After a devastating 50 percent correction between December 25 and January 25, Polygon (MATIC) struggled to maintain the support at $1.40. While some argue that this top 15 coin only corrected after a 16,200% increase in 2021, others point to the rise of competing expansion solutions.
MATIC/USD token on FTX. Source: Trading View
Despite this, MATIC is still 50.8% below its all-time high with a market capitalization of $11 billion. Terra (LUNA) is currently worth $37 billion, Solana (SOL) is worth over $26 billion, and Avalanche (AVAX) is $19 billion.
On the plus side, Polygon raised $450 million on February 7, and the funding round was backed by some of the most important blockchain VCs, including Sequoia Capital.
Polygon offers infrastructure scaling and support for decentralized applications (DApps) based on Ethereum Virtual Machines (EVM). In addition, he is not alarmed by the high transaction fees and network congestion affecting the Ethereum network.
But with the rise of Proof-of-Stake team-1 networks to offer affordable smart contract capabilities, competition has arisen for decentralized finance (DeFi) on the Ethereum network, non-fungible token mining, marketplaces, cryptocurrencies, gambling, and social applications. .
By comparison, Terra’s total recorded value increased 340% between July and December 2021, to $12.6 billion. Similarly, Avalanche’s smart contract deposits increased from $185 million to $11.11 billion in the same period.
Polygon sizing lotion usage is declining
Polygon’s main DApp metric began showing weakness in August 2021 after the network’s TVL dropped below 4 billion MATIC.
Total polygon value, MATIC locked. Source: Defillama
The chart above shows how the Polygon DApp deposit peaked at 7.4 billion MATIC in July 2021 and then declined over the next few months. In dollars, the current TVL of $3.5 billion is the lowest since May 2021. According to DefiLlama, these numbers represent less than 5% of the total TVL (excluding Ethereum).
On the other hand, Ankr, a multi-chain infrastructure toolkit, launched a token bridge between Ethereum and Polygon on March 9. The first version will enable the aMATICb floating storage token to be transmitted and maintained. This allows users to earn multiple reward categories on DeFi platforms.
To confirm if the TVL drop in Polygon is a problem, DApp usage calculations must be analyzed. Some DApps such as Games and Collectibles do not require large deposits, so a TVL account does not matter in these cases.
Polygon DApps chain data for 30 days. Source: DappRadar
As DappRadar showed, on March 10, the number of polygon network addresses interacting with DApps increased by 5% compared to the previous month. While TVL Polygon has suffered the most compared to similar smart contract platforms, the gaming segment has seen stable network usage as measured by 199,260 active Crazy Defense Heroes titles over the past 30 days.
On November 16, Polygon launched a virtual Miden machine based on zk-STARK, a scalable and transparent argument for a zero-knowledge system. Polygon has also committed more than $1 billion to developing complex DeFi applications that require the release and downsizing of sensitive information about digital assets in order to quickly verify blockchain participants.
The above data indicates that Polygon is holding its own against the competing chains, and these owners may not want to worry too much about MATIC’s 50% price correction. Polygon continues to thrive, and the fact that it offers so many sought after Tier 2 expansion solutions across industries can be seen as an optimistic factor.