MATIC, the native token of Ethereum Layer 2 blockchain Polygon, has seen spectacular growth since the end of 2022. MATIC entered the new year at $0.7572 on January 1 and reached its most recent high of $1.1240 on January 26. At press time, the price of MATIC stands at $1.0790.
Being the native token of Polygon, MATIC is mainly used for transaction fees and as a settlement currency between users on the blockchain. What’s more, MATIC is also used for governance, allowing holders to vote on important network changes, and staking. As per data from CoinMarketCap, the total supply of MATIC is 10,000,000,000 coins, while its circulating supply currently stands at 8,734,317,475 MATIC. The market capitalization of MATIC is $9,465,654,825.
Meanwhile, Polygon, or as its team calls it, "Ethereum's Internet of blockchains" has recently experienced a particular boost in daily transactions, which has made it the second most used network.
With its 349,200 daily active users (DAU), it surpassed the popularity of Ethereum, which has a DAU total of 340,969 at the time of publication. BNB Smart Chain (BSC), Binance's blockchain network, remains the market leader with its 803,707 active users.
Launched in 2017, Polygon (previously Matic Network) is a proof-of-stake (PoS) blockchain that aims to provide interoperability for Ethereum-compatible blockchains and improve their scalability. Polygon also supports existing projects by improving their compatibility with Ethereum and enables the development and deployment of custom blockchains.
The team behind the network believes that Polygon is "scaling the goodness of Ethereum." Indeed, Polygon has managed to achieve incredible transaction speed, with an average block processing time of 2.1 seconds. Polygon also focuses on keeping transaction fees low, which are typically around $0.01.
The rapid increase in the price of Polygon's token can be attributed to the active development of the network, as well as its recent partnerships. One of them is the agreement with Warner Music Group signed in December 2022. Polygon Studios and LGN.io will build the LGND Music platform to help musicians adopt Web3 to facilitate their careers. Shortly after, Polygon also partnered with Mastercard Artist Accelerator to onboard emerging musical talents to web3.
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What’s more, DeLabs, the startup behind top Solana NFT collections y00ts and DeGods, has recently announced it accepted a $3 million grant to migrate from Solana to Polygon.
In addition, Polygon has successfully completed a network hard fork on January 17 to reduce gas fees and shorten the time required for block production.
Polygon’s hard fork
To keep gas fees low during peak demand, the developers of Polygon decided to increase the value of BaseFeeChangeDenominator from 8 to 16. The team believed this move would reduce the rate of change of the gas fee, which is essential for periods of increased transaction demand. In other words, Polygon users can avoid the exponential growth of gas fees when the system deals with an exceeding number of concurrent transactions.
Another critical upgrade to the platform was shortening the length of a sprint from 64 blocks to 16. A sprint can be understood as the number of blocks produced by a validator in Polygon's Bor chain. Bor is the third layer of the Polygon architecture, alongside the Ethereum and Heimdall layers. It is often referred to as the block producer implementation.
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“By reducing the length to 16 blocks, this upgrade means a single block producer will produce blocks continuously for a much shorter time (~32 sec) than the current (~128 seconds),” Polygon blog post reads.
At the same time, Polygon's developers promised that the block reward would stay the same since “the change will not affect the total time or number of blocks a validator produces.”