Ethereum is a trendsetting blockchain globally and is second only to Bitcoin when it comes to popularity and market cap. Its unprecedented adoption has also resulted in some operational issues with respect to low speeds and higher transaction costs resulting in not so ideal user experience. Basically, Ethereum’s extensive network of clients clog its network and impact its scalability. An Indian-founded blockchain platform is providing a solution to these challenges via its innovative and unique layer 2 solution. Let us find out what it does and why it has a strong future potential.
Polygon (with ticker MATIC) is a complete multi-chained system, a framework as well as a protocol. It connects Ethereum-compatible blockchain networks and is built to solve the scalability issues on the current Ethereum network. It is a layer 2 solution, i.e it works on top of Ethereum’s primary blockchain. Polygon uses side chains to unclog the main platform in a smart and cost-effective manner.
Polygon (MATIC) representation, Source: Giottus
Polygon’s multi-chain network provides an infrastructure for facilitating blockchain networks that can communicate with each other outside of Ethereum’s primary chain though it retains Ethereum’s liquidity, security and interoperability.
MATIC, Polygon’s token, is the underlying resource behind the Polygon ecosystem. It is primarily used for staking tokens (proof-of-stake algorithm) to safeguard the Polygon network in addition to being an asset.
The MATIC token has a maximum supply of 10 billion, of which more than 67 per cent is already in circulation. It currently ranks among the top 25 cryptocurrencies in the world with a price of $1.4 per token, with more than $9 billion market capitalization.
Short term technical analysis
MATIC started 2021 with a price tag of less than $0.02 per token and hit an all-time-high of $2.45 in May giving early investors (a lot of them from India) great multiples on their investments and making its Indian founders crypto billionaires.
MATIC has traded well in technical frameworks over the past quarter, respecting both resistance and support levels. It bounced off the strong .66 – .618 fibonacci retracement levels – also called the Golden Pocket – that it formed between July to September, before rallying nearly 40% to $1.42 as of today. It has now broken through the .382 fibonacci level and seems to be headed upwards of $1.5.
Source: TradingView, Binance
With bullish momentum prominent on its charts, investors looking to enter may want to wait for a drop to the $1.34 support level. Should that level be lost, MATIC will find support at the $1.19-$1.2 levels, where its 100-day and 20-day moving averages currently reside.
In the medium-term (4-6 months), MATIC has potential to break $5 and beyond giving more cheers to the Indians who have invested in the asset.
The potential of Polygon (MATIC) is linked to Ethereum’s strong performance. Ethereum 2.0 will mitigate some of the blockchain’s scalability issues, but Polygon will continue to be relevant as it has already demonstrated substantial success in integrating a network of companies and partners. Polygon’s future surely looks promising.
This article was authored by Giottus Cryptocurrency Exchange as a part of a paid partnership with The News Minute. Crypto-asset or cryptocurrency investments are subject to market risks such as volatility and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.