Monday, 15 April 2024

Crypto News

Polygon ecosystem development and upcoming zkEVM launch add to MATIC’s bullish momentum

Polygon ecosystem development and upcoming zkEVM launch add to MATIC’s bullish momentum

Matter Labs, the firm managing Polygon (MATIC), announced that the beta version of its zero-knowledge Ethereum Virtual Machine (zkEVM) would launch on March 27, 2023. It’s possible that Polygon will enjoy a first-mover advantage in this space by launching a public mainnet before zkSync and Scroll.

Zk-based roll-up technology is accepted as the gold standard for scaling. The existing optimistic-based roll-ups like Arbitrum and Optimism have EVM capability but are less secure because they are “fraud-proof.” Malicious transactions on an optimistic roll-up can stay valid for up to seven days or more before being reversed. Thus, giving an advantage to zk-technology.

Moreover, the Ethereum (ETH) community’s focus on Liquid Staking Derivatives may shift toward L2 networks after the anticipated Shanghai upgrade in March. This is because the update following Shanghai, EIP-4844, will reduce the cost of L2 roll-ups by 10 to100 fold. A working zk-based roll-up solution will likely attract new projects to its ecosystem.

Polygon has built a strong bullish narrative in the market with the upcoming zkEVM launch. The team’s efforts in the Web3 space are promising and show signs of increasing activity. The growth in its DeFi ecosystem has stalled, which could likely stay this way for more extended periods.

Technically, the market structure for Polygon looks bullish. However, the recent 78% increase in MATIC’s price since the start of 2023 could see a correction as speculative buying cools down. Such a situation could possibly provide an ideal entry in MATIC for a swing trade.

Polygon’s DeFi sector has stalled but Web3 activity is on the rise

Since the start of 2023, Polygon has witnessed a spike in its NFT activity, especially for low-cost gaming assets. According to data from Dune Analytics, the number of NFT sales on Polygon surpassed Ethereum for two consecutive months in December 2022 and January 2023. While Ethereum still leads in total volumes, Nansen’s NFT activity data shows that the minting and sale volume on Polygon has been picking up since the start of 2023.

The volume of NFT sales and mints on Polygon. Source: Nansen

Meta also chose Polygon as the base layer for minting digital collectibles on its social media app, Instagram. This feature is currently in the limited testing phase but should see traction soon among the 1.28 billion Instagram users.

In November 2022, Matter Labs appointed the former gaming head of YouTube, Ryan Watt, to lead its gaming…

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