Layer
2
scaling
solution
Polygon
has
maintained
strong
network
activity
even
as
the
broader
cryptocurrency
market
and
its
native
token,

MATIC,
experienced
a
downturn
in
the
second
quarter
of
2024,
according
to
a
new
report
from
market
intelligence
platform
Messari.

 

Polygon
Weathers
Crypto
Market
Downturn

While
MATIC
saw
a
44.3%
drop
in
its
circulating
market
cap
to
$5.5
billion
over
the
quarter,
placing
it
as
the
20th
largest
crypto
asset
(currently
at
the
26th
position),
the
protocol’s
on-chain
metrics
remained
strong. 

This
is
in
contrast
to
larger
cryptocurrencies
such
as
Bitcoin
and
Ethereum,
which
saw
their

market
capitalization

decline
by
12%
and
6%,
respectively,
over
the
same
period.

Related
Reading

The
key
driver
behind
Polygon’s
stability
in
network
performance
during
the
second
quarter
of
the
year,

according
to
Messari,
was
the
implementation
of
Ethereum
Improvement
Proposal
(EIP)
4844
on
the
Polygon
mainnet
in
Q1
2024. 

This
upgrade,
which
introduced
“blobs”
to
the
network,
significantly
reduced
the
average

transaction
fee

on
Polygon
from
$0.017
to
just
$0.01,
resulting
in
a
decrease
of
41.1%.

As
a
result,
Polygon’s
revenue
derived
from
network
transaction
fees
fell
40.6%
to
$4
million
in
Q2
2024.
However,
this
drop
was
not
due
to
a
decrease
in
user
activity,
but
rather
the
lower
fees
enabled
by
EIP-4844.
In
fact,
Polygon’s
user
metrics
continued
to
soar,
with
the
protocol
seeing
strong
growth
across
several
key
indicators. 

On-Chain
Activity
And
Ecosystem
Growth

According
to
the
report,
the
average
number
of

daily
active
addresses

climbed
to
1.2
million,
a
47.6%
increase
quarter-over-quarter
(QoQ).
The
average
number
of
daily
returning
addresses
rose
even
more,
up
50.5%
to
1
million.
Moreover,
new
addresses
being
added
to
the
network
grew
by
31.7%
to
167,800
per
day
on
average.

The
report
also
notes
that
Polygon’s
transaction
volume
also
held
steady,
averaging
4.1
million
daily
transactions,
just
below
its

all-time
high

and
representing
a
3.9%
increase
from
the
prior
quarter. 

In
comparison,
fellow
Layer
2
networks
Arbitrum
(ARB)
and
Base
saw
average
daily
active
addresses
of
545,000
and
528,000
respectively.

 

Related
Reading

While
Polygon’s
decentralized
finance
(DeFi)

total
value
locked

(TVL)
dropped
22.9%
to
$1
billion,
this
was
largely
attributable
to
the
decline
in
MATIC’s
price
rather
than
a
net
outflow
of
capital.
Messari
reported
that
TVL
denominated
in
MATIC
actually
increased
by
38.1%
to
1.8
billion
tokens.

However,
DeFi
protocols
on
Polygon
saw
mixed
results,
with
Aave,
Uniswap,
and
SushiSwap
all
experiencing
declines
in
TVL
ranging
from
13%
to
25%.
Quickswap
saw
the
largest
drop
at
35%.

Lastly,
Polygon’s
non-fungible
token
(NFT)
market
also
remained
stable,
with
average
daily
NFT
volume
dipping
slightly
by
5.7%
to
$1.8
million.
However,
the
number
of
daily
NFT
sales
actually
increased
by
1.8%
to
52,000,
underscoring
ongoing
collector
interest.

At
the
time
of
writing,
MATIC
has
experienced
a
mere
5%
increase
to
a
trading
price
of
$0.512,
after
hitting
a
2-year
low
of
$0.428
on
July
5th. 

 

Coupled
with
this
worrying
price
action,
the
token
has
seen
a
30%
decrease
in
trading
volume
over
the
past
few
days,
amounting
to
$197
million,
according
to
CoinGecko

data.
All
of
this
has
resulted
in
an
82%
difference
to
MATIC’s
all-time
high
of
$2.91,
which
was
set
during
the
2021
bull
run. 

Featured
image
from
Shutterstock,
chart
from
TradingView.com

Go to Source
Author: Ronaldo Marquez

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