Ethereum’s largest Layer-2 network, Polygon, announced the long-awaited transition of its MATIC token to POL on September 4. On the same day, user activity on the Layer-2 network fell to its lowest level in months. Data from Polygonscan showed that the total number of transactions recorded on the Polygon Proof of Stake (PoS) chain on August 18 was 2.44 million, the lowest level since December 2023.

What happened to the polygon frontier?

A drop in network transactions means fewer active users. In the case of Polygon, uncertainty over MATIC’s upcoming transition to POL may have caused users to hold off on transactions until the transition is complete.

MATIC’s weak price performance reflects the network’s recent decline in activity; the altcoin is up just 3% over the past 24 hours, trading at $0.41. Despite a 27% increase in trading volume to $142 million, uncertainty surrounding the POL transition has led to a slowdown in trading.

However, Polygon’s DeFi sector has remained resilient. On August 18, the network’s total value locked (TVL) and decentralized exchange (DEX) trading volumes both saw significant growth, indicating continued interest despite a general decline in trading activity.

The TVL value increased by 5% on the day to $859 million. In addition, the daily trading volume of DEXs within the Layer-2 network increased by 21%. As of the date of this writing, Polygon's daily DEX trading volume is $69 million.

MATIC Chart Analysis

MATIC’s value has not surged significantly following Polygon’s announcement, but there has been a noticeable uptick in buying activity on its 12-hour chart. As of this writing, the coin’s relative strength index (RSI) is in an uptrend and poised to break above its 50 neutral line.

An attempt to cross the centerline indicates an increase in buying pressure. This suggests that MATIC is shifting from a slightly downtrend to a more neutral or slightly uptrend momentum. If this buying pressure intensifies, the price of the coin could rise to the 30-day high of $0.55. However, if the market trend turns from positive to negative and there is a surge in selling activity, a drop to $0.33 is possible.