MATIC, the native cryptocurrency of the Polygon network, failed to meet expectations in early October. Unable to continue the rally, MATIC fell behind its competitors.
Bullish momentum has been erased
The decline in the Polygon network increased following negative news regarding the departure of a key co-founder and weak activity on Polygon’s zero-knowledge (ZK) aggregation subnet.
MATIC’s price has erased gains prior to the early October rally and bullish momentum driven by expectations for the protocol to be upgraded.
Polygon’s 2.0 scaling technology was announced in June 2023 as a plan for a scaling ecosystem consisting of four layers: staking, execution, interoperability, and proof. Each of these layers has contributed to creating an interconnected chain ecosystem that facilitates secure, fast and extremely cost-effective transfers.
Lagged behind competitors
Measurements from on-chain data provider Artemis revealed a significant disparity between Polygon zkEVM’s 6,210 active addresses, StarkNet’s 154,390, and zkSync ERA’s 239,810 addresses. It was noted that there was a similar inconsistency when the number of daily transactions was analyzed, and Polygon’s zero information collection also fell behind its competitors.
Notably, despite launching much earlier than most Ethereum layer-2 solutions in June 2020, Polygon currently faces direct competition from Optimism (OP) and Base.
Additionally, the decrease in the number of active addresses using decentralized applications of the Polygon network also affected MATIC’s performance.
Advantages of Polygon 2.0
Benefits of Polygon 2.0 include enhanced security and privacy through ZK proofs, full compatibility with the Ethereum Virtual Machine (EVM), and instant cross-chain interactions without requiring additional security or trust assumptions. The project continues to develop the ZK-STARK based layer-2 solution Miden.
It could also be argued that the recent 10.6 percent pullback merely reflects an adjustment to the extreme excitement triggered by the testnet launch. However, other factors may have contributed to worsening investor sentiment towards Polygon. For example, Polygon’s ZK subnet zkEVM lags behind its competitors in terms of activity and deposits.
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