Polygon, one of the first layer-2 networks in the crypto industry, has lost market share as competition in the sector has risen. POL, its token, has also plunged by 43% from its December high, while its ranking in the crypto sector has deteriorated. It is now the 35th biggest crypto, worse from where it was a few years ago and has lost market share to Base and Arbitrum.
Polygon has lost market share to Base and Arbitrum
Polygon was probably the first layer-2 network in the crypto industry. Its technology provides an Ethereum scaling solution that helps reduce transaction costs and boost speeds.
According to its website, Polygon has over 28,000 smart contract creators and has handled over 2.4 billion transactions. It also has over 219 million unique addresses in its ecosystem.
Recently, however, Polygon has lost market share across various industries like gaming, NFTs, and Decentralized Finance (DeFi).
One of the best ways to gauge a layer-1 or layer-2’s success is to consider the total amount of money locked in its platform. According to DeFi Llama, Polygon now has $954 million locked in its ecosystem, with AAVE, Polymarket, Uniswap, and Spiko being the biggest names in the ecosystem.
In contrast, other layer-2 solutions like Arbitrum and Base have over $3 billion in assets, figures that have grown in the past few months. While Polygon was launched in 2017, Arbitrum and Base were created in 2021 and 2023.
Another way to look at a layer-2’s network success is to consider the amount of cash in its stablecoins. This is notable since stablecoins are what power the blockchain industry.
Polygon has a stablecoin market cap of $1.67 billion, while Base and Optimism have over $3 billion each. That is a sign that they are more active networks than Polygon.
Polygon DEX volume has fallen
Another metric to look when considering a chain’s success is to look at the volume of assets traded on in its DEX networks. Data shows that its DEX networks handled over $365 million in the last 24 hours, much lower than what other chains handled.
Solana’s 24-hour volume was almost $30 billion, while Base and Arbitrum had $2.11 billion and $2.7 billion, respectively.
Polygon’s 30-day volume was $4.9 billion. While this is a good number, it was much lower than Base’s $51 billion and Arbitrum’s $24 billion. It has also been overtaken by a fairly new network like Sui, which processed $4.1 billion in assets.
More data shows that the Polygon network has continued to deteriorate. As shown below, the number of active Polygon active chain addresses has fallen, moving from 1.665 million in July last year to 558,000. This decline happened even as cryptocurrency pieces jumped, with Bitcoin reaching an all-time high on Monday.
Polygon chain addresses
The number of deployed contracts on Polygon has also dropped to its lowest level in December last year. There were over 36,000 contracts, down from 358k in October.
Polygon price forecast
Polygon price chart
The 4H chart shows that the POL token has crashed from last year’s high of $0.7671 to the current $0.4355. It has moved below the 61.8% Fibonacci Retracement point and the 50-period moving average.
Polygon has also formed a descending triangle pattern whose lower side is at $0.4132. A falling triangle pattern is a highly popular bearish sign in the market. Therefore, the coin will likely continue falling as sellers target the next target at $0.3897, its 78.6% Fibonacci Retracement point.
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