Polygon users competed with Ethereum in 2023, but why couldn’t the price surpass $1?

Layer-2 network Polygon is said to have rivalled Ethereum in 2023, as both networks experienced a surge in new users.

Layer-2 Network Polygon Competes with Ethereum in User Acquisition

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In a surprising turn of events, the layer-2 network Polygon has been reported to have competed head-to-head with Ethereum in terms of user acquisition in 2023. This news has sparked speculation about the impact on MATIC’s price, considering the influx of new users into the ecosystem during that year.

Polygon and Ethereum Lead the User Acquisition Race

According to a report by Blockchain analytics firm Flipside, both Polygon and Ethereum stood out among other networks, acquiring a staggering 30.6 million users combined in 2023. Polygon accounted for 15.24 million users, while Ethereum attracted 15.4 million users. These users are defined as individuals who performed at least two transactions on the respective networks.

While Polygon fell just short of Ethereum’s numbers, it still surpassed other networks such as Bitcoin and Solana. Moreover, Polygon outperformed other Ethereum layer-2 networks like Arbitrum, Optimism, and Base, with 7.3 million, 3.3 million, and 1.9 million acquired users, respectively.

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Polygon’s Impressive Rise in 2023

Polygon started off the year with a bang, setting a monthly acquired users record in January with 2 million new users. Interestingly, this was also the first time in a long while that MATIC, Polygon’s native token, surpassed the $1 mark. It maintained this level until the end of April but experienced a dip for the majority of the year, only resurfacing above $1 towards the end of December 2023.

MATIC price at $0.74 | Source: MATICUSDT on Tradingview.com

The Mystery Behind MATIC’s Struggle to Surpass $1

A recent analysis by Blockchain intelligence firm ChainArgos raised suspicions about the Polygon team secretly selling off MATIC tokens, which could explain the sell pressure the token faced despite its utility. Apparently, the team did not follow the publicly stated plan for token allocations, with some of the sold tokens originating from the allocated funds. These secret sales went undetected for a long time and reportedly occurred through wallets linked to the crypto exchange Binance.

To date, approximately 767 million MATIC tokens have been offloaded in these covert transactions. ChainArgos indicated that these outflows had a significant impact on MATIC’s price, with the flow of tokens serving as a “good indicator for an upcoming top and subsequent move lower.”

As of now, MATIC is trading at around $0.73, showing a slight increase in the last 24 hours according to data from CoinMarketCap.

Q&A Content

Q: How does Polygon compare to Ethereum in terms of user acquisition?

A: Both Polygon and Ethereum acquired an impressive number of users in 2023, with Polygon accounting for 15.24 million users and Ethereum attracting 15.4 million users. While Polygon fell slightly behind Ethereum, it outperformed other networks like Bitcoin and Solana.

Q: How did Polygon’s user numbers affect MATIC’s price?

A: The increase in Polygon’s user base should have potentially impacted the price of MATIC. However, a recent analysis suggests that the Polygon team has been selling off MATIC tokens, which could explain the struggle to hold above $1 despite its utility.

Q: Which other layer-2 networks did Polygon outperform?

A: In addition to outperforming other Ethereum layer-2 networks like Arbitrum, Optimism, and Base, Polygon also ranked ahead of Bitcoin and Solana in terms of user acquisition.

Q: How did MATIC’s price fare in 2023?

A: MATIC experienced a surge above $1 in January 2023 but traded below that level for most of the year. It rose above $1 again towards the end of December 2023 and is currently trading at around $0.73.

Future Outlook and Investment Recommendations

The increasing user base of Polygon highlights the network’s potential for future growth and adoption. As more users flock to the network, the demand for MATIC tokens could increase, potentially leading to an upward price movement. However, investors should remain cautious due to the ongoing concerns about token sell-offs by the Polygon team. Monitoring the situation closely and analyzing market trends will be crucial in making informed investment decisions.

Reference List

1. Layer-2 network Polygon
2. MATIC’s price forecast
3. Cardano’s exponential growth
4. Other layer-2 networks
5. Significance of EVM sidechain update on XRP Ledger

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