The DeFi race continues as more chains accelerate. But in this context, Polygon changed course and gradually lost momentum. In the past few weeks, Polygon’s growth has slowed, causing concern among investors and developers.

Polygon slows down

In just 1 year, Polygon has grown from 30 to almost 3000 dApps (decentralized applications). Developers are drawn to this chain because of their competitive advantage. The network is the largest DeFi chain on Ethereum and can solve problems inherent in Ethereum itself.

The most important of these is the introduction of proof-of-stake into the network. While the Ethereum Mainnet (Mainnet) is currently converting to PoS, Polygon has already done so.

Second, through the use of Optimistic Rollups and zkRollups, Polygon has worked to make transactions faster and more reliable. At the same time, it solves the problem of Ethereum’s high gas fees by making transactions cheaper.

In addition, Polygon is also growing rapidly compared to other DeFi chains. Until recently, this upward move not only slowed, but possibly also reversed.

At one point, Polygon had over 1-2 million addresses a day, more than Ethereum and Binance Smart Chain (BSC). Now that number has dropped to just 200,000 to 400,000.

Number of new polygon addresses | The source: Coin98

Similarly, the number of active on-chain addresses once hovered around 500,000, beating Ethereum and BSC again, but has since dropped below 300,000.

Number of active addresses of Polygon | The source: Coin98

As a result, the number of on-chain transactions also fell from almost 7 million per day to less than 3.5 million today.

Number of transactions polygon | Source: Coin98

The most worrying problem with this is that all of these developments happened over a period of only 1.5 months.

When demand and participation decrease, the total value locked (TVL) in the network stops growing as a whole. TVL has raised just $ 100 million since September.

TVL on polygon | The source: DeFi Lama

This in turn resulted in Tron and Fantom overtaking Polygon and returning to 8th place.

While Polygon is focused on getting more traction on the social fronts, which is reflected in the volume of social networks, and adding more dApps (e.g. Hermez) to the network, it’s not really effective in terms of growth.

Polygons social mass | Source: Santiment

Hence, the network needs to grow more naturally in order to reclaim its place in DeFi space.

MATIC price, meanwhile, is trading at $ 1.75, down 34.7% from its all-time high of $ 2.68 on May 18. It is one of the few coins that has not been able to generate a new ATH since May, while BTC and ETH and many other large coins have repeatedly reached new record values ​​in recent months.

Source: TradingView

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Minh Anh

According to AMBCrypto

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