Polygon Monthly Analysis – February 2022

Heading into 2022, industry experts touted Polygon as one of the Layer 2 blockchains that would rival Ethereum and even bite into its share. Market analysts, on the other hand, forecasted Polygon's native token MATIC to see more price gains. While the year is not so advanced to review these projections, an analysis of Polygon in the first two months paints a rough idea of where the network and its token are headed.

Market Metrics

Market Capital

Polygon's market capitalization as of writing stands at $10.95 billion – 39.47% below the network's aggregate dollar value at the start of the year, $18.09 billion. The current figure is slightly below Polygon's market cap on the first day of the month, $11.24 billion.

MATIC Circulating Marketcap & Price YTD chart. Source: Messari

Last month, Polygon's market capital stayed above $16 billion predominantly for the first two weeks before crashing below this mark for the remainder of the month as the market saw a strong recession. In February, the figure has hardly crossed above the $15 billion point – an indication of the poor month crypto assets have had.

The market-wide tumble in reaction to the tensions around the Ukraine crisis last Thursday pushed Polygon's price to $1.25 – levels last touched in October 2021. The market capital shrunk correspondingly to $8.88 billion – its lowest so far this year.

Blockchain and Network Metrics

PoS Chain Daily Transactions

The number of transactions recorded on the Polygon network at the start of the year was 4,042,954. This figure rose to set a January peak of 4,549,520 two days later before seeing a decline to a monthly low of 2,272,676 transactions on 19^th January.

Daily Transactions chart. Source: Polygonscan

This month, Polygon peaked at 4,065,765 transactions on the 8^th but has since been on a gradual descent. Over the weekend, Polygon saw significantly reduced figures as the number fell to nearly half its peak. The fewest number of daily transactions on the network 2,150,189 was recorded on Saturday. Notably, the January peak and February bottom represent the extremes of transaction numbers so far, this year.

PoS Chain Unique Addresses

More users have been jumping on board the Polygon network, evidenced by the continued rise in the number of PoS chain unique addresses. The increase in the number of said addresses has been, for the most part, consistent from 129,862,889 at the start of the year to the current 137,855,123.

Unique Addresses chart. Source: Polygonscan

Polygonscan data shows that there were more unique addresses throughout January than February. The network saw 5,350,327 additional addresses in January. The equivalent figure for this month (as of 27^th February) is 2,095,734 addresses. It is worth noting that January also posted the highest daily increase with 1,257,831 new addresses recorded.

Active Polygon PoS Chain Addresses

Representing the measure of user engagement in the network, the number of active on-chain addresses in January reached a high of 592,270 addresses on the 6^th. The lowest count of the month was recorded on the 20^th – 229,915.

Active Addresses chart. Source: Polygonscan

The figures recorded this month do not beat January's highs or lows. February peaked on the 16^th with 380,950 active addresses and saw the least activity on the 20^th with 308,081 active addresses.

PoS Chain Average Gas Price

The early days of January saw the gas prices on Polygon rise to all-time highs. The spike was attributed to the surging popularity of the play-to-earn game Sunflower Farmers. This NFT farming game caused the gas prices to spike at least three times the previous peak.

Average Gas Price chart. Source: Messari

The average gas price reached an all-time high of 763.6 Gwei on 05^th January. The gas prices again came close to this level when an average of 762.6 Gwei was recorded just over two weeks later on 21^st January. The least average price of gas was the 44.6 Gwei seen on the second last day of the month.

February's prices have been much more stable, registering the most competitive prices of 54.4 Gwei on the 5^th and an apex of 179.8 Gwei on the 24^th.

PoS Chain Network Utilization

After touching a peak network utilization figure of 94.11% on 3rd January, Polygon's network utilization progressively declined but remained above 50% until 25^th January. The descending pattern continued, with the network recording a monthly low – 44.43% on 28^th January.

Network Utilization chart. Source: Polygonscan

Polygon's network utilization (the average gas used over the gas limit) has remained below 50% throughout February. The lowest figure of 49.51% was recorded on 14^th February, followed by a decline to a yearly low, so far, of 31.77% on 20^th February.

DeFi Performance

TVL Changes

Polygon's total value locked (TVL) grew then dipped over the course of February. The TVL was at $4.78 billion at the start of the month, and on 10^th February, it reached a high of $5.64 billion before seeing a decline. The nearly consistent slide saw the figure hit a low of $3.86 billion on 25^th.

Polygon DeFi TVL. Source: DeFi Llama

A sharp upsurge on 27^th saw Polygon briefly cross $8 billion in TVL and post a monthly high of $8.03 billion. The chain has since lost a huge chunk of the TVL and is down to $3.88 billion as of writing.

DeFi Market Share

Relative to other DeFi ecosystems, Polygon has been a steady performer. Starting the year off with a 2.29% market share, the chain held onto the 2.3% dominance level for most of January before rising above 2.5% towards the end of the month.

DeFi market share. Source: DeFi Llama

This month started on a high, with a market share position of 2.51%, which rose to 2.67% by 11^th February. The dominance has since fallen closer to 2%, with Polygon losing its seventh rank among chains with the largest TVL to Tron. The latter has a dominance of 2.04% on the last day of the month, while Polygon's equivalent market share figure is 1.96%.

To learn more about Polygon visit our Investing in Polygon guide.