Polygon is the most prominent Ethereum layer 2 scaling solution and blockchain network protocol.
It aims to save Ethereum (which is being crippled by high gas fees and slow transactions) from its own success by taking some of its workloads onto its highly scalable blockchain.
Polygon offers developers and users the security and network effect of Ethereum, fast transactions, and low gas fees.
This is why a lot of Ethereum-based projects have ported their dApps over to Polygon to enjoy these advantages.
In this post, I would be sharing with you everything you need to know about Polygon and its native token, MATIC.
We would be looking at how much MATIC could be worth by the next 2 to 5 years, and the factors that would possibly affect its price performance.
After reading this post, you should be able to determine for yourself whether Polygon (MATIC) is a good long term investment for you or not.
But first, let’s run through a few quick facts about Polygon.
Polygon (MATIC) fast facts
- Polygon is a multi-chain blockchain network protocol that helps connect Ethereum-compatible blockchains.
- Polygon can process up to 65,000 transactions per second with a block time of 1 second.
- The project was formerly called Matic Network but was rebranded to Polygon in February 2021. But the token name remains MATIC.
- Currently, there are over 400 different dApps running on Polygon. Providing their uses with faster and cheaper transactions with the security and decentralization of Ethereum.
- Polygon has a maximum supply of 10,000,000,000 (10 billion) tokens, with a current total marketcap of about $9 billion.
- The polygon bridge is the most active cross-chain bridge for easy, safe, and fast movement of funds to and from Ethereum.
- Polygon is a community-based project being developed by a decentralized team of contributors from all over the world. However, the core team includes Jaynti Kanani, Sandeep Naiwal, Anurag Arjun, and Mihailo Bjelic; all co-founders.
- As of today, September 12, 2021, there’re a total of 100 active validators securing the Polygon blockchain.
- The average transaction fee on Polygon is $0.00004.
What is Polygon (MATIC)?
Polygon is an Ethereum layer 2 scaling solution that provides the framework for building dApps and bringing interoperability to all Ethereum-compatible blockchains.
This is why it’s popularly known as “Ethereum’s internet of blockchains”.
First, it aims to help existing and new dApps on Ethereum to scale, enjoy fast transactions, and low fees without sacrificing the security, decentralization, and network effect of Ethereum.
Secondly, it wants to become a multi-chain blockchain network that connects all Ethereum-compatible blockchains and make them interoperable. Similar to Avalanche, Polkadot, and Cosmos.
Their vision is basically to become a one-stop shop for everything on Ethereum.
The network can process up to 65,000 TPS on its PoS (proof of stake) algorithm with a block confirmation time of 2 seconds, and an average transaction fee of $0.00004 average transaction fee.
Making it one of the fastest and cheapest chains while still maintaining Ethereum-level security and decentralization.
Polygon core team
Polygon was co-founded in 2017 as Matic Network by Jaynti Kanani, Sandeep Nailwal, Anurag Arjun, and Mihailo Bjelic.
According to data from their Github page, there are currently 12 developers contributing codes to the Polygon repository.
Furthermore, there’s a 5-member board advising the project which comprises of prominent names like:
- Judson Jameson (Ethereum Foundation),
- Ryan Sean Adams (Bankless),
- Pete Kim (Coinbase) among others,
- Anthony Sassano (EthHub), and
- John Lilic (ex ConsenSys).
Click here for the current and full list of Polygon’s core team.
Polygone core features
Polygon combines the best of Ethereum and its network of sovereign blockchains to create a rich and interoperable blockchain ecosystem that can scale for mass adoption.
Some of the most prominent features of Polygon include but are not limited to:
- Ethereum compatible
- Highly scalable
- Highly secure
- Sovereign blockchains
- Interoperable
- Excellent user and developer experience
- Flexible and customizable frameworks
1. Compatible with Ethereum
As an Etheruem layer- 2 solutions, Polygon is 100% compatible with Ethereum.
That means that existing dApps on Ethereum can be easily ported to Polygon with little to no modifications required.
2. Highly scalable
Polygon scales primarily through its Commit chains, which are transaction networks that operate adjacent to the main blockchain — in this case, Ethereum.
The Commit chains bundle together batches of transactions and confirm them en masse before returning data to the main chain.
Thus effectively reducing the workload on the main chain and increasing transaction throughput.
Polygon is said to be theoretically capable of having thousands of chains scaling together to increase throughput.
With the potential to one day, generate millions of transactions per second (TPS) when attached to a mainchain like Ethereum.
3. Highly secure
Polygon is secured by a modular ”security as a service” provided by Ethereum or a pool of professional validators on the network.
The network enjoys a similar level of decentralization and security as Ethereum.
4. The sovereignty of connected blockchains
Each blockchain on Polygon runs on its own dedicated resources, fully customizable tech stack, and sovereign governance mechanism.
The activities on one chain do not in any way interfere with the operations of any other member chain on the network.
5. Interoperable
The Polygon network natively supports the transmission and broadcasting of messages and transactions between chains.
Moreso, there are bridges between Polygon and external blockchain networks to facilitate cross-chain funds transfer.
6. Excellent user and developer experience
The user experience on Polygon in terms of transaction cost and speed is comparable to what’s obtainable on traditional web2.0 platforms.
More so, building on Polygon for developers is exactly the same as building on Ethereum.
There’s zero protocol level knowledge required, no token deposits, fees or permissions.
Everything that works on Ethereum works perfectly fine and exactly the same on Polygon.
7. Flexible and customizable frameworks
There are several community-built, easily customizable frameworks developers can work on to create their own projects and get them into the market in no time.
The Polygon community
With over 400 projects currently running on Polygon, the Ethereum community to back it, and hundreds of thousands of active community members, Polygon has all the support it needs to be successful.
Polygon Twitter followership is over 650,000 as I write this line. 56,000+ Telegram group members, 17,000+ Discord channel members, and 13k+ Redditors actively follow and support the project.
The value of a utility token such as MATIC is mostly based on the number of users on its network, which is where a large and growing community plays an important role.
Polygon (MATIC) token
MATIC is the native cryptocurrency of the Polygon network.
The token is used to pay for transaction fees on Polygon as well as reward validators who secure the network by staking their MATIC tokens.
MATIC has a maximum supply of 10 billion (10,000,000,000) tokens of which about 6.7 billion (67%) is currently in circulation.
MATIC use cases
The main and current use cases of the MATIC token are:
- It is used to pay for all transaction fees on the Polygon network.
- MATIC can be staked by Validators and delegators to secure the network and earn rewards.
Polygon (MATIC) price prediction 2021-2025
Between April and June 2021, the MATIC token price has moved from $0.4 to its all-time high (ATH) of $2.62.
That is a massive 555% return on investment (ROI) in just about 3 months -thanks to the crazy 2021 bull run.
However, the token has retraced along with the market to its current price of $1.2.
Is this a good price to buy the token right now? Does it have the potential to go up from here? Should you HODL for the long term? How long
Let’s find out below.
Polygon (MATIC) price prediction 2021
The market cap (MC)/TVL (total value locked) ratio is usually used to determine how undervalued or overvalued a token price is.
The closer the MC/TVL ratio is to 0 the more undervalued the underlying asset is.
And the higher above 1 the MC/TVL ratio, the more overvalued it’s considered to be.
PS: These are not “absolute” values. A coin can have a MC/TTVL ratio of 5 and still pump 100% to 1000%. This is crypto, and impossible things happen all the time. But then be wary of very high ratios.
Currently, the MC/TVL ratio of MATIC is 1.49
This to me, means that the token is currently fairly overvalued. But not too much.
With ongoing developments, updates, a growing userbase, and good general market conditions, there’s still a lot of room for the price to go up.
Based on the TVL ratio alone, my MATIC price prediction for 2021 is $3 maximum.
And that’s if we could see another reasonable bull run before the year runs out.
If the market shifts to bearish, I can see the price of MATIC going down to the $0.7 and $1 range.
Personally, I wouldn’t be buying MATIC above $1 except we’re an obvious bull run.
Why?
Because I’m looking for coins that will give me a 5x to 10x or more within a year and I don’t see MATIC doing that (yet).
Polygon (MATIC) price prediction 2022 to 2025
With a maximum supply of 10 billion and about 40% of that yet to hit the market, inflation is far from over.
And if we should see an extended 2018-like bear market, the price of MATIC could drop even lower than stated above.
In such a case, a fall back to $0.35 and $0.65 between 2022 and 2023 ending wouldn’t be too far fetched.
But hey! Nobody says there’s gonna be such a nasty bear run. And I personally don’t see it coming (yet).
I’m just showing you the possible scenarios under different market conditions.
Other factors that may contribute to the potential MATIC price drop are:
- The release of Ethereum 2.0
- The growth of other layer-1 smart contract platforms like Solana, Avalanche, etc.
People use layer-2 solutions like Polygon because it has low fees and is fast.
Why should they continue using it when Ethereum itself offers equally low fees and fast transactions, and other layer-1 blockchains even does a far better job?
Without developing some new and unique selling points (USP), I don’t see Layer-2 protocols like Polygon surviving the smart contract chains war that’s coming in 2022 and beyond.
Fast and cheap alone wouldn’t cut it in the next 2 to 5 years.
However, in the absence of a major bear run, if the competition doe not renders Polygon irrelevant, and the current market sentiment is sustained MATIC can touch $5 by 2022.
Furthermore, as bull runs usually occur after Bitcoin halving, I expect another major bull run around 2024 through 2025.
Should this be the case and if Polygon survives the war and remains relevant then a $10 MATIC price is possible.
This would give the project a $100 billion fully diluted market cap valuation which is also perfectly feasible.
At this point, the entire crypto market should be somewhere well over $5 to $10 trillion.
Conclusion
Polygon is a layer 2 smart contract platform that aims to help solve the Ethereum problem of scalability, high fees, and slow transactions.
And so far, it has done exceptionally well. with over 400 dApps currently running on its blockchain, more than $9 billion of TVL, and millions of active monthly users.
Thus Establishing itself as one of the most prominent smart contract platforms for all things DeFi.
The price of the token, MATIC has also performed significantly well during the 2021 bull runs, printing over 500% gains.
However, the competition among smart contract platforms will be very different from what it is now in the next 3 to 10 years, especially when Ethereum 2.0 is live.
And without further innovation, Ethereum layer-2 solutions like Polygon may become irrelevant and lose users.
People use layer 2 solutions because Ethereum is too slow and expensive.
What incentives would be there to use them when Ethereum solves its scalability, slow transactions, and high gas fees problems?
Very little…
More especially coupled with the fact that there are other Layer 1 smart contract platforms like Solana, Avalanche, etc that performs even better than Polygon.
But all hope is not lost, as the project seems to have some very bright minds and the Ethereum community strongly behind it.
A great team can always work out new ideas and strategies to continue making Polygon relevant and successful even post-Ethereum 2.0.
However, barring an extended bear market, and if Polygon can survive and thrive despite the competition, then a $5 MATIC price by 2022 and $10 by 2025 is very much in play.
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