Polygon Plans EIP-1559 Deployment Next Week To Burn MATIC – Price Prepares Breakout

Polygon, Ethereum’s leading Layer 2 scaling solution, announced today that the highly anticipated upgrade of the Ethereum Improvement Proposal (EIP) 1559 hits the mainnet next week.

Setting up a hard fork London belong Polygon is preparing go into operation

In one notification On Wednesday, the India-based project officially announced that the upgrade would begin burning MATIC, which is expected to officially go live on the mainnet on January 18, 2022 (UTC) around 3 p.m.

The EIP-1559 upgrade, commonly known as the London Hardfork, completely revolutionized the way the fee market works on the Ethereum network. Accordingly, first price auctions are no longer the primary mechanism for collecting fees and are introducing a separate base fee that is incinerated and not paid to the miners.

While this change does not reduce transaction fees, which are determined by demand and supply dynamics, it does allow users to better estimate costs and reduce the number of users who overpay.

However, these changes will have far-reaching implications for everyone involved in Polygon, including native Polygon token holders, validators, delegators, decentralized application (dApp) developers and users.

Deflationary effects on MATIC

Since Polygon has a firm supply of 10 billion tokens, any reduction in the number of available coins will have a deflationary effect on the asset.

The project’s core team notes that their analysis concludes that annual MATIC consumption will be 0.27% of total supply, around 27 million MATIC.

For network dApp users, upgrading to EIP-1559 will benefit from even lower fees. However, there will be fewer MATIC tokens. On the other hand, developers are gaining momentum since all the tools on Ethereum work smoothly and have few adverse effects.

At the same time, deflationary pressure is beneficial for both validators and delegators, as they receive rewards calculated in MATIC for processing transactions in the polygon network.

In addition, these changes result in fewer spam transactions and limit network congestion as the base charge is automatically increased when the block is filled.

Meanwhile, Polygon recently discovered and fixed a bug that could jeopardize more than $ 24 billion in MATIC.

Cops refuse, MATIC. for sale

The MATIC sell-off has been rejected by the bulls and the price is moving to make another breakout above the rising wedge.

MATIC price rallied well from several levels that had a big impact on the downtrend. The bulls are mostly on the sidelines and the bears are actively selling for good reasons. The price closed below the rising wedge on January 7th and further closed below the Ichimoku cloud on January 8th, which is a point of action for any short-term trader.

MATIC will expand significantly if there is a sustained breakout over the rising wedge pattern. Price has been trading within and slightly above this bearish reversal pattern since October 2021, but there is no clear breakout and many fakeout moves. However, there was no fakeout above the upper trendline, resulting in an ongoing sell-off.

MATIC still has room to confirm a breakout from a cycle time perspective. But bulls and bears should watch out for the week of January 28th. On the weekly Ichimoku chart, this is the next kumo twist. Kumo Twist has a very high chance of producing major and minor tops / bottoms when the instrument is leaning into the Kumo Twist cycle. So if the MATIC price doesn’t break out sharply before the Kumo Twist phase, it could face some selling pressure in the last week of January 2022.

MATIC – Weekly Ichimoku Chart/USDT | Source: Tradingview

Ideally, MATIC would trade sideways or slightly lower until the Kumo Twist appears, which brings the price down to a small swing low that could help establish a sustained uptrend.

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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.

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