Is Polygon Worth Investing?
Towards the end of May, high-profile cryptocurrencies like Bitcoin and Ethereum recorded sharp downtrends. Around the same time, a new cryptocurrency known as Polygon (MATIC) rose nearly 35%. And although the new asset eventually bowed to the market-wide sell-off, its crash wasn’t as drastic.
According to investment analysts, the aftermath of the May 2021 bear market forced many savvy investors to look for new alternatives. At the time, Polygon was slowly creeping into the mainstream media, and it just happened to fall into the radars of most investors.
The cryptocurrency has since been steadily growing, scaling the charts to become the 16th biggest cryptocurrency, according to CoinMarketCap. It currently has a market cap of $6.6 billion and a fully diluted market cap of $10.4 billion.
Around May 2019, Polygon was trading for as low as $0.003 but quickly grew to over $2.5 in May 2021. Although the price has slightly slumped, experts predict an uptrend with the possibility of the token hitting over $2 by the end of the year.
But what exactly is Polygon, why is it important to Ethereum developers, and is it worth investing in?
Read ahead, we have prepared a comprehensive guide to answer all your questions.
What is Polygon?
Previously known as Matic Network, Polygon is an Indian-based platform that seeks to solve some of the main challenges faced by the Ethereum network. These include high gas fees, low transactions per second (TPS) and general poor user experience.
The network that fondly refers to itself as “Ethereum’s Internet of Blockchains”, is trying to create a multi-chain ecosystem of blockchains compatible with the Ethereum blockchain.
Why is this important?
You see, while Eth Ethereum is great as it is, being the most popular destination for DeFi projects and the pioneer of smart contracts blockchain, it has several limitations that especially make it difficult for developers to work with it. These include the serious network congestion resulting from the ever-growing demand.
Polygon tries to solve these problems by developing a simple framework that can allow developers to launch custom Ethereum-compatible blockchain in a few steps. This way, the platform will be able to make different blockchains not only interoperable but also easily scalable.
The idea is to enable distinct blockchains to painlessly and freely share value and information by removing the ideological and technological barriers that make interoperability between blockchains difficult today.
Polygon was built by four Indian software Engineers; Jaymost ofnti Kanani, Sandeep Nailwal, Anurag Arjun, and Mihailo Bjelic. The project began as MATIC Network and was rebranded to Polygon in February 2021 in an attempt to expand its global scope. MATIC is, however, still its ticker symbol and the name of its native utility token.
Currently, Polygon is a big player in various crypto sectors such as Decentralized Finance (DeFi), Decentralized Applications (DA), Non-fungible Tokens (NFTs) and the popular Decentralized Autonomous Organization (DAO).
How Does Polygon Work?
The Polygon architecture is composed of four layers. These are:
- The Ethereum layer: Mostly made up of smart contracts that are implemented on the Ethereum blockchain. The smart contracts are used for handling transaction finality, communication between Ethereum and other Polygon chains, and staking.
- Security layer: Provides an additional layer of security and usually runs alongside Ethereum.
- Polygon networks layer: Consists of the ecosystem of blockchain networks that are developed on Polygon. Each network has its own community and can produce blocks or handle local consensus.
- Execution layer: This is Polygon’s EVM (Ethereum Virtual Machine) and is useful for executing smart contracts.
The Ethereum and security layers are optional for Polygon developers, while the Polygon networks layer and the execution layer are mandatory.
Polygon’s message-passing system allows chains launched on its platform to communicate both with each other and with the central Ethereum chain. This kind of communication helps to broaden Polygon’s use cases, such as use with decentralized applications.
Polygon also provides developers with several modules they can use to painlessly develop and deploy their own custom blockchain. For example, developers using Polygon gain access to governance and consensus modules on top of multiple execution environments and virtual machine implementations.
Additionally, blockchains developed on Polygon are compatible with the Matic proof-of-stake (PoS) sidechain. The PoS sidechain capitalizes on a network of validators to drastically boost transaction speeds while keeping gas fees at a minimal.
The Polygon network usually supports two types of chains. These are:
- Stand-alone chains: These are self-governing chains that are directly compatible with the main Ethereum blockchain.
- Secured chains: These depend on a network of expert validators to bootstrap their security.
The polygon platform is also designed to support several blockchain mechanisms. These include:
- Matic Plasma
- Zk Rollups
- Optimistic Rollups
- Validum chains
All of these mechanisms are capable of speeding transaction throughput of specific blockchains without jeopardizing user experience or security.
Although Polygon recently rebranded, it still uses MATIC as its ticker symbol and the name for its native token.
Let’s briefly talk about the MATIC token below.
What is MATIC Token?
MATIC is Polygon’s native token. The token is used to power several aspects of the Polygon ecosystem. For example, it can be used for:
- Participating in network governance
- Contributing to the security of the platform by staking tokens
- Settling gas fees
At the time of writing this article, MATIC was trading at $1.38 based on data from CoinMarketCap. Like most of the other cryptocurrencies, MATIC crashed in May, where it hit its current all-time high price of $2.68. This means the token has dropped over 60% in the last month.
Several experts predict that the price may rise to reach $2 again by the end of the year, although the current price growth is a bit too slow.
To better understand if MATIC is a good investment or not, let go through its price history. This will help us understand the token’s past performance and the possible future trajectory.
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Polygon (MATIC) Price History
Usually, when new cryptocurrency tokens are launched, they start at a very low price because they are mostly unknown, and there is probably no demand for them.
However, for Polygon, it was a bit different. When the MATIC token was launched, it recorded high trading volumes, although its price started relatively low.
Most of the action started around 2019, according to the CoinMarketCap chart. The site indicates that MATIC traded for as low as $0.003 towards the end of April 2019.
However, since there was already a fair deal of demand, the price quickly grew and crossed $0.01 in mid-May 2019, then $0.02 towards the end of May.
In late June 2019, MATIC dropped back to $0.01 and stayed below $0.02 until late November. After that stagnation, the token quickly rose, and by December 2019, it had reached $0.04. Just as quickly, it dropped back to below $0.02 and finished the year at $0.0149.
MATIC started 2020 around the same price point, and it wasn’t until early February that it went back to above $0.02. There was a sharp slump in mid-March that humbled MATIC at as low as $0.009, but it quickly went back to $0.01 towards the end of the month.
MATIC traded below $0.02 for the most part of April and the first half of May 2020. By this time, the demand had reduced, and the community remained relatively low, so there wasn’t enough activity to catalyze a steady uptrend.
From June until the end of 2020, MATIC mostly traded between $0.01 and $0.03 and only briefly went above $0.03 in mid-August.
Although 2021 also started below $0.02, the price of MATIC quickly grew and crossed $0.03 during the first few days of January. Around this time, a market-wide bull run was just getting started, and MATIC was lucky enough to be part of it.
The real bull market started in February 2021, where MATIC quickly scaled charts and climaxed at as high as $0.4 in mid-March. But that was just the beginning of a bull run that saw many cryptocurrencies achieve milestones they had never witnessed before.
The price of MATIC stagnated slightly for most of April 2021and then between April 20th and April 30th, MATIC dramatically jumped from $0.4 to $0.9, representing a more than 50% increase in just 10 days.
But the wildest of all price pumps happened between May 6th and May 18th when MATIC jumped from $0.8 to more than $2.5, its highest price of all time. That is a more than 212% increase in less than two weeks.
Unfortunately, after this spike, MATIC experienced one of its worst crashes, with the price plummeting to as low as $1.1 by May 22nd. This did not, however, weaken the token’s resolve to be among the top.
Towards the end of May, it was back to above $2 although it crashed again and kept fluctuating for the most of June. In late June, MATIC went back to $1.06 and in September it climbed to $1.7. At the time of writing, it was trading at $1.38.
Polygon Price Prediction 2021 - 2022
Although Polygon has been lauded as one of the fastest-growing projects in the crypto-verse, its price has recently been under serious pressure. MATIC lost a lot of value in June after the price started dropping in late May.
So far, price analysts are giving mixed signals as to how the coin might close this year and its performance going forward. Like with most young cryptocurrencies, the performance of Polygon (MATIC) depends on leaders like Bitcoin and Ethereum. And since Polygon is directly dependent on Ethereum, its growth trajectory will most likely follow that of Ethereum.
In fact, if you look at the price charts for the two assets, you’ll find that they are very similar. So, that’s one way to figure out Polygon’s future growth.
Otherwise, for the remaining part of this year, several price analysts have given their predictions as to how MATIC might finish the year.
According to Wallet Investor, Polygon MATIC might start November at an average price of $1.4 and continue to slowly grow through the rest of the year.
By the end of 2021, Wallet Investor predicts that Polygon MATIC will be close to $1.72 and even hit the high of $2.2 per token.
Gov.capital shares almost the same predictions as Wallet Investor but believes that MATIC will reach $2 by the end of the year. The Polygon crypto will reach an average price of $1.9 in December and a maximum price above $2.2.
For 2022, Wallet Investor continues its late 2021 uptrend, with Polygon crossing $3 in June. There will be steady growth from month to month, and MATIC might finish 2022 at $4.
Gov.capital, on the other hand, starts 2022 at $2.02 and finishes the year at $3.93 on average or as high as $4.5. Per token.
Now that we have looked at a bit of the technical analysis, let’s quickly go through some of the ways that you can invest in Polygon (MATIC).
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How to Invest in Polygon
There are several ways you can invest in Polygon, but we mostly recommend two. These are:
- Hodling for the Long-term
- Trading for the short-term
Let's go through each of these methods below.
Method 1: Hodling Polygon for the Long-term
Holding simply means buying crypto then storing it for many years until it becomes profitable. For instance, if you buy Polygon for the current market price of about $1.38, you can wait for ten years then sell it when the price is, say, $100 per token.
As you can see, you can make a lot of money by simply buying MATIC and storing it and then forgetting about it. To HODL, you will need to transfer your tokens to an off-exchange wallet which is much more secure. The most common are hardware and software wallets which you can get either for free or at a fee depending on features such as security and convenience.
We recommend HODLing for investors who are just starting and haven’t learned the ropes of trading yet.
Method 2: Trading Polygon for the Short-term
Unlike HODLing, trading allows you to make short-term gains by either betting on the price of MATIC to rise or predicting price direction and benefit from both an uptrend or a downtrend.
There are several trading platforms that you can use, but we find eToro to be the most convenient. Here is how you can quickly and conveniently trade Polygon (MATIC) on eToro
- Open an online account by providing a few personal details, then verify your account
- Deposit funds you will use to buy MATIC into your eToro account. You can use several options, including Credit cards, PayPal, Neteller or Bank Transfer.
- Search for Polygon (MATIC), then click BUY
- Enter the amount you would like to trade with
- Click on ‘Open Trade’
That is it! You are now trading Polygon on eToro.
So, now you have decided whether you want to trade, hold or do a combination of both. But we have not really answered the most important question; Is Polygon a good investment?
Let’s find that out below.
Is Polygon (MATIC) a Good Investment?
According to CoinMarketCap, Polygon is currently the 21st largest cryptocurrency with a market capitalization of $9.4 billion. Although the asset suffered a devastating crash in May, it has been tenacious in its quest to be the best scaling solution for Ethereum projects.
Despite its struggles, Polygon seems like a good investment with a bright prospect. As we have seen from the predictions, experts expect the price to rise and even cross $2 by the end of the year. The price rally will be even more promising in the next three to five years.
However, the fact that the price might rise does not make MATIC a good investment per se. The Polygon network is doing a lot on its part to ensure that the asset not only remains afloat but also shines its way to the top.
Polygon has recorded impressive year-to-date returns for some of the early investors. For instance, those who bought MATIC when it was trading for as low as $0.02 in 2019 then sold in May 2021 when it crossed $2.5 made enviable profits.
So, while MATIC has lost much of its value due to the June bearish market, it has a great future outlook and might soon resume a bullish trajectory.
In particular, three factors will significantly help to push MATIC’s price to stardom. These include:
- Growing interest and community base
- High-profile collaborations
- Investments from renowned business figures like Mark Cuban
Polygon’s growing community is partly because of Ethereum’s popularity, especially from the start of 2021. Given Polygon’s effort in boosting transaction speeds and making Ethereum projects easier to use, the platform has gained a lot of attention from both enthusiasts and investors.
As a result, there is increasing adoption of Polygon, which also means growing investor interest. This eventually helps to boost the asset’s value and make it a great investment.
Polygon has also scored several high-end collaborations, adding plenty of credibility and value to its name. For instance, the network recently announced that it had partnered with Infosys Limited, an Indian-based IT company that mostly provides business consulting. The collaboration dubbed M-Setu will enable Infosys to provide revolutionary services to its clients using Polygon’s technology.
Polygon also partnered with The Trace Network, where the company will use the crypto for NFT and decentralized finance services. This collaboration will help retailers to easily introduce their NFT’s to the public.
The biggest recent collaboration was with Google Cloud’s BigQuery, which allows BigQuery users to access and take advantage of Polygon’s powerful technology.
Polygon has also attracted interest from high profile investors like Mark Cuban, who recently announced support for the platform. On May 25th, Cuban announced that he had invested in Polygon and was confident that the network was set for an exciting future.
All these make Polygon a great future investment. Whether you are trading or holding, you might be able to enjoy some gains if you diligently do your research and know the right time to invest.
Conclusion: So, Should I Buy Polygon?
Polygon recently caught the eyes of investors for continuing to perform well amidst a market-wide price slump. The Polygon crypto asset has recorded an over 10,000% growth since the start of the year, and experts predict that it might be a great investment in the next few years.
While this is impressive growth, there are a few things you need to consider before buying MATIC. One of them is its long-term potential. Where will it be in the 5 or 10 years?
As more people begin to realize the potential in Plolygon’s technology, its price will gradually rise over the years. In fact, more forecasts present an optimistic outlook, with MATIC expected to be much more valuable in the next few years.
However, given its leisurely growth, buying Polygon might not be a good idea if you are looking for good short-term returns.
Polygon’s underlying technology is also largely dependant on Ethereum’s bottlenecked speed and scalability. This means that if Ethereum were to successfully move to Eth2 and solve its scalability and speed issues, Polygon’s solution will become less necessary,
As a result, Polygon needs to expand its usefulness beyond Ethereum to be a feasible long-term investment. The network’s technology also has competition, and if it doesn’t move fast and create a better solution, it might be phased out soon enough.
Lastly, before you buy MATIC, you need to understand that it is just as volatile as any crypto out there, and you could lose your investment. So, don’t jump in blindly or invest more than what you can afford to lose. Before you buy, understand your risk tolerance and investment goals.
But even more importantly, do enough research and make your own decisions.
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