Polygon Jumps in Crypto Market Rebound, as Ether Congestion Drives Adoption for Rivals
MATIC, the native token of Polygon Network, was gaining the most in a broad-based rally in cryptocurrencies on Monday, as investors look to layer 2 scaling solutions amid continued stress on Ethereum’s network.
Messari data shows the MATIC price has risen by 40% in the past 24 hours, hitting 6.5-week highs above $0.50, for a 25-fold gain on a year-to-date basis. Bitcoin (BTC), the largest cryptocurrency, was up 6% over the past 24 hours, while No. 2 ether surged 10%.
MATIC, now with a market capitalization of more than $2.5 billion, rose about 5% in price last week, defying a sell-off in cryptocurrencies as markets digested the prospects of U.S. President Joe Biden’s proposed capital gains tax hike. If passed, the measure could dampen demand for riskier investment assets, including bitcoin as well as other fast-moving digital assets.
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Polygon’s organic growth is powering its price higher, Alex Svanevik, CEO of blockchain data company Nansen, told CoinDesk in a Telegram chat.
“Polygon has seen 10x rise in the number of transactions since the start of the year,” Svanevik said. “That’s a significant increase.”
Polygon getting more traction
Record activity on Ethereum has led to network congestion and high transaction costs this year. The dynamic in turn has driven an increase in demand for alternative “smart-contact” blockchain networks, such as Binance Smart Chain (BSC), along with scaling projects like Polygon that provide faster and cheaper transactions using layer 2 sidechains. These are tangential networks running alongside the main Ethereum blockchain.
In recent weeks, Polygon has won increasing adoption, with top names from the world of decentralized finance (DeFi) announcing integration with the layer 2 scaling solution in a bid to bypass congestion and high fees on Ethereum’s network.
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“Polygon, the top Ethereum layer 2 is going nuts! Integrations with Aave, Pooltogether, Sushiswap, Open Sea, Curve Finance, Decentraland, and loads of other big #defi applications,” market analyst Lark Davis tweeted Sunday.
The Aave-Polygon integration announced March 31 has already brought over $1 billion in liquidity into Aave protocol, according to a tweet from Polygon co-founder Mihailo Bjelic. Aave was the third-largest DeFi protocol at press time, with $6.33 billion in “total value locked” (TVL), which is the amount of collateral put into the system in exchange for loans or other transactions.
The investor community is cheering the outlook for lower fees resulting from Aave’s decision to adopt Polygon.
“Being able to interact with Aave without worrying about gas fees is a game-changer,” one user tweeted. “Now I understand why Aave is the powerhouse of DeFi.”
Bjelic predicted that other DeFi protocols would see Aave-like growth.
Curve Finance adopted Polygon’s scaling solution earlier this month, saying that Polygon’s high-speed and low-cost infrastructure is the perfect match for its mission to allow for seamless exchange of stablecoins.
“Scaling narrative is accelerating, courtesy of Polygon and its layer-2 aggregator vision,” Denis Vinkourov, head of research at the trading sentiment data provider Trade the Chain, told CoinDesk in a Telegram chat. “The popular saying, ‘Build it, and they will come,’ couldn’t be any more relevant after the likes of Curve and Aave announced support” for Polygon.
“Looking ahead, it’s not just Polygon that will continue to attract new capital, but so will decentralized exchanges such as QuickSwap,” Vinokourov said.
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A beginner’s guide to crypto lingo
New York (CNN Business) Investing in cryptocurrencies requires an appetite for risk and a whole new vocabulary. Here’s a beginner’s guide to the fundamentals of crypto lingo.
Bitcoin
Bitcoin is a cryptocurrency created in 2009 by an unknown person (or people) using the alias Satoshi Nakamoto. Unlike traditional currencies such as the US dollar, bitcoin isn’t controlled by a bank or government. Bitcoin is by far the most valuable and popular cryptocurrency in use today.
Blockchain
A blockchain is a digital ledger and the key technology underpinning most cryptocurrencies, non-fungible tokens (more on those later) and other unique digital items.
Blockchain can be used to store all kinds of information, but so far its most common use is in recording cryptocurrency transactions. Once a transaction is made, it’s entered on this public ledger, which is managed by a global peer-to-peer network — millions of computers, in bitcoin’s case.
Blockchain is fundamental to bitcoin’s appeal: As a decentralized database, it can’t be controlled by any one person or group — unlike a fiat currency such as the US dollar, which is managed by a central bank.
Buy the f****ing dip (BTFD)
A rally cry for crypto bulls that urges investors to buy coins when prices drop.
Coinbase
The leading cryptocurrency exchange platform. The company went public in April , an event that many viewed as a turning point in the story of cryptocurrencies' journey into the mainstream marketplace.
Cryptocurrency
An all-digital money system made up of “coins” or “tokens” that are controlled by a decentralized ledger.
Dogecoin
The oddball of the crypto family began as a joke based on the “doge” meme in 2013. But as cryptos have broadly gained mainstream interest, dogecoin has emerged as an unexpected heavy hitter. It now has a market cap of more than $30 billion and it has surged more than 5,000% so far this year. And unlike its more popular brethren, a single dogecoin is still cheap — it hit an all-time high of about 45 cents in April. Whether or not its a smart investment remains an active question.
Elon Musk
Tesla CEO whose tweets have been known to spark rallies in cryptocurrencies such as bitcoin and dogecoin.
Ethereum
An open-source blockchain-based software that controls the cryptocurrency Ether. It is the second-largest digital currency by market cap at nearly $300 billion.
FUD (“fear, uncertainty, doubt”)
In crypto parlance, FUD refers to negative information that weighs on an asset’s value.
HODL
Depending on whom you ask, this is either a typo that stuck or an abbreviation of “hold on for dear life.” Bitcoin bulls often tweet “HODL” as a reaction to FUD.
The typo lore dates to a 2013 post on the forum bitcointalk titled, “I AM HODLING.” In it, an apparently drunk bitcoin investor ranted about holding onto the crypto even as it fell drastically. Memes were created, and the term became a shorthand for an investment strategy.
Mining
The complicated process by which new bitcoins are entered into circulation. Mining is not for amateur enthusiasts: It requires high-powered computers that solve complex mathematical puzzles to create a new “block” on the blockchain.
The mining process eats up a lot of computing power and electricity, which has led to concerns about bitcoin’s environmental impact.
NFT
Non-fungible tokens, or NFTs, are pieces of digital content linked to the Ethereum blockchain. “Non-fungible” essentially means one-of-a-kind, something that can’t be replaced, unlike, for example, a dollar bill that you can replace with any other dollar bill. In the simplest terms, NFTs transform digital works of art and other collectibles into one-of-a-kind, verifiable assets.
Satoshi Nakamoto
The pseudonym that refers to the person (or people) who invented bitcoin. Their real identity remains unknown.
Satoshis, aka “Sats”
The smallest unit of bitcoin ever recorded on the blockchain, equal to one one-millionth of a bitcoin.
Wallet