Strong fundamentals and the steady growth of the Polygon network are just some of the factors behind MATIC’s recent rally above $2.00.
MATIC seems ready for a breakthrough
Layer-Two (L2) solutions for the Ethereum network have become a hot topic of discussion. Speculation about the associated tokens supported the massive rally seen in many of the protocols this year. The parabolic growth of the decentralized financial (DeFi) and non-fungible token (NFT) sectors also increased the cost of performing simple transfers. This prompted developers and investors to migrate to L2-supporting platforms.
An L2 solution that saw its token price rise to highs earlier this year and now looks poised to launch a
Data sourced from TradingView show that MATIC hit a low of $1.01 on September 21. For the past few months, the price has been in a steady uptrend, pushing the altcoin above USD 2.00 on December 1.
The Polygon ecosystem is expanding rapidly. Evidence of this can be seen in the proliferation of protocol launches, cross-chain migrations, the launch of a Polygon-focused Exchange-Traded Product (ETP), and a steady increase in user activity.
Expanding the MATIC ecosystem
One of the biggest drivers of MATIC price and on-chain activity is the addition of new protocols to the Polygon network thro project launches and cross-chain migrations.
Most recently, the decentralized exchange IDEX announced that it would be launching v3 of its exchange on the Polygon network. This would make it the first hybrid liquidity DEX on Polygon.
The Polygon network has seen many project launches. Some of these include NFT projects such as the OpenBiSea NFT marketplace and gaming/DeFi platforms such as Rainmaker Games, Harvest Finance, and Jarvis Network.
Currently, the Uniswap community is in the process of voting on whether or not to add Polygon support for Uniswap v3. After a majority of ‘yes’ in the stage 1 vote on November 25, the process has moved to stage 2.
Increasing institutional support
Another reason for the rising price action for Polygon is the increased interest from institutional investors. Several exchange-traded products (ETPs) have been listed for Polygon in recent months. Some of these include the Osprey Polygon Trust in September and the 21Shares Polygon ETP in November.
Polygon is also on the list of assets under investigation by Grayscale Investments as a potential Trust candidate.
The network also benefited from a $20 million investment fund launched by Wintermute. This is a digital asset market maker that focuses on helping drive the development of decentralized applications on Polygon.
Currently, the Polygon network is getting more attention as it prepares to host a ZK summit on December 9. Here developers will discuss the “current state and future of zk-STARKs and applications of zero-knowledge proofs”.
Increase in active users and wallets
A third reason for the rising price action seen in MATIC is the steady increase of users on the network. this staysjkt from the increase in wallet addresses with a balance.
As can be seen from the chart above, the number of Polygon wallets with balances has steadily increased in 2021. It currently stands at a record high of 282,760.
Evidence of the increased activity can also be found in the data for total fee revenue on the network. These also rose steadily in the second half of 2021.
As new protocols continue to appear on the Polygon network, these statistics are likely to rise as new users continue to use the platform to escape the high fees seen on the Ethereum network.