Increased growth in the number of projects joining Polygon has been recorded, raising speculations on MATIC’s undervaluation. This growth comes at a critical time when projects are looking towards layer 2 solutions to gain a competitive edge.
The Ethereum network has been facing tough competition from layer 1 networks such as Cosmos (ATOM) and Solana (SOL). Ethereum comes with higher fees and lagging transactions compared to ATOM and SOL. This limitation has made Ethereum look towards layer 2 solutions and shifting to a proof-of-stake mechanism to maintain its competitiveness.
One of the platforms on which Ethereum is adopting scalability and development is Polygon (MATIC). The platform has recorded an increase in activities and transactions in two months. MATIC has recorded a 50% price growth from 0.26 on April 18 to $0.39 amidst increasing adoption of the layer 2 frameworks.
Polygon Reports Increase in Projects
In early February, MATIC announced that they would be linking up with Polygon to create a new brand. This development would enable the platform to become better suited for the Ethereum network. The Polygon (MATIC) rebranding has increased the usage and adoption of the platform.
Several DeFi and NFTs have integrated with Polygon to enjoy the low fees and speedy transactions of the network. Some major protocols that have shifted to Polygon include SushiSwap (SUSHI), Decentaland (MANA), and Aavegotchi (GHST).
Aave, one of the largest DeFi lending platforms, also announced its Layer 2 solution powered by Polygon. After the launch, Aave recorded growth in liquidity to $1 billion and over 7200 users.
Spike in DEX trading volumes
Leading decentralized exchanges such as SushiSwap and Uniswap have been instrumental to the growth of the crypto sector and DeFi. To suppor growth, decentralized exchanges need to enhance functionality.
SushiSwap has partnered with Polygon and other blockchain networks to enhance functionality. On the other hand, QuickSwap had launched a DEX project aimed at boosting liquidity on Polygon. These adoptions have increased liquidity and trading volumes on decentralized exchanges. A surge in trading activities on DEX is also attributed to more projects joining Polygon.
The future is not so promising for Ethereum if the Eth2 upgrade is not implemented soon. DeFi projects on Ethereum may start looking for platforms that offer faster transactions and lower fees. If these projects transfer to Polygon, it means that the price of MATIC will also rise. An increase in total value locked for projects running on Polygon also proves that the protocol is a viable solution.