Is Ethereum’s ‘Merge’ a Threat to L2 Solutions Like Polygon?

He who rules within himself and rules his passions, desires and fears is more than a king.

Does this quote from ‘Paradise Regained’ somehow mean Ethereum’s ‘Merge’? Well, only if ‘passion, desire and fears’ are considered scalability. As Ethereum waits for its transition to Proof-of-Stake (PoS), investors are wondering if the ‘Aggregation’ will invalidate Polygon’s use cases.

It can be noted that the move from Ethereum to PoS could give a boost to low-2-scale solutions such as Polygon. Many believe that the ‘Merge’ may not have a major effect on Ethereum’s scalability. Consider this: After the ‘Merge’, demand for Ethereum will see a sharp spike.

Now, due to the traffic, users may find it more difficult to use Ethereum. In that case, tier-2 platforms can witness a lot of traction, which will eventually translate into demand. With this factor in mind, it seems that Polygon is perfectly positioned to make a profit. In fact, it appears that MATIC holders would benefit greatly from the Ethereum to PoS transition.

Would MATIC go up?

On January 19, 2022, the EIP 1559 upgrade was introduced in Polygon’s PoS, burning more than 600,000 MATIC to date. In addition, in early February, the network raised $450 million from several crypto venture capitalists. And on March 24, Polygon announced that two massive product releases would be coming soon. All this goes on to claim that the macro outlook for the token cannot be bearish to say the least.

To assess that story, a look at the Total Value Locked (TVL) wouldn’t be a bad idea. At the time of writing, the TVL locked to the Polygon network was $4.1 billion. AAVE had 29.34% of the dominance on the network.

It should also be noted that there are hundreds of decentralized applications running on the network. It pretty much proves that Polygon is Ethereum’s most popular layer-2 scaling solution. Despite the enthusiasm of the upgrades, MATIC has not shown any remarkable performance lately.

Source: Defillama


At the time of writing, the token was trading at $1,635, down about 6.02% over the past day. While MATIC is still in an upward trend, it has not registered a significant percentage increase in the past year. Apparently the offer seems to be pushing the price of MATIC down.

The token has a relatively aggressive acquisition schedule. In fact, with the very minimal ICO price, early token holders seem to be making significant profits. This indicates that some of them are selling, as expected. This therefore affects the price of the token.

Source: Messari

Also, the demand for MATIC was complacent on the map. Polygon PoS chain with unique address card clearly forms a plateau. The daily increase in addresses actually decreased after February 3, 2022. One of the reasons for this could be the declining interest of investors.

Source: Polygon scan

In addition, for investors, one of the most important factors to consider is the number of daily transactions on the Polygon PoS chain, which has been declining since June 2021. With the addition of excellent network upgrades, the token’s demand is expected to increase in the coming months.

Source: Polygon scan

MATIC seems to be an average performer in general. However, investors who have faith in the network’s ecosystem can certainly keep a large chunk of the token in their portfolio.

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