Polygon (POL) has recently encountered significant challenges, witnessing a sharp decline in its market value. As of Tuesday, its price plummeted to $0.3910, marking an astonishing drop of 47% from its peak in December 2024. This downturn has raised concerns among investors and analysts, sparking a deeper investigation into the underlying causes.
One of the most alarming signs is a notable dip in active addresses on the Polygon network, which have decreased by 12% in the last 30 days, settling at 5.96 million. This figure stands in stark contrast to Base, the leading layer-2 network, which recorded an impressive 21.7 million active addresses. Such a decline indicates waning user engagement and could signal larger systemic issues within the ecosystem.
While Polygon’s transaction volume experienced a slight increase of 7% to reach 91.5 million, its fee revenue saw a staggering 38% plunge to just $835,000. This performance starkly contrasts with Base’s handling of over 218 million transactions and generating a hefty $15.5 million in fees within the same timeframe. Such disparities highlight the growing competitive pressure that Polygon faces in the evolving cryptocurrency landscape.
The difficulties are not confined to transaction volume and fees alone. The total value locked (TVL) in Polygon’s DeFi ecosystem has diminished considerably, now standing at $842 million. In comparison, competitors like Base and Arbitrum have significantly higher TVLs at $3.41 billion and $3 billion, respectively. Furthermore, Polygon’s decentralized exchange (DeX) ecosystem has not fared better, with a 20% drop in weekly trading volume to $1.2 billion, while Base managed an impressive $10.7 billion.
In the NFT sector, where Polygon previously thrived, the performance has been equally dismal. Data from CryptoSlam indicates a dramatic 71% drop in NFT sales over the past month, down to just $24.8 million, while Base’s NFT sales surged by 388% to reach $22.7 million. This shift could signify a lost market share and could be contributing to investors’ loss of confidence in Polygon.
Additionally, earlier this year, Polygon’s performance prompted its removal from the Lido DAO liquid staking in December, further highlighting its struggles. The four-hour chart of the POL token suggests a downward trajectory, as it formed a bearish descending triangle pattern, indicating that the price may continue to slide further. Investors will be closely watching key support levels, with the next threshold being $0.3425, reflecting a worrying trend for those involved with Polygon.
As Polygon continues to grapple with these issues, its long-term viability may depend on how effectively it can recalibrate its strategies and reclaim its position in the competitive landscape of blockchain technologies.
