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If there’s one factor that is change into clear about cryptocurrencies and the blockchain over the previous two years, it is that buying and selling alone is not a great use case for cryptocurrencies. The trade goes to have to supply some type of utility to companies, customers, and different expertise corporations, or these cryptocurrencies and blockchains will not final.
As blockchains like Solana and Base collect customers and builders, bettering on their velocity and price construction, some blockchains are going to be left behind. I feel Polygon (MATIC 1.18%) falls squarely in that class. It would not have the person or developer base to compete with higher blockchains.
The person downside
Cryptocurrencies are essentially a forex of a blockchain, so, if nobody’s utilizing the blockchain, the forex itself has little or no worth. That is the elemental downside for Polygon.
In accordance with Stack.Cash’s monitoring of Github repos, which is a measure of how a lot developer exercise is being shared among the many developer neighborhood, Solana has 4.5 occasions extra developer exercise than Polygon. The Layer-1 blockchain Polygon lives on, Ethereum, had a whopping 10.3x extra developer exercise than Polygon.
Transactions by customers of the blockchain present the same distinction in exercise. In accordance with Polygonscan and Solana Explorer, Polygon is operating at about 23 transactions per second whereas Solana is performing about 4,000 transactions per second. Customers are merely extra energetic on a higher-throughput blockchain like Solana.
Pace and price on the blockchain
Apart from not having a plethora of customers, Polygon has elementary expertise challenges in comparison with different blockchains. It is a lot slower than a blockchain like Solana, and but dearer. Polygon says a median transaction prices about 1.5 cents and Solana’s transactions are roughly 0.02 cents.
One of many benefits of Polygon has all the time been that it is a Layer 2 — or a blockchain constructed on high of one other blockchain — to what’s thought-about the most effective and most developer-friendly blockchains, Ethereum. However being a Layer 2 implies that transactions are gradual and clunky for customers, relying on what you are doing. In a latest publish, Polygon mentioned that bridging belongings to the Ethereum mainnet would take 30 to 60 minutes. To enhance efficiency, Ethereum itself wants to enhance velocity value and effectivity.
But when it does that, why not simply develop on Ethereum and never on Polygon?
Polygon’s problem
As a Layer 2 Blockchain, Polygon won’t ever management its future. Sure, there are potential enhancements like rollups and different options that may enhance its velocity and effectivity, however the underlying blockchain nonetheless must roll as much as Ethereum.
This has put Polygon behind in the case of builders and customers as a result of the blockchain is just extra cumbersome and gradual to make use of. And that is not going to enhance in a bear market. I feel as extra improvement occurs on the blockchain, extra Layer 1 blockchains and probably some particular Layer 2 blockchains will win out. On high of that, there was progress in stablecoin utilization, which might negate numerous worth being added to cryptocurrencies themselves.
Regardless of the way you have a look at it, Polygon is not the most effective place for cash in crypto and that is why it is one I’d keep away from proper now.
Travis Hoium has positions in Ethereum and Solana. The Motley Idiot has positions in and recommends Ethereum, Polygon, and Solana. The Motley Idiot has a disclosure policy.
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