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Layer 2 scaling solution Polygon has maintained strong network activity even as the broader cryptocurrency market and its native token, <\/span>MATIC<\/span><\/a>, experienced a downturn in the second quarter of 2024, according to a new report from market intelligence platform Messari.<\/span><\/p>\n While MATIC saw a 44.3% drop in its circulating market cap to $5.5 billion over the quarter, placing it as the 20th largest crypto asset (currently at the 26th position), the protocol\u2019s on-chain metrics remained strong.\u00a0<\/span><\/p>\n This is in contrast to larger cryptocurrencies such as Bitcoin and Ethereum, which saw their <\/span>market capitalization<\/span><\/a> decline by 12% and 6%, respectively, over the same period.<\/span><\/p>\n The key driver behind Polygon\u2019s stability in network performance during the second quarter of the year, according<\/a> to Messari, was the implementation of Ethereum Improvement Proposal (EIP) 4844 on the Polygon mainnet in Q1 2024.\u00a0<\/span><\/p>\n This upgrade, which introduced \u201cblobs\u201d to the network, significantly reduced the average <\/span>transaction fee<\/span><\/a> on Polygon from $0.017 to just $0.01, resulting in a decrease of 41.1%.<\/span><\/p>\n As a result, Polygon\u2019s revenue derived from network transaction fees fell 40.6% to $4 million in Q2 2024. However, this drop was not due to a decrease in user activity, but rather the lower fees enabled by EIP-4844. In fact, Polygon\u2019s user metrics continued to soar, with the protocol seeing strong growth across several key indicators.\u00a0<\/span><\/p>\n According to the report, the average number of <\/span>daily active addresses<\/span><\/a> climbed to 1.2 million, a 47.6% increase quarter-over-quarter (QoQ). The average number of daily returning addresses rose even more, up 50.5% to 1 million. Moreover, new addresses being added to the network grew by 31.7% to 167,800 per day on average.<\/span><\/p>\n The report also notes that Polygon\u2019s transaction volume also held steady, averaging 4.1 million daily transactions, just below its <\/span>all-time high<\/span><\/a> and representing a 3.9% increase from the prior quarter.\u00a0<\/span><\/p>\n In comparison, fellow Layer 2 networks Arbitrum (ARB) and Base saw average daily active addresses of 545,000 and 528,000 respectively.<\/span><\/p>\n While Polygon\u2019s decentralized finance (DeFi)<\/span> total value locked<\/span><\/a> (TVL) dropped 22.9% to $1 billion, this was largely attributable to the decline in MATIC\u2019s price rather than a net outflow of capital. Messari reported that TVL denominated in MATIC actually increased by 38.1% to 1.8 billion tokens.<\/span><\/p>\n However, DeFi protocols on Polygon saw mixed results, with Aave, Uniswap, and SushiSwap all experiencing declines in TVL ranging from 13% to 25%. Quickswap saw the largest drop at 35%.<\/span><\/p>\n Lastly, Polygon\u2019s non-fungible token (NFT) market also remained stable, with average daily NFT volume dipping slightly by 5.7% to $1.8 million. However, the number of daily NFT sales actually increased by 1.8% to 52,000, underscoring ongoing collector interest.<\/span><\/p>\n At the time of writing, MATIC has experienced a mere 5% increase to a trading price of $0.512, after hitting a 2-year low of $0.428 on July 5th.\u00a0<\/span><\/p>\nPolygon Weathers Crypto Market Downturn<\/span><\/h2>\n
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On-Chain Activity And Ecosystem Growth<\/span><\/h2>\n
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