Key facts:
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Polygon became all the rage during the “DeFi Spring” of 2021 and then lost momentum.
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With this rebranding, the Polygon organization seeks to “resurrect” the token.
Polygon’s native token, MATIC, will change its name to POL tomorrow, September 4, marking a milestone in the evolution of the ecosystem. This rebranding occurs in a context where Polygon, which shone during the “DeFi spring” of 2021, has lost much of its market momentum.
Two weeks ago, the token price climbed to $0.53. However, This price was not able to hold and has now fallen to $0.40..
This decline is not surprising, since, from 2022, MATIC has shown poor performance in the market.
After reaching its all-time high of $2.92 in 2022, its price began to fall, facing solid resistance at the $1 mark, a level it has only surpassed on three occasions since then, as the chart below shows. TradingView.
MATIC Price. Source: TradingView.
Market psychology, explained in the Bitcoin/” target=”_blank” rel=”noreferrer noopener”>Cryptopedia From CriptoNoticias, he points out that these historical resistances, such as $1 in the case of MATIC, are formed when a financial asset has recurring difficulties in overcoming a specific price.
This phenomenon, coupled with low activity on the Polygon network, has influenced the weakness of MATIC’s price.
Polygon network activity is declining
On-chain indicators They also reflect a discouraging outlook for the Polygon network.. According to the analysis site Artemis, the number of daily active addresses on the network peaked in June 2023 at 1.6 million, but has since dropped dramatically to the current 633 thousand active addresses.
Similarly, daily transactions have declined, from a high of 16 million in November 2023 to just 2.9 million todayas seen in the following graph.
Daily transactions on the Polygon network. Source: Artemis.
The total value locked (TVL) on the network also saw a significant drop, from $5.3 billion to $885 million over the past three years.
Faced with this scenario, Polygon Labs, the company issuing the token, decided to replace MATIC with POLdescribing this change as “a fully community-driven update,” as it was reported CryptoNews.
POL is designed to be the next-generation native token in the Polygon ecosystem, providing governance rights and improving network scalability.
This will allow a decentralized group of PoS (Proof of Stake) validators to provide security, resilience, and neutrality to every network within the Polygon ecosystem.
Additionally, MATIC users will not need to do anything to have their tokens upgraded to POL, as the change will be made automatically.
The MATIC community does not expect any increases in the asset price
Despite these improvements, the MATIC community does not anticipate a significant increase in the asset’s price. Users of the token have expressed on the social network Reddit his reservations about the future of POL.
Some, like robertsa901, pointed out that, If a strong reversal does not occur now, the price could fall even further.“MATIC was my #1 coin, but even now I have doubts and sold all of mine,” he commented.
“I bought 5,500 MATIC in 2020 and 2021, which allowed me to make a nice profit. Maybe that was its only bull run. I can’t see it going up like that again.”
Another user, Tall_Run_2814, said that Polygon no longer has the same user and market activity as in 2021something mentioned previously in this article. However, he still believes that it is a “great project.”
Additionally, some users, such as Material-Emotion1245, have pointed out that the Polygon Foundation has been selling its assets, which could be affecting the token price.
“The Polygon Foundation has a large portion of its assets as an institution, so if they wanted to, they could probably increase the price a lot. They might not want the price to be high to keep costs down,” he said.
Updates do not guarantee a price increase
Finally, it is important to highlight that Name or image updates do not always guarantee a price increase of a digital asset.
The trader who identifies himself as Daan Crypto on the social network X mentioned that in 2017, these strategies could increase the value of a currency by up to 100%. However, The market has evolved and today the success of a project depends on more complex factors..
A recent example is the Cardano (ADA) Cryptocurrency, which activated the Chang hardfork. This upgrade decentralizes the governance of the network, previously managed by IOHK, the company founded by Charles Hoskinson.
Nevertheless, The market did not react as expected and the price of ADA remained at $0.32. So far in 2024, the cryptocurrency has registered a rise of 28%, but it is still 89% below its historical maximum.
While the change from MATIC to POL represents a new stage for Polygon, the future of POL’s price will depend on multiple factors, including the market’s response to these changes and the network’s ability to regain the activity it once had.
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