Polygon outperformed Ethereum in NFT trades, solidifying its tier 2 position. Despite the growth in the NFT market, the network experienced declining dApp activity and token volume.
Polygon [MATIC]a layer 2 scaling solution for Ethereum [ETH], outperforms the latter in terms of the number of NFT transactions executed on each protocol. In addition, the increasing NFT transactions strengthen Polygon’s position in the layer 2 space.
The number of Polygon NFT transactions in January surpassed Ethereum NFT for the second consecutive month, but average transaction costs were much lower. Several data from the NFT lending ecosystem has reached record highs, with BendDAO lending volume exceeding $36 million.
— Wu Blockchain (@WuBlockchain) February 1, 2023
Read Polygons [MATIC] Price forecast 2023-2024
The Polygon NFT market has been growing and while the number of transactions has been high, the average fees generated by these transactions have been low.
The low cost may affect the network’s overall monetization ability, but it may also be the reason why many users choose this tier 2 solution.
However, the fees had no impact on Polygon’s total TVL, which is up 2.26% over the past 30 days, according to data from L2Beats. In particular, the TVL was $2.50 billion.
Not all good news for MATIC
A potential threat to Polygon could be the decrease in daily activity on its dApps. Popular dApps such as Balancer and Planet IX have witnessed a decline in unique active wallets, with Planet IX dropping 35% and Balancer dropping 12.6% in the past 24 hours. The number of transactions on Planet IX also fell by 36.95% in the past seven days.
A decline in dApp interest could reduce Polygon’s dominance in terms of daily active users. Much of the activity on the Polygon network stemmed directly from the popularity of its dApps. If this pattern continues, Polygon would be negatively impacted going forward.
Despite the growth of the NFT market, Polygon’s token, MATIC, has not seen a corresponding increase. According to data from Santiment, total volume for MATIC fell from 2.06 billion to 908.67 million.
How much is 1,10,100 MATIC worth today?
In addition, Polygon’s development activity also declined. This suggested that Polygon’s team’s contributions to its GitHub have dropped, which could impact the protocol’s future growth and development.
All in all, the growth of the Polygon NFT market is a positive sign, but the decrease in daily activity on the dApps and the falling volume of the token should be closely monitored to ensure the continued success of the protocol.
This post Polygon Outperforms Ethereum in NFT Transactions, But Challenges Await
was published first on https://ambcrypto.com/polygon-outpaces-ethereum-in-nft-transactions-but-challenges-loom-ahead/