Polygon is Ethereum’s most popular sidechain. ETH and ERC20 token transactions are much cheaper on Polygon, and they’re confirmed quicker since the sidechain has faster block times.
In this article we’ll dive into the ecosystem and consider the top 5 reasons to be bullish on Polygon and the network’s native token: MATIC.
1) NFTs on Polygon
Trading NFTs on the Ethereum mainchain isn’t always easy. Network congestion can make trading fees incredibly expensive. In some cases users have paid more in transaction fees than what their NFT is actually worth. Failed transactions are also common, especially when a large project like Bored Apes launches a new mint. In one particularly bad example, a user paid $430,000 in transaction fees for a failed transaction.
Instead of navigating that minefield of high fees and stuck transactions, many people have started buying and selling NFTs on Polygon. With its low fees and high bandwidth, Polygon is better suited to handle the traffic that a popular NFT release can generate.
For now, Polygon can scale up to about 1,000 transactions per second, although theoretically it could scale to thousands of transactions per second in the future. These numbers are exponentially better than the 15 to 20 TPS that the Ethereum base layer can process.
OpenSea, the world’s most popular NFT marketplace, is on Polygon and trading volumes are rising rapidly. In the last twenty-four hours just under 2,600 NFTs have traded on Polygon, cumulatively worth about $130,000. Although that’s only a small percent of the NFT trading volume on Ethereum, OpenSea only launched on Polygon in October of 2021. In a year from now, a noticeable percentage of NFT trading could be on Polygon rather than Ethereum.
2) Investors are buying the MATIC token
MATIC is Polygon’s native token and it has several key use cases. MATIC investors can use the token to vote on governance decisions for Polygon. For example, raising transaction fees or adding new features to the protocol.
MATIC is also used to secure the network. Polygon has its own Proof of Stake consensus mechanism separate from Ethereum’s. Validators stake MATIC for a chance to earn staking rewards. The current staking reward on Polygon is 18%.
According to Dune Analytics, the number of unique Ethereum addresses holding MATIC recently reached an all-time high of 418,000. There are currently 37,000 wallets holding more than 1,000 tokens, and whales holding 10,000 to 10,000,000 tokens have increased their holdings by 8.7%.
A comprehensive dashboard with multiple MATIC token statistics is available here.
3) Private transactions with Nightfall
Polygon has an awesome feature that’s missing from most other layer two scaling solutions: private transactions! Developed by the consulting firm Ernst & Young, Polygon Nightfall uses zero-knowledge proof to anonymize transactions and hide wallet balances.
Anonymous transactions are important for individuals and corporations alike. In fact, corporate adoption could really help Polygon to beat out the competition. In many instances, corporations cannot transact on public blockchains since anyone can see their financial activity. Nightfall offers corporate blockchain users a way to transact without disclosing what they're doing.
4) Layer two scaling solutions are taking off
Layer two scaling solutions are taking off across the board. According to L2Beat, layer two deposits are at an all-time high. A cumulative total of 3.6 million ETH have been deposited in the scaling solutions that L2Beat tracks. The deposits are growing despite the bear market and a slowdown in new user growth.
A rising tide lifts all ships, and increased demand for layer two bandwidth proves that Polygon’s long-term prospects are excellent. Ethereum is poised to maintain its position as the dominant smart contract platform, suggesting that demand for scalability solutions will remain high.
5) Crosschain interoperability
Polygon got its start on Ethereum but that doesn’t mean the network is restricted to just one blockchain. The process is straightforward for Polygon to integrate with any EVM compatible (Ethereum Virtual Machine) blockchain. Two of Polygon’s most popular connections are to Binance Smart Chain and Avalanche. Other connections are also available via the wide variety of third party bridges that have integrated with Polygon.
The interoperability options currently available on Polygon are just the tip of the iceberg. Crosschain bridges are still in the early stages of development and many of them lack the necessary features and liquidity for institutional adoption. Once the bridges are more fully developed, Polygon will have a service that tens of millions of people want to use.
The Ethereum merge is coming, but it won’t significantly increase the transaction throughput on the network, and the Ethereum team itself has talked about the need to use sidechains for scaling. The future of cryptocurrency is a seamless transition between different blockchains, and Polygon is well-positioned to take an early lead in interoperability.
How to buy MATIC
You can buy MATIC in Exodus using a credit / debit card, bank account, or Apple Pay. For a simple, step-by-step guide on how to buy cryptocurrency in Exodus using Ramp network, head to our knowledge base.
Exodus hosts over 200 different crypto assets including MATIC chain assets like USDC, and you can also buy MATIC with Bitcoin and other cryptocurrencies within Exodus by either using the built-in exchange app, or by linking your Exodus wallet with the FTX exchange.
This content is for informational purposes only and is not investment advice. You should consult a qualified licensed advisor before engaging in any transaction.