Polygon (CCC:MATIC-USD), previously known as the MATIC Network, has been one of the most rewarding investments this year. In the past 12 months, the cryptocurrency has gained an incredible 7,100%.
The blockchain network has proven to be highly efficient for decentralized finance (DeFi), so crypto pundits are bullish on MATIC. As it continues to make more inroads in the fast-growing DeFi world, I envision a healthy growth runway ahead for the crypto.
Many believed that the crypto bubble would definitely burst this year. However, it’s clear that the industry has come of age in the past year and has finally made its way into some institutional investors’ portfolios.
Nevertheless, cryptocurrencies remain highly speculative investments and are prone to wild swings. In the long-term, though, digital assets that offer real utility will be able to sustain their upward trajectory. The acceptance of polygon in DeFi will be a major growth catalyst for the cryptocurrency.
Polygon is essentially a scaling platform for the Ethereum (ETH-USD) network. It facilitates off-chain transactions securely and efficiently, enhancing smart contracts and payments. Polygon is a Layer-2 network, which increases its scalability and interoperability between blockchains. Layer-2 networks are considered critical for the widescale adoption of digital assets.
Polygon calls itself “Ethereum’s internet of blockchains,” as Polygon’s developers sought to create a platform that would enable Ethereum to grow effectively and allow the latter’s infrastructure to be developed. Polygon eliminates some major drawbacks of the Ethereum network, including inadequate throughput, a poor experience for users, and the lack of centralized governance.
The key aspect of the platform is the Polygon SDK, a modular framework that facilitates the creation of several applications. Polygon’s “Plasma” platform facilitates affordable off-chain transactions.
MATIC has built a robust network that has enabled the creation of an array of decentralized applications. Its framework facilitates the creation of sovereign, customizable blockchains.
The Potential of DeFi
Decentralized finance, or DeFi, has grown exponentially in the past year. It uses blockchain technology to manage financial transactions. Blockchain technology is a decentralized public ledger in which transactions are recorded transparently.
The goal of its creators is to take power out of the hands of the centralized institutions and democratize the process through peer-to-peer relationships. Moreover, a full spectrum of traditional financial services is slated to be offered to users through the blockchain. Cryptocurrencies remain at the heart of decentralized finance.
The cryptocurrency industry has grown very rapidly in the past year, and CoinGecko estimates that the sector has a total market capitalization of $128 billion. The sector will aim to become more accessible and develop greater trust among the users of different currencies, while fostering more transparency.
MATIC and some of its peers are in an ideal position to ride the DeFi wave for the foreseeable future. MATIC’s platform appears to be tailor-made for DeFi, and, with regular updates, the platform will only get better with time. However, it must continue pushing for innovation and refining its platform.
The Bottom Line on MATIC
Polygon has been one of the best performing cryptocurrencies in the past 12-months. After MATIC’s massive gains, many could believe that MATIC may soon tumble. However, MATIC isn’t a fad and has proven to be amazingly useful for DeFi. If it’s continuously improved, it could post substantial gains for the foreseeable future.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.