Layer 2 (L2) solutions for the Ethereum network have become a popular topic of discussion, and speculation about the associated tokens has driven the explosive growth seen across multiple protocols this year. The corresponding growth of the decentralized finance (DeFi) and non-financial token (NFT) sectors has also significantly increased the cost of making simple transfers, which has led developers and investors to move to L2-enabled platforms.
An L2 solution that saw its token price rise to new heights at the beginning of the year and now appears to be ready for a new breakthrough is Polygon (MATIC), a proof-of-stake blockchain protocol that integrates scalable solutions on Ethereum to support a multi-chain ecosystem.
Data from Cointelegraph Markets Pro and TradingView shows that the MATIC hit a low of $ 1.01 on September 21, and the price has been in a steady upward trend in recent months, which has caused the altcoin to break above the $ 2 mark on the 1st. December.
MATIC / USDT 1-day chart. Source: TradingView
The Polygon ecosystem is expanding, as evidenced by an increase in protocol launches, network migration, the launch of an exchange-traded product (ETP) targeting Polygon, and continued growth in user activity.
Expand the ecosystem
One of the main factors influencing MATIC’s price and network activity was the addition of new protocols for launching Polygon Networks projects and cross-chain relays.
Recently, IDEX decentralized the stock exchange that it will launch version 3 of the stock exchange on the Polygon Network, making it the first DEX with hybrid liquidity on Polygon.
Polygon Network hosts projects from NFT projects such as the OpenBiSea NFT Marketplace and DeFi gaming platforms / platforms such as Rainmaker Games, Harvest Finance and Jarvis Network.
The Uniswap community is currently voting to add Polygon support for Uniswap v3, and after November 25, when a majority voted for Phase 1, the process went to Phase 2.
Increased institutional support
Another reason for the bullish behavior of Polygon’s price is the growing interest of institutional investors. Several Polygon ETPs have been listed in recent months, including the Osprey Polygon Trust in September and the 21Shares Polygon ETP in November.
Polygon is also listed as an asset under investigation by Grayscale Investments as a potential trust candidate.
The network has also benefited from a $ 20 million investment fund set up by Wintermute, a digital assets maker that helps accelerate the development of Polygon’s decentralized applications.
Polygon Network is currently receiving increased attention as it prepares to host the ZK Summit on December 9, where developers will discuss “the current and future state of zk-STARK and zero-knowledge applications”.
Related: IDEX launches hybrid decentralized liquidity exchange on polygon
Increase the number of active users and wallets
The third reason for the bullish price movement seen in MATIC is the continuous increase in the number of users on the network, which is reflected in the increase in the number of wallet addresses with balances.
Polygon titles that are in balance compared to the price of MATIC. Source: Intotheblock
As shown in the chart above, the number of Polygon wallets with balance has grown steadily through 2021 and is currently at a record high level of 282,760 wallets.
Evidence of increased activity can also be found in data on the total income generated from online commissions, which is growing steadily in the second half of 2021.
Landfill price versus total income. Source: Token Terminal
As new protocols continue to emerge on the Polygon Network, these statistics are likely to grow if new users continue to use the platform to avoid the high fees seen on the Ethereum network.
VORTECS ™ data from Cointelegraph Markets Pro began to provide optimistic prospects for MATIC on October 15, ahead of the recent rally.
Exclusive to Cointelegraph, VORTECS is an algorithmic comparison of historical and current market conditions based on a number of data points, including market sentiment, trading volume, recent price movements and Twitter activity.
Pricing VORTECS ™ (in green) versus MATIC price. Source: Cointelegraph Markets Pro
As you can see in the chart above, MATIC’s VORTECS steg reading rose to green on October 15 and peaked at 94 approximately 48 hours before the price began to rise 57% over the next six weeks.