Layer two (L2) solutions for the Ethereum network have become a popular topic of discussion and speculation about their associated tokens supported the massive rally seen in many of the protocols this year. The parabolic growth of the decentralized finance sector (DeFi) and non-fungible tokens (NFT) also caused an increase in the cost of making simple transfers and this led developers and investors to migrate to L2 support platforms.
One L2 solution that saw the price of its token rise to new highs earlier in the year and now seems poised to make another breakout higher is Polygon (MATIC), a proof-of-stake blockchain protocol that adds scalable solutions on Ethereum to support a multi-chain ecosystem.
Data from Cointelegraph Markets Pro and TradingView show that MATIC touched a low of $ 1.01 on September 21, and for the past few months the price has been in a steady uptrend, carrying the altcoin above the $ 2 mark on December 1.
The Polygon ecosystem is expanding and proof of this can be seen at increased protocol launches, cross-chain migrations, the launch of an exchange-traded product (ETP) focused on Polygon, and a steady increase in user activity.
Ecosystem expansion
One of the biggest drivers of MATIC price and on-chain activity has been the addition of new protocols to Polygon network project launches and cross-chain migrations.
More recently, the decentralized exchange IDEX announced that it would launch v3 of its platform on the Polygon network, making it the first hybrid liquidity DEX on Polygon.
Tomorrow. Approximately 12 PM PST.
IDEX v3, the first Hybrid Liquidity DEX will be launching on @ 0xPolygon.
✅ Combined AMM + Order Book Liquidity
✅ Cheap transaction fees pic.twitter.com/1nmOEzEGLW
– IDEX (@idexio) November 30, 2021
AMM Combined Liquidity + Order Book
Trade Rewards + Liquidity Mining
No failed transactions
Real limit and stop-loss orders
Cheap transaction fees
The Polygon network has seen project launches from NFT projects as the market OpenBiSea NFT 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 to add Polygon support for Uniswap v3 and after the majority of yes votes in Phase 1 on November 25, the process moved to Phase 2.
Increased institutional support
Another reason for Polygon’s bullish price action has been increased interest from institutional investors. Several ETPs have been listed for Polygon in recent months, including the Osprey Polygon Trust in September and the 21Shares Polygon ETP in November.
Polygon is also included in the list of assets being explored by Grayscale Investments as a potential Trust candidate.
The network has also benefited from a USD 20 million investment fund launched by Wintermute, a digital asset market maker focused on helping drive decentralized application development at Polygon.
Currently, The Polygon network is receiving increased attention as it prepares to host a ZK Summit on December 9, where developers will discuss the “current and future state of zk-STARK and zero-knowledge testing applications.”
Increase in users and active wallets
A third reason for the bullish price action observed in MATIC has been the constant increase in users on the network, as evidenced by the increase in wallet addresses that maintain a balance.
As shown in the graph above, the number of Polygon wallets with balance has increased steadily throughout 2021 and It is currently at an all-time high of 282,760.
Evidence of the increase in activity can also be found in the data for total revenue generated by rates on the network, which has risen steadily during the second half of 2021.
As new protocols continue to appear on the Polygon network, These statistics are likely to increase if new users continue to use the platform to escape the high fees seen on the Ethereum network.
VORTECS ™ data from Cointelegraph Markets Pro began to spot a bullish outlook for MATIC on November 15, ahead of the recent price spike.
The VORTECS ™ Score, exclusive to Cointelegraph, is an algorithmic comparison of historical and current market conditions derived from a combination of data points including market sentiment, trade volume, recent price movements and activity in Twitter
As seen in the chart above, the VORTECS ™ Score for MATIC began to rally on October 15 and peaked at 94 around 48 hours before the price began to increase 57% in the next two days.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and business move involves risk, you should do your own research when making a decision.
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