 9,906,648,978 $MATIC coins, its price performance hasn't kept pace with some other alternative coins. At its peak on April 17, 2023, MATIC traded at $1.1838, representing a current drop of 16.23%.
Despite this, $MATIC fundamentals remain strong. With over 500 projects running on its chains (as of March 30, 2024) and a dedicated community, Polygon has the potential for significant growth. However, recent analysis suggests a decline in on-chain activity, with fewer active addresses and new participants compared to the past. This could be contributing to the price stagnation.
A Look at On-Chain Activity and Transaction Fees
One area of concern is the current usage of Polygon's zkEVM technology. While it offers a promising Layer 2 solution, the number of transactions running on the chain remains lower compared to leading competitors like Arbitrum (ARB) and Optimism (OP). As of March 30, 2024, L2beat data shows Polygon zkEVM processed by 269,000 transactions from 230 projects in the past 30 days, compared to 34.3 million and 16.35 million transactions for ARB and OP, respectively.
Additionally, MATIC's daily fees (7-day average) are lower than those collected by OP, at $40.48 million compared to $62.96 million. However, it's important to note that zkEVM is a relatively new technology, and user adoption might still be growing.
Another factor impacting user adoption could be the higher fees on the zkEVM chain compared to competitors. Currently, sending 1 ETH on zkEVM costs around $0.14, and a token swap is $0.51, whereas other Layer 2 solutions like $OP , ARB, or METIS with comparative technologies (Optimistic Rollup) charge significantly less (between 75% - 95% less). Polygon is actively working on reducing fees in the future, which could be a positive development.
Conclusion: Keeping an Eye on a Growing Project
Whether MATIC's price will rally soon depends on its ability to overcome these challenges and attract more users to its zkEVM chain as well as its existing chains. The strong fundamentals and ongoing development efforts suggest MATIC's potential for future growth. As the Layer 2 landscape continues to evolve, Polygon remains an interesting project to watch, agree? Let us know what you think!!