Polygon ($MATIC ), a network that offers scalability solutions for Ethereum, has been performing strongly in recent months, following the rise in value of $ETH . The correlation between the two assets reached 0.95 in March, meaning they move in almost the same direction. With Ethereum breaking price records and leading the market for decentralized finance (DeFi) and non-fungible tokens (NFTs), Polygon can benefit from the demand for faster and cheaper transactions on the network.
Polygon is an infrastructure that allows you to create and connect secondary networks to Ethereum, called sidechains or layer 2. These networks process part of the transactions that occur on Ethereum, relieving congestion and reducing fees on the main network.
Polygon claims to be able to process up to 65,000 transactions per second, with costs that are a fraction of a cent on the dollar.
To use Polygon, users need the MATIC token, which serves as a means of payment and also as a reward for validators who maintain the security of the network.
On February 6, the blockchain registered 10,439 active addresses. That number jumped to 15,708 on March 3. MATIC price followed this lead, rising from $0.83 to $1.14 in March, an increase of over 37.35%.
However, the price is still far from its all-time high of $2.92, reached in December 2023. Furthermore, the token has been surpassed by ETH in terms of growth, as Ethereum has risen 4.5 times more than than MATIC in the same period. Considering the strong correlation between the two assets, some analysts believe that Polygon has the potential for big leaps in the future.
One of the factors that could boost Polygon is the growth of the DeFi and NFT ecosystem on Ethereum, which is attracting more and more users and developers. Polygon already has more than 15 thousand active addresses on its network, an increase of almost 60% in the last 30 days. Some of the top DeFi projects, such as Aave, SushiSwap, and Curve, have already launched versions on Polygon, taking advantage of its scalability. Additionally, Polygon also hosts several NFT marketplaces, such as OpenSea, Decentraland, and SuperRare, which are hot right now.
To continue standing out in the market, Polygon needs to face competition from other scalability solutions, such as Optimism, Arbitrum and ZkSync, which also promise to improve Ethereum's performance. Additionally, Polygon also needs to prepare for Ethereum's transition to the Proof-of-Stake (PoS) consensus model, which is expected to occur by the end of the year. This change could make Ethereum faster and cheaper in its own right, reducing the need for secondary networks. However, Polygon claims it will continue to be relevant as it offers more flexibility and interoperability for developers.
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