The Polygon (MATIC) price held steady on Wednesday morning even as other cryptocurrency prices crashed. MATIC is trading at $2.58, which is a few points below its all-time high of $2.90. It has risen by 321% from its lowest level in July this year.
The need for Polygon
Polygon is the biggest layer-2 blockchain network in the world. The total market capitalization of all the MATIC in circulation is about $17.8 billion, making it the 14th biggest cryptocurrency in the world. Other fast-growing layer-2 platforms are Immutable X and Loopring.
As a layer two network, Polygon helps developers to supercharge their Ethereum-built applications. It is also possible to build applications from scratch using Polygon.
There is a strong need for a layer two platform, especially when it comes to Ethereum. While the number of Ethereum-killers is rising, it still reigns supreme in the smart contracts industry.
For example, Ethereum dominates the decentralized finance (DeFi) industry. According to DeFi Llama, there are 375 apps built on Ethereum. This includes popular apps like Curve, InstaDapp, and Maker.
In total, these apps have a total value locked (TVL) of $155 billion. In contrast, all DeFi apps have a TVL of $248 billion, meaning that Ethereum is bigger than all of them combined.
While Ethereum is the market leader in its industry, it is known for its key underlying challenges. For example, as a second-generation project, it is based on the proof-of-work (PoW) technology that makes it expensive to mint new coins.
It is also extremely slow compared to other blockchain networks since it can only handle less than 20 transactions per second (TPS). In contrast, a fast-growing Ethereum-killer like Kadena can process 480k tps. Ethereum transactions are also expensive.
Therefore, Polygon helps developers to optimize their projects while remaining in Ethereum’s network. It has a tps of about 7,000, and transactions cost just a few cents.
Polygon growth accelerating
The Polygon price has grown rapidly in the past few months as more developers have embraced its technology.
The most recent platform that moves to Polygon’s ecosystem is Uniswap. For starters, Uniswap was one of the first DEXes. It is a decentralized exchange that has about $8.6 billion in TVL. It simply helps people buy and sell tokens without an intermediary.
Uniswap joined many other decentralized platforms that already use Polygon. The most prominent ones are Curve, Aave, QuickSwap, Balancer, and Beefy Finance among others. In total, apps in Polygon have a TVL of $5.5 billion.
Therefore, the growing adoption by the biggest DeFi platforms explains why the Polygon price has continued rising in the past few days, even as other cryptocurrencies retreat. Investors believe that the ecosystem and the number of transactions will keep growing in the coming months.
Still, the biggest risk for Polygon and other coins is the Federal Reserve. As we move into the new year, the Fed has hinted that it will abandon its easy-money policies, which could have an impact on the cryptocurrencies sector.
Polygon price prediction
The daily chart shows that the MATIC price has been in a bullish trend in the past few months. Along the way, the coin formed an ascending channel that is shown in the chart below. The price is also above the 25-day and 50-day moving averages. Also, it has tested the key resistance level at $2.8, which was the previous all-time high. Therefore, there is a possibility that the pair will remain in a bullish trend in the coming weeks.