- Polygon’s native token (MATIC) experienced a 16.4% rally coinciding with the launch of Polygon 2.0 Goreli testnet on Oct. 4.
- The resistance at $0.60 proved stronger than anticipated and was followed by a 10.6% decline over the six days leading into Oct. 10.
- Negative news surrounding a key co-founder’s departure and weak activity in Polygon’s zero-knowledge rollup (ZK-rollup) subnet contributed to the decline.
Rallies tend to follow mainnet and protocol updates
- Polygon 2.0 is a network of ZK-based layer-2 chains unified via a novel cross-chain coordination protocol.
- Polygon’s 2.0 scaling technology was unveiled in June 2023 as a plan for a scaling ecosystem consisting of four layers: staking, execution, interoperability, and proving.
- Polygon’s benefits include enhanced security and privacy through ZK-proofs, full compatibility with the Ethereum Virtual Machine (EVM), and instant cross-chain interactions without additional security or trust assumptions.
Network data shows Polygon losing steam as new competition emerges
- Metrics from Artemis reveal a significant disparity between Polygon zkEVM’s active addresses compared to StarkNet and zkSync ERA.
- Polygon’s ZK-rollup also trails competitors in terms of daily transactions.
- Polygon’s total value locked (TVL) is less than half of Arbitrum’s layer-2 scaling solution.
- Polygon is facing direct competition from Optimism and Base.
Other factors impacting MATIC’s performance
- The departure of Polygon’s co-founder triggered discomfort among investors.
- The number of active addresses using the Polygon network’s decentralized applications (DApps) has declined.
Reduced network activity, the departure of a co-founder, and competition from other ZK scaling solutions have contributed to MATIC’s recent negative performance. However, the team continues to deliver updates and improvements to the Polygon network. Investors should monitor the project’s progress in addressing these challenges and capitalizing on the innovations of Polygon 2.0.
This article is for general information purposes and is not intended to be taken as legal or investment advice.