MATIC, the Polygon protocol’s native token, is at the top of the most appreciated cryptocurrencies in 2021, accumulating a 10,400% gain for the year. If on January 1st the price of the currency was no more than US$0.01, today MATIC is traded at US$1.05, according to data from CoinMarketCap.
The asset’s price on Friday (9) is still 61% below the historic high of US$ 2.68 reached in May, a month marked by strong falls across the crypto market.
One of the factors that explain MATIC’s departure from anonymity to the top of today’s most promising cryptocurrencies is the attention its ecosystem has been receiving from decentralized finance (DeFi).
In recent months, Polygon has become the target of a number of DeFi projects trying to escape the Ethereum congestion in search of a fast and inexpensive network to implement their solutions.
Polygon is an Ethereum-compatible tier 2 scaling solution, and provides a highly customizable foundation for hosting different types of decentralized applications (dApps).
While Ethereum transaction fees in early June were around $4 — a price considered low by ETH standards — Polygon transactions cost just $0.001, as shown by an IntoTheBlock report.
The company’s analysts also indicate that the number of active addresses on the network has increased almost 20 times since January 2021. This coincided with the arrival at Polygon of important projects that accumulate a large number of users, such as AAVE, Sushiswap, 1Inch, Cream Finance, among others.
The network’s new entrants helped Polygon achieve a record $11 billion in total blocked value (TVL) in June, according to data in DeFi Llama. Since then, the project’s TVL has dropped to $7.8 billion, following the declines affecting the DeFi sector as a whole.
At the beginning of its bull phase, Polygon began to attract the attention of big investors. Billionaire Shark Tank presenter Mark Cuban became an investor in the project, proving an immediate 35% rise in the asset’s price after the announcement.
One more factor that can be attributed to Polygon’s success is the high rewards the cryptocurrency generates in its staking program. According to Staking Rewards, there is an estimated $1.8 billion held in MATIC staking generating an annual revenue (APY) of 12.4% for users — a percentage higher than competitors like Cardano (6.5%) , Ethereum 2.0 (6%) and BNB (9%).