Polygon’s （MATIC） ecosystem shows strong network activity with soaring daily active addresses and transactions, despite broader market downturns.
Points
- Polygon ecosystem sees increased network activity.
- Daily active addresses and transactions climb.
- MATIC price gains 5% amid broader market downturn.
The Polygon ecosystem has maintained robust 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, the protocol’s on-chain metrics remained strong. This resilience 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.
The key driver behind Polygon’s stability in network performance during the second quarter of the year 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.
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.
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%.
NFT Market Stability
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 increased by 1.8% to 52,000, underscoring ongoing collector interest.
At the time of writing, MATIC has experienced a 5% increase to a trading price of $0.512, after hitting a two-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. This represents an 82% difference from MATIC’s all-time high of $2.91, set during the 2021 bull run.
Despite the broader market downturn, Polygon’s strong network activity and ecosystem growth demonstrate its resilience and potential for future recovery.