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 its token price rise to new highs earlier in the year and now looks 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.
Cointelegraph Markets Pro data and TradingView shows 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, taking the altcoin above the $ 2 mark on December 1.
The Polygon ecosystem is expanding and proof of this can be seen in increased protocol launches, cross-chain migrations, the launch of a Polygon-focused exchange-traded product (ETP), and a steady increase in activity from the users.
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.
Most recently, decentralized exchange IDEX announced that it would launch v3 of its exchange on the Polygon network, making it the first hybrid liquidity DEX on Polygon.
Tomorrow. At approximately 12 p.m. PST.
IDEX v3, the first hybrid liquidity DEX to launch on @ 0xPolygon.
✅ Combined liquidity of AMM + order book
✅ Trade Rewards + Liquidity Mining
✅ No failed transactions
✅ Real limit and stop-loss orders
✅ Inexpensive transaction fees pic.twitter.com/1nmOEzEGLW
– IDEX (@idexio) November 30, 2021
The Polygon network has seen project launches from NFT projects like the OpenBiSea NFT marketplace and gaming / DeFi platforms like 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 $ 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-STARKs and zero-knowledge testing applications.”
Related: IDEX to Launch Hybrid Liquid Decentralized Exchange on Polygon
Increase in active users and wallets.
A third reason for the bullish price action seen in MATIC has been the steady increase in users on the network as evidenced due to the increase in wallet addresses with balance.
As shown in the graph above, the number of Polygon wallets with balance has been increasing steadily throughout 2021 and is currently at an all-time high of 282,760.
Evidence of increased activity can also be found in the data for the total revenue generated by tariffs on the network, which has increased 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 detect a bullish outlook for MATIC on October 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, trading volume, recent price movements, and trading activity. Twitter
As seen in the graph above, the VORTECS ™ score for MATIC spiked into the green zone on October 15 and peaked at 94 around 48 hours before the price began to increase by 57% over the next six weeks.
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