$POL The reasons behind the fall of Polygon (POL)
Polygon (POL), which once ranked among the top 10 cryptocurrencies in the world by market capitalization, currently holds the 39th position in the CoinMarketCap ranking.
The altcoin, which reached a market capitalization of over $18 billion in 2021, when it was still called MATIC, now has a market cap of less than $4 billion.
Check out the combination of factors that contributed to this decline and whether the asset will be able to bounce back.
Polygon loses ground to competitors
Created in 2017 by Jaynti Kanani, Sandeep Nailwal, and Anurag Arjun, the Polygon network quickly became a reference in scalability solutions for the Ethereum blockchain.
However, other L2s have emerged, capturing a considerable share of this market. Networks like Arbitrum, Optimism, and Base are growing in users by offering competitive fees and an enhanced experience for developers.
This migration has reduced the usage of Polygon, directly reflecting in its adoption metrics. The Total Value Locked (TVL) of the network, for example, fell from over $9 billion in July 2021 to the current $870 million.
Reduction in on-chain activity
Another relevant factor is the decline in the volume of on-chain activity within the Polygon network. Data from DeFiLlama indicates a decrease in the number of smart contracts deployed and in the number of active addresses, suggesting a slowdown in the growth of the network.
This decline can be attributed to a combination of factors, such as reduced interest from developers, lack of new incentives for adoption, and increased competition in the market.
The number of daily transactions, for example, fell from its peak of over 14 million in November 2024 to approximately 3 million.
Polygon (POL), which once ranked among the top 10 cryptocurrencies in the world by market capitalization, currently holds the 39th position in the CoinMarketCap ranking.
The altcoin, which reached a market capitalization of over $18 billion in 2021, when it was still called MATIC, now has a market cap of less than $4 billion.
Check out the combination of factors that contributed to this decline and whether the asset will be able to bounce back.
Polygon loses ground to competitors
Created in 2017 by Jaynti Kanani, Sandeep Nailwal, and Anurag Arjun, the Polygon network quickly became a reference in scalability solutions for the Ethereum blockchain.
However, other L2s have emerged, capturing a considerable share of this market. Networks like Arbitrum, Optimism, and Base are growing in users by offering competitive fees and an enhanced experience for developers.
This migration has reduced the usage of Polygon, directly reflecting in its adoption metrics. The Total Value Locked (TVL) of the network, for example, fell from over $9 billion in July 2021 to the current $870 million.
Reduction in on-chain activity
Another relevant factor is the decline in the volume of on-chain activity within the Polygon network. Data from DeFiLlama indicates a decrease in the number of smart contracts deployed and in the number of active addresses, suggesting a slowdown in the growth of the network.
This decline can be attributed to a combination of factors, such as reduced interest from developers, lack of new incentives for adoption, and increased competition in the market.
The number of daily transactions, for example, fell from its peak of over 14 million in November 2024 to approximately 3 million.