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Polygon (MATIC) Flying: Is This Program The Primary Catalyst?

MATIC, the native token of Polygon, an Ethereum sidechain, is ripping higher, mirroring the general performance across the crypto scene, spearheaded by Bitcoin (BTC). As of November 9, MATIC is up roughly 5% in the past 24 hours and inching closer to July 23 highs, looking at the candlestick arrangement in the daily chart.

This upswing is at the back of rising trading volume and improving sentiment, which has seen the token expand 64% from October lows, a net positive for optimistic traders.

Polygon price trending upwards on the daily chart | Source: MATICUSDT on Binance, TradingView

The 110 Million MATIC Grant

Looking at events in the past few trading days, the MATIC rally seems to have been catalyzed by Polygon Village’s recent announcement. The team said it plans to distribute 110 million MATIC to projects aiming to deploy decentralized finance (DeFi), gaming, and social media solutions on the sidechain. 

Polygon said late-stage projects can receive direct grants of up to 2 million MATIC. Meanwhile, early-stage projects and startups, can apply via quadratic funding grants. 

In this funding arrangement, the amount of MATIC sent to a project will directly depend on how popular the project is. Those that are popular among crypto holders will receive more funds. Still, it remains unclear how Polygon Labs will deal with bots when deciding how popular a given project is. Voting will be on-chain on Polygon, where MATIC will be the currency through which users can support their favorite projects.

Polygon Rising Stature: From POL To ZK-EVM

Over the years, Polygon has emerged as a popular scaling solution for Ethereum, looking at statistics and total value locked (TVL), especially in DeFi. The platform is compatible with the Ethereum Virtual Machine (EVM). Accordingly, it allows protocols launching on its rails to easily connect with the mainnet without sacrificing security.

By connecting with Polygon, projects can operate in a highly scalable environment with relatively low fees. This feature allows intensive dapps, including social media platforms or decentralized exchanges (DEXes), to operate seamlessly.

Polygon is also transitioning and, subject to the community’s approval, will gradually replace MATIC with POL. This token will power the broader ecosystem, including supernets and layer-2 networks relaying on Polygon’s infrastructure. In late October, the POL contracts went live on the Ethereum mainnet as part of Polygon 2.0. This transition will see Polygon integrate zero-knowledge (ZK) technology into all its products. 

Manta Network said it would retool and integrate Polygon’s Chain Development Kit (CDK) in mid-October. Doing this, the protocol migrated from the optimistic rollup it initially launched on. Using Polygon’s CDK, Manta integrates zk Rollup technology to settle transactions faster and confidentially.

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Polygon’s POL Upgrade Live On Ethereum Mainnet, MATIC To $1?

After months of development and weeks after testnet deployment, the POL upgrade is now live on the Ethereum mainnet. According to an update on October 25, Polygon Labs, the team behind the Ethereum sidechain, Polygon, said the move is a milestone for the project. The team claims the release of POL “paves the way for the next series of milestones in the Polygon 2.0 roadmap.”

Polygon 2.0 Taking Shape: What’s In Store?

The Ethereum sidechain continues to build. Despite challenges in the last bear run, which saw MATIC, the platform’s native currency, drop below $1 before crashing to spot levels, the team announced the start of Polygon 2.0, reviving developer activity.

The primary objective of the upgrade is to make the network more scalable, secure, and user-friendly. To achieve this, Polygon will leverage a new consensus mechanism, proof-of-stake liquidity (POSL), which the developer claims is more efficient. 

Notably, the team is developing key differences between this consensus system for Polygon 2.0. For instance, validators must stake their native tokens and liquidity to participate in the network. 

The liquidity provided by participating validators will then be channeled to boost the liquidity of its decentralized exchanges (DEXes). Subsequently, once Polygon 2.0 goes live, exchanges running on the sidechain will be more liquid, meaning users can easily swap tokens in a low-fee, highly scalable environment. 

Will MATIC Bulls Break $1?

Moreover, POL will be critical for Polygon 2.0. With the token now being initiated on the Ethereum mainnet, Polygon Labs is jump-starting the process, setting the ball rolling for POL, which the team said will “power a vast ecosystem of ZK-based layer-2 chains.” 

The team claims POL is a “hyperproductive token” primarily designed to power a multichain ecosystem. Besides, the token will be used to settle fees, and holders will participate in governance. At the same time, those who choose to stake it will be paid in the token. 

Still, it is not clear whether this update will support MATIC prices in the long run. At present, the $1 psychological level remains elusive. 

Looking at price charts, MATIC is already up 30% from October 2023 lows and continues to unwind losses. Moreover, bulls have reversed the dump of October 17 and continue to power higher. 

Polygon price on October 25| Source: MATICUSDT on Binance, TradingView

From the daily chart, bull bars are banding along the upper BB, a volatility indicator. This suggests that the underlying momentum is building up, favoring optimistic buyers.

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Polygon 2.0 Roll Out Officially Begins, Is MATIC Set For A Major Surge?

Polygon Labs announced today the roll out of their ambitious Polygon 2.0 implementation. The announcement, made via a tweet, marks the release of three pivotal Polygon Improvement Proposals (PIPs) and a detailed roadmap for phase 0. “The wait is over. Polygon 2.0 implementation kicks off now,” the tweet reads, signaling the beginning of a new era for the platform.

Earlier this summer, Polygon Labs had unveiled their vision for Polygon 2.0, a roadmap that aims to scale Ethereum blockspace to create what they term as the “Value Layer of the Internet.” This transformative vision promises unlimited scalability and unified liquidity. To bring this vision to fruition, a series of upgrades to the Polygon protocol architecture are imperative. Phase 0, announced today, is the first step in this direction.

Phase 0 focuses on four main upgrades to the protocol:

  1. The transition from MATIC to POL.
  2. Establishing POL as the native (gas) token for PoS.
  3. Designating POL as the staking token for PoS.
  4. The introduction of the Staking Layer, a feature that will empower validators to secure a diverse range of chains within the evolving Polygon 2.0 ecosystem.

What Phase 0 Of Polygon 2.0 Brings

Polygon Labs has indicated that if the community endorses these proposals, the implementation could begin as early as the fourth quarter of this year. It’s noteworthy that the changes detailed in the first three PIPs are designed to be seamless, ensuring no disruptions for end-users at this stage.

An official blog post, also released today, provides deeper insights into the transformative journey of Polygon 2.0, which was first introduced to the public in June. This set of proposed enhancements seeks to revolutionize nearly every facet of the Polygon ecosystem. The three PIPs released today offer a comprehensive blueprint for phase 0. Their goal is to construct a network of interconnected zero-knowledge-powered L2 chains, effectively scaling Ethereum to the vast expanse of the Internet.

Central to these PIPs is the transition process, the specifications for the revamped token of the Polygon 2.0 architecture, and crucial updates to the Polygon PoS native token.

PIP-18, titled “Polygon 2.0 Phase 0,” offers a comprehensive overview of the initial phase, detailing the upgrades that will be further elaborated upon in subsequent PIPs. The milestones of phase 0 are crafted with the user in mind, ensuring minimal disruptions for those already operating on Polygon PoS and Polygon zkEVM chains.

Meanwhile, PIP-17 delves into the intricacies of the POL token, outlining the associated contracts that will oversee its emission and migration. The POL token is not just a new name; it represents a next-generation token designed to accommodate an ecosystem of ZK-based Layer 2 chains, enabling staking, community ownership, and governance.

Lastly, PIP-19 focuses on the transition of the native gas token on Polygon POS from MATIC to POL. This transition is designed to ensure maximum compatibility with existing systems, with the native token’s properties remaining unchanged.

MATIC Price Analysis

The MATIC price currently remains in a downtrend channel that saw its beginning in mid-February this year. MATIC hit its yearly high of $1.56 on February 13 and has fallen 68% since then. However, a look at the 1-week chart shows that there is hope for MATIC bulls.

At the time of writing, MATIC was trading at 0.5184. All it would take to breathe new life into the MATIC price is a move above $0.5855. This price level marks the 78.6% Fibonacci retracement level, in addition, a move above this price would signify a breakout from the downtrend channel. The bulls could regain the upper hand and target the 20-week EMA at $0.7007.

Another key resistance level is at $0.7698, where the 200-day EMA is located. A rise to this price level would already represent a 45% rally. As then, the 50% Fibonacci retracement level at $0.9435 could be targeted by the bulls. Major selling pressure can also be expected at $1.27 (23.6% Fibonacci retracement level) before the yearly high would be within reach.

Polygon 2.0 clearly has the potential to awaken the bulls from their slumber. However, the $0.5855 price level is the critical key. If MATIC fails at this price level, a sweep of 65-week low at $0.3177 could loom.

Polygon MATIC price