Polygon’s MATIC Token Ended May Up 120% Despite Bitcoin’s Price Crash

Surging utilization of Polygon Network’s Ethereum layer 2 scaling resolution allowed that platform’s token (MATIC) to largely escape the destiny of different cryptocurrencies in May introduced down by crash within the worth of bitcoin.

MATIC, at present ranked 18th as per market capitalization by Messari, rallied 120% in May at the same time as bitcoin fell by 35%. Ether, polkadot, cardano, XRP, and decentralized finance (DeFi)-blue chips suffered larger losses, pushing the full market capitalization of the crypto universe down by 24%. 

MATIC was capable of stand up to the the worst results of the downdraft because of Polygon’s hovering utilization and fixed progress within the congestion and excessive prices that plague the DeFi-dominating Ethereum blockchain, as analytics agency IntoTheBlock mentioned in its analysis word printed on June 2. 

Related: Bitcoin Is Heading to the Moon and for Once It’s Meant Literally, Courtesy of BitMEX

“Throughout 2021, Ethereum fees skyrocketed up to 845% compared to the year before; currently, a transaction on the network costs around $4.819,” IntoTheBlock said. “On the other hand, transacting on the Polygon network only costs around $0.001 to transfer $200.”

As such, a number of DeFi protocols flocked to Polygon – a sidechain working tangent to Ethereum’s blockchain, providing excessive transaction output and comparatively low prices with out compromising safety. Scaling refers to rising the throughput of the system, as measured by transactions per second.

MATIC’s spectacular efficiency proves a cryptocurrency backed by sturdy fundamentals can largely maintain its personal towards a worth slide in bitcoin. As such, the token might proceed to understand within the coming months until Ethereum sees a sustained drop in transaction prices or utilization.

Ethereum rivals like Polkadot, Solana, and Binance Smart Chain would additionally appear prepared to realize. However, as Polygon is a sidechain that works along with Ethereum, it benefits from Ethereum’s dominating community results and thus holds an edge over blockchains that search to interchange the market-leading large. Perhaps that’s why tokens powering Ethereum rivals Polkadot, Solana, and Binance Smart Chain suffered double-digit losses in May at the same time as MATIC prolonged a four-month run of beneficial properties. A current string of flash mortgage assaults on merchandise constructed on the Binance Smart Chain seemingly didn’t assist the popularity of the would-be Ethereum dethroners both.

Related: Is the Bitcoin Bull Market Over?

While MATIC proved remarkably resistant within the face of bitcoin’s worth crash, it wasn’t utterly immune. The majority of beneficial properties occurred within the first half of the month, earlier than the most important cryptocurrency fell from $58,000 to $30,000 within the eight days to May 19 on issues concerning the unfavourable environmental affect of crypto mining and China regulatory fears. MATIC’s worth hit an all-time excessive of $2.72 for a year-to-date acquire of 248% earlier than bitcoin’s troubles took their toll.

Rally accompanied by community progress

Before MATIC started giving again some its beneficial properties in mid-May, the token’s efficiency was rising consistent with the hovering utilization of the protocol itself. During the month, the variety of common every day energetic customers on Polygon surged by 285% from 7,500 to 28,873, in accordance with blockchain knowledge supplier Covalent. The sidechain grew to become busier than ever as extra customers accessed DeFi through the low-cost scaling resolution. 

Per Covalent, the variety of distinctive addresses utilizing Aave protocol on Polygon shot up by 156% to 15,769 in May. The decentralized cash market large obtained over $5 billion in liquidity through the layer 2 scaling resolution. Aave announced integration with Polygon in April. 

Meanwhile, common every day distinctive customers on Polygon-based decentralized alternate QuickSwap rose by 302% to over 10,000, and the liquidity on the platform elevated by 68% to $924.78 million, Covalent mentioned in an e mail. 

“The almost fee-less trading Polygon offers offered a breath of fresh air to seasoned DeFi traders that have been suffering under the weight of extremely high gas prices [Ethereum fees] for some months now,” Tim Frost, CEO of Yield app, mentioned whereas explaining causes for Polygon and QuickSwap’s success. 

Looking forward

Polygon’s efficiency has led the protocol to obtain validation from distinguished traders like Mark Cuban. Further, the token has been added to the Bitwise 10 Large Cap Crypto Index (BITX) with a weightage of 1.03%, according to LiveMint. The index is managed by Bitwise Asset Management, a crypto asset supervisor with $1.5 billion value of belongings underneath supervisor.

“The early rally seemed to be driven by a mix of savvy DeFi users and retailers, but now popular investors like Mark Cuban are publicly diving in,” Nick Mancini, chief neighborhood officer at Trade The Chain, advised CoinDesk. 

Cuban confirmed being an investor in Polygon on May 26, however shunned disclosing the scale or composition of his stake. However, Polygon’s co-founder Sandeep Nailwal told Economic Times on May 27 that his challenge obtained a “sizeable investment” from the billionaire entrepreneur and never by a easy buy of tokens.

“I was a Polygon user and find myself using it more and more,” Cuban said in an e mail to CoinDesk on the time. His website describes Polygon as “the first well-structured, easy-to-use platform for Ethereum scaling and infrastructure development.”

Trade The Chain’s Mancini mentioned he expects extra institutional inflows into DeFi belongings and a continued rally in MATIC, albeit after some draw back in June. The token has come underneath strain this week, falling by 15% to $1.58. Still, costs are up 8,800% year-to-date. 

Yield CEO Tim Frost mentioned Polygon and QuickSwap’s momentum may gradual as soon as the Ethereum 2.0 (proof-of-stake improve) is accomplished. Developers estimate that the improve will occur by the top of this yr or early 2022. After that, Ethereum founder Vitalik Buterin plans to implement the sharding improve to ease congestion and produce down charges. 

However, Polygon CEO Sandeep Nailwal mentioned he’s assured that layer 2 scaling options will prevail even after the improve permits Ethereum transaction prices to say no. 

“Ethereum 2.0 will become 64 times more scalable than Ethereum is now, but the demand is 1,000 times than where we are. You will need L2 scalability,” Nailwal told CoinDesk.

Also learn: Money Reimagined: The Power of Community 

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