Anyone interested in earning with cryptocurrencies has likely encountered the Polygon token (POL), formerly known as MATIC. While this currency has never shown meteoric rises, it remains one of the most promising for investment. Let’s explore what makes Polygon crypto attractive for investors.
What Is Polygon Cryptocurrency?
The largest blockchain networks today, Bitcoin and Ethereum, are built on the Proof-of-Work consensus algorithm and currently lead in capitalization. However, users frequently criticize them for scalability issues, resulting in slow transaction confirmations and high fees.
One way to address this issue is by using Layer 2 solutions, which function as additional blockchains. One such implementation of this technology is the decentralized Polygon network.
Polygon is a network of secure Layer 2 solutions and independent sidechains designed to enhance the scalability of the Ethereum blockchain. This reduces transaction costs and improves speed. It is not a standalone blockchain but rather an extension of Ethereum — a middleware platform that simplifies interaction with it.
The first version of Polygon crypto was launched in 2017 under the name Matic Network, which it retained until early 2020. Initially focused on solving Ethereum’s scalability problems, Matic Network transitioned to Polygon in 2020, retaining its native token name, MATIC. On September 4, 2024, Polygon officially rebranded its token as POL, while retaining all previous MATIC functionalities.
Initially designed as a supporting blockchain for Ethereum, Polygon has grown into a standalone ecosystem, outperforming the primary ETH blockchain in:
- Transaction processing speed,
- Transaction fees,
- The number of active registered addresses.
How Does Polygon (MATIC) Work?
The Polygon architecture includes 4 layers responsible for system security, communication between several blockchains that make up the network structure – the Ethereum layer, the security layer, the Polygon layer (consisting of several blockchains), and the transaction execution layer.
The cryptocurrency consensus algorithm is Proof-of-Stake. This means that at the time of the platform launch, a full issue of coins was made and mining is impossible. About 80% of coins are in free circulation. 20% of the coins are under the control of the developers and are gradually being put into circulation.
How Can You Earn With Polygon Crypto?
Since mining this cryptocurrency is not an option, there are two primary earning methods:
- Trading: Polygon is a highly volatile currency, making it suitable for trading.
- Staking: By locking up coins, users support network liquidity and help validators maintain its functionality, earning rewards in return. The estimated staking yield is approximately 20% annually.
Disadvantages of Polygon Cryptocurrency (MATIC)
While Polygon has many advantages, it is not without drawbacks. Experts highlight its centralization as a weak point. About 45% of coins are held in two wallets, with 30% in a single wallet. Additionally, 20% of coins remain frozen under developer control. This raises concerns about decentralization, as a single entity could influence the price.
Other factors impacting Polygon’s performance include:
- Competition: Other platforms, like Solana, Avalanche, and others, also address Ethereum’s scalability issues.
- Market Trends: POL is more volatile than BTC but more stable than many high-risk altcoins. However, it still lacks significant stability.
Despite these issues, users often consider the drawbacks minor due to its fast transaction speeds, low fees, and reliable platform performance.
Should You Invest in Polygon (MATIC)?
Whether to invest in Polygon depends on your investment strategy and goals. As a native token for many decentralized networks, Polygon (POL) can be useful for professional investors working with DeFi or other crypto-assets, particularly due to its low fees.
But whether it is worth investing in POL to make money is a more complicated question. Let’s consider different strategies:
- Staking: With a return of approximately 20% annually, staking is appealing. However, consider the token’s volatility and whether staking returns can offset potential price drops.
- Trading: Making money on the high volatility of Polygon crypto is not a bad idea. But you need to take into account the margin and the possibility of using leverage with short positions. Not all exchanges can offer favorable conditions.
- Long-Term Investment: Polygon has demonstrated both sharp rises (from $0.003 to $2.92) and steep declines (to $0.38). Recent trends suggest growth, and as an effective Layer 2 solution, its value could increase. However, like any crypto investment, it carries significant risks.
Prospects of Polygon’s Price – Video
For more predictions about POL’s future price, watch the video:
Conclusion
Polygon is a popular and promising cryptocurrency. Its applications are expanding, making it worth considering as an investment asset. However, investors must account for its volatility and overall market conditions.
FAQs About Polygon
Predictions vary widely, with some experts forecasting prices up to $11.45 by 2030. However, these should be taken cautiously.
To invest in POL, simply purchase the tokens on any preferred exchange.
Risks include price volatility, competition from other projects, and technological challenges. Always evaluate these factors before investing.
