Polygon Ecosystem On Fire: Daily Active Addresses And Transactions Soar, MATIC Gains 5%
July 27 2024 - 2:30AM
NEWSBTC
Layer 2 scaling solution Polygon has maintained strong network
activity even as the broader cryptocurrency market and its native
token, MATIC, experienced a downturn in the second quarter of 2024,
according to a new report from market intelligence platform
Messari. Polygon Weathers Crypto Market Downturn While MATIC saw a
44.3% drop in its circulating market cap to $5.5 billion over the
quarter, placing it as the 20th largest crypto asset (currently at
the 26th position), the protocol’s on-chain metrics remained
strong. This is in contrast to larger cryptocurrencies such
as Bitcoin and Ethereum, which saw their market capitalization
decline by 12% and 6%, respectively, over the same period. Related
Reading: Why Is ETH Price Struggling Despite The Spot Ethereum ETFs
Launch? The key driver behind Polygon’s stability in network
performance during the second quarter of the year, according to
Messari, was the implementation of Ethereum Improvement Proposal
(EIP) 4844 on the Polygon mainnet in Q1 2024. This upgrade,
which introduced “blobs” to the network, significantly reduced the
average transaction fee on Polygon from $0.017 to just $0.01,
resulting in a decrease of 41.1%. As a result, Polygon’s revenue
derived from network transaction fees fell 40.6% to $4 million in
Q2 2024. However, this drop was not due to a decrease in user
activity, but rather the lower fees enabled by EIP-4844. In fact,
Polygon’s user metrics continued to soar, with the protocol seeing
strong growth across several key indicators. On-Chain
Activity And Ecosystem Growth According to the report, the average
number of daily active addresses climbed to 1.2 million, a 47.6%
increase quarter-over-quarter (QoQ). The average number of daily
returning addresses rose even more, up 50.5% to 1 million.
Moreover, new addresses being added to the network grew by 31.7% to
167,800 per day on average. The report also notes that Polygon’s
transaction volume also held steady, averaging 4.1 million daily
transactions, just below its all-time high and representing a 3.9%
increase from the prior quarter. In comparison, fellow Layer
2 networks Arbitrum (ARB) and Base saw average daily active
addresses of 545,000 and 528,000 respectively. Related Reading:
Crypto AI Token RENDER Soars 15.6% After Rebrand, Can It Hit $10?
While Polygon’s decentralized finance (DeFi) total value locked
(TVL) dropped 22.9% to $1 billion, this was largely attributable to
the decline in MATIC’s price rather than a net outflow of capital.
Messari reported that TVL denominated in MATIC actually increased
by 38.1% to 1.8 billion tokens. However, DeFi protocols on Polygon
saw mixed results, with Aave, Uniswap, and SushiSwap all
experiencing declines in TVL ranging from 13% to 25%. Quickswap saw
the largest drop at 35%. Lastly, Polygon’s non-fungible token (NFT)
market also remained stable, with average daily NFT volume dipping
slightly by 5.7% to $1.8 million. However, the number of daily NFT
sales actually increased by 1.8% to 52,000, underscoring ongoing
collector interest. At the time of writing, MATIC has experienced a
mere 5% increase to a trading price of $0.512, after hitting a
2-year low of $0.428 on July 5th. Coupled with this worrying
price action, the token has seen a 30% decrease in trading volume
over the past few days, amounting to $197 million, according to
CoinGecko data. All of this has resulted in an 82% difference to
MATIC’s all-time high of $2.91, which was set during the 2021 bull
run. Featured image from Shutterstock, chart from
TradingView.com
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