The host of popular crypto analytics and market commentary show Coin Bureau says that Polygon ($MATIC) is positioned to benefit from Ethereum’s transition to a proof-of-stake network. 

Polygon is “a protocol and a framework for building and connecting Ethereum-compatible blockchain networks”; it aggregates “scalable solutions on Ethereum supporting a multi-chain Ethereum ecosystem.”

On 18 May 2021, Anthony Sassano, who joined Polygon as an advisor earlier this year, took to Twitter to clear up some of the confusion around Polygon (e.g. some people refer to Polygon as a sidechain to Ethereum, while others call it an L2 blockchain). Below are a few highlights from that Twitter thread:

  • “There is the Matic Plasma Chain and the Polygon PoS chain. The vast majority of the activity is happening on the PoS chain.“
  • “The PoS chain is what people refer to as a ‘sidechain’ to Ethereum because it has its own permissionless validator set (100+ who are staking MATIC) which means it doesn’t use Ethereum’s security (aka Ethereum’s PoW).“
  • “The PoS chain goes beyond a standard sidechain and actually relies on and commits itself to Ethereum (what some people may call a ‘commit-chain’). It relies on Ethereum because all of the validator/staking logic for the PoS chain lives as a smart contract on Ethereum.“
  • “This means that if the Ethereum network went offline, the Polygon PoS chain would also go offline. Secondly, the PoS chain actually commits/checkpoints itself to Ethereum every so often.“
  • “This has 2 benefits: it provides Ethereum-based finality to the PoS chain & it can help the chain recover in case of catastrophic event. This also means that Polygon is paying Ethereum to use its blockspace (in ETH) & paying for it to secure the contracts & checkpointing.“

During a YouTube video released on March 31, Coin Bureau’s host “Guy” told viewers that Polygon would likely rally alongside Ethereum’s highly anticipated upgrade. Guy noted that Ethereum’s transition to proof-of-stake would have “minimal effect” on the smart contract network’s scalability, thereby increasing demand for other layer-2 solutions such as Polygon. 

As reported by The Daily Hodl, Guy said, 

[The upgrade] is likely to increase the demand for Ethereum which will make it even harder to use. This means layer-2s might soon be needed more than ever and Polygon is perfectly positioned to profit. 

Coin Bureau’s host argued that $MATIC, which has failed to appreciate in price over the past year, has been limited by the coin’s increasing supply. Guy showed that MATIC’s circulating supply had increased by around 600 million coins over the last four months as a result of the project’s vesting schedule. 

Guy concluded that the Polygon foundation was creating a substantial amount of selling pressure on the altcoin, and thereby limiting its price performance over the past year.  Despite predicting a rally following the Ethereum upgrade, Guy was ultimately cautious on the price outlook for $MATIC due to the project plateauing, in addition to the selling pressure. 

He concluded, 

This paints a pretty grim picture for MATIC’s price potential but this ultimately depends on the demand that can be created by the upcoming milestones on the Polygon roadmap. 

Disclaimer

The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.

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