Polygon (MATIC) rally comes to an end as competitors devour market share

Polygons native token (MATIC) experienced a 16.4% rally that coincided with the launch of Polygon 2.0 Goreli testnet on Oct. 4. Polygons ZK subnet, zkEVM, has lagged behind competitors in terms of activity and deposits.Network information reveals Polygon losing steam as new competitors emergesZK networks daily active and deals. A comparable discrepancy exists when analyzing the number of day-to-day transactions, with Polygons zero-knowledge rollup likewise tracking competitors.Taking a more comprehensive point of view on the total number of deals and deposits in the Polygon network yields suboptimal results. Source: DeffiLamaIts noteworthy that regardless of being introduced much earlier than most Ethereum layer-2 services in June 2020, Polygon is now dealing with direct competition from Optimism (OP) and Base.The departure of Polygons co-founder, Jaynti Kanani, on Oct. 4 after six years with the job likewise set off some degree of pain among financiers, offered the tasks proximity to the important completion of its better multiple-layer scalability service.

Polygons native token (MATIC) experienced a 16.4% rally that accompanied the launch of Polygon 2.0 Goreli testnet on Oct. 4. Nevertheless, the resistance at $0.60 proved stronger than anticipated, and was followed with a 10.6% decrease over the six days leading into Oct. 10. This decline was exacerbated by negative news relating to the departure of an essential co-founder and weak activity in Polygons zero-knowledge (ZK) rollup subnet.Polygon (MATIC) 12-hour price, USD. Source: TradingViewMATICs price has actually wiped out previous gains from the early October rally, eliminating the bullish momentum driven by the expectations of the procedures upgrades. Rallies tend to follow mainnet and protocol updatesPolygon 2.0 is a network of ZK-based layer-2 chains, unified via a novel cross-chain coordination protocol. Polygons 2.0 scaling innovation was revealed in June 2023 as a plan for a scaling ecosystem consisting of four layers: staking, execution, interoperability, and proving. Each of these layers adds to developing an interconnected community of chains that assist in secure, fast, and extremely affordable transfers.Among the advantages of Polygon 2.0 are enhanced security and personal privacy through ZK proofs, complete compatibility with the Ethereum Virtual Machine (EVM), and instant cross-chain interactions without needing additional security or trust assumptions. Its worth keeping in mind that the job is continuing to develop its ZK-STARK-based layer-2 option, Miden.One might argue that the current 10.6% retracement simply shows a change to the overexcitement set off by the testnet launch. Nevertheless, other aspects may have contributed to investors intensifying sentiment towards Polygon. Polygons ZK subnet, zkEVM, has lagged behind rivals in terms of activity and deposits.Network information shows Polygon losing steam as brand-new competition emergesZK networks daily active and deals. Source: artemis.xyzMetrics from Artemis, an on-chain information service provider, expose a considerable variation between Polygon zkEVMs 6,210 active addresses compared to StarkNets 154,390 and zkSync ERAs 239,810. A similar disparity exists when examining the number of everyday transactions, with Polygons zero-knowledge rollup likewise trailing competitors.Taking a more comprehensive viewpoint on the overall number of deals and deposits in the Polygon network yields suboptimal results. Polygons total value locked (TVL) stands at $756 million according to DeFiLlama, which is less than half of Arbitrums layer-2 scaling solution.Total value locked (TVL) in USD. Source: DeffiLamaIts noteworthy that regardless of being introduced much earlier than the majority of Ethereum layer-2 solutions in June 2020, Polygon is now facing direct competition from Optimism (OP) and Base.The departure of Polygons co-founder, Jaynti Kanani, on Oct. 4 after 6 years with the task also activated some degree of pain among financiers, given the jobs proximity to the important completion of its better multiple-layer scalability service. Remarkably, this decision follows the departure of Polygon Labs CEO, Ryan Wyatt, in July 2023, shortly after joining the business in February 2022. Further impacting MATICs performance was a decline in the variety of active addresses using Polygon networks decentralized applications.Polygon network Dapps active addresses, 30-day modification. Source: DappRadarOn average, the top 12 Dapps on the Polygon network experienced a 17% decline in the variety of active addresses over the last 30 days. This concern was particularly concerning in the NFT and decentralized finance (DeFi) markets, significantly affecting applications like Uniswap, OpenSea and Move Stake.Related: Circle presents native USDC tokens on PolygonRegardless of the factors behind MATICs token surge previously in October, the current 10.6% unfavorable performance can be credited to minimized network activity, the departure of a co-founder throughout a vital upgrade stage, and stiff competition from other ZK scaling solutions. Eventually, there suffices bearish news flow to justify this correction, although the team has been regularly providing the essential updates and improvements to the Polygon network. Financiers should carefully keep an eye on the jobs progress in dealing with these challenges and capitalizing on the developments of Polygon 2.0. This short article is for general details purposes and is not planned to be and ought to not be taken as legal or investment recommendations. The thoughts, opinions, and views revealed here are the authors alone and do not always show or represent the views and viewpoints of Cointelegraph.