Polygon (MATIC) hits 2-year low amid market turmoil ahead of POL transition

Polygon (MATIC) is currently enduring a severe downturn. The cryptocurrency has plunged to multi-year lows, with its price dropping to $0.3342 before stabilizing around $0.39. This marks the lowest level MATIC has seen since June 2022.

Over the past week, the Polygon price has seen a 33% decline, reflecting the broader bearish trend in the market. The entire crypto market has depreciated by nearly 17% in the last 24 hours, underscoring the extent of the current downturn, which has wiped out nearly $300 billion in value from the crypto market in just 24 hours.

Macroeconomic factors driving MATIC price down

The current turmoil in the crypto world is driven by a confluence of macroeconomic factors.

Global financial instability has heightened fears among investors.

The Bank of Japan’s recent decision to raise interest rates for the first time in 17 years to combat yen depreciation has added to market anxiety.

In the US, recession fears have intensified following a lower-than-expected jobs report for July 2024.

Additionally, rising geopolitical tensions, particularly concerning the Middle East, have further fueled market uncertainty.

Polygon introduced Plonky3 in July

Amid this market panic, Polygon has been making strides to bolster its platform. On July 16, Polygon Labs introduced Plonky3, an advanced zero-knowledge (ZK) proving system designed to enhance Ethereum scalability.

This new system builds on the successes of its predecessor, Plonky2, and offers improved modularity and flexibility for developers.

Plonky3 aims to make Ethereum transactions significantly faster, by 5 to 10 times in certain configurations, thereby supporting the network’s growth amid the evolving technological landscape.

Despite these technological advancements, MATIC’s value did not show any positive movements. Over the last two weeks, it has dropped by over 26%.

Plan to shift from MATIC to POL token

Following the introduction of Plonky3, Polygon will undergo a significant transition on September 4th, shifting from MATIC token to POL token.

POL will initially serve as the native gas and staking token for Polygon PoS, with plans to expand its role in subsequent phases.

This change is expected to reshape the Polygon ecosystem, aiming to improve the network’s functionality and user experience.

The transition is part of a broader effort by Polygon to maintain its competitive edge and address ongoing market challenges.

One billion POL Community Grants Program (CGP)

The Polygon platform recently also announced the first season of the 1 billion POL Community Grants Program (CGP) to attract and support developers. The 1 billion POL will be distributed over 10 years through grant funding.

In the first season of the CGP, 35 million MATIC will be distributed towards funding the best projects across the Polygon and Ethereum landscape.

Additionally, Uniswap v3 recently integrated with Polygon, offering $250k in rewards and aiming to boost investor confidence.

While MATIC holders face immediate challenges, the platform’s strategic advancements highlight its commitment to long-term growth and scalability in the ever-evolving crypto landscape.

As the market navigates through this turbulent period, Polygon’s developments and the upcoming transition to POL could play a crucial role in shaping its future trajectory.