Ethereum‘s largest Layer-2 networks, Polygon, announced the long-awaited transition of its MATIC token to POL on September 4. On the same day, user activity on the Layer-2 network dropped to its lowest levels in months. Data from Polygonscan shows that the total number of transactions recorded on the Polygon Proof-of-Stake (PoS) chain on August 18 was 2.44 million, the lowest level since December 2023.
What’s Happening on the Polygon Front?
A drop in transaction numbers on a network means fewer active users. In Polygon’s case, uncertainty surrounding the upcoming transition of MATIC to POL may cause users to delay transactions until the transition is complete.
MATIC’s weak price performance reflects the network’s recent activity decline; the altcoin has increased by only 3% in the last 24 hours, trading at $0.41. Despite a 27% increase in trading volume, reaching a total of $142 million, uncertainty surrounding the transition to POL contributed to the slowdown.
However, Polygon’s DeFi sector remains resilient. On August 18, both the network’s total locked value (TVL) and the trading volume on decentralized exchanges (DEXs) saw significant increases, indicating continued interest despite the broader decline in transaction activity.
According to Artemis data, the TVL value increased by 5% that day, reaching $859 million. Additionally, the daily trading volume on DEXs within the Layer-2 network increased by 21%. As of the date of this writing, Polygon’s daily DEX trading volume was recorded at $69 million.
MATIC Chart Analysis
MATIC has not managed to record a significant increase in value following the Polygon announcement, but there has been a notable increase in buying activity on its 12-hour chart. As of the date of this writing, the token’s Relative Strength Index (RSI) is in an upward trend and is preparing to cross above the 50-neutral line.
The attempt to cross the center line indicates increased buying pressure. This shows that MATIC is shifting from a slight downward trend to a more neutral or slightly upward momentum. If this buying pressure gains momentum, the token’s price could rise to a 30-day peak of $0.55. However, if the market trend turns from positive to negative and selling activity surges, it could drop to $0.33.
