Polygon's Price Plummets 47% Amidst Ecosystem Slowdown
1min read Polygon (POL), a popular layer-2 scaling solution for Ethereum, has been experiencing a significant price decline in recent months. As of Tuesday, the Polygon coin retreated to $0.3910, marking a 47% drop from its December 2024 highs. This downturn can be attributed to a persistent slowdown in the Polygon ecosystem, as indicated by various metrics.
Data from Nansen reveals that active addresses on the Polygon network have fallen by 12% over the past 30 days, reaching 5.96 million. This figure is notably lower than that of Base, the largest layer-2 network, which recorded 21.7 million active addresses during the same period. While Polygon's transactions increased by 7% to 91.5 million, its fee revenue plummeted by 38% to $835,000. In contrast, Base handled over 218 million transactions and generated $15.5 million in fees.
The total value locked in Polygon's DeFi ecosystem has also dropped to $842 million, significantly lower than Base's $3.41 billion and Arbitrum's $3 billion. Additionally, Polygon's DeX ecosystem is lagging, with weekly trading volume falling by 20% to $1.2 billion, while Base, a relatively new network, handled $10.7 billion in the same period. The NFT market on Polygon has also seen a decline, with Polygon NFT sales dropping 71% in the last 30 days to $24.8 million, while Base surged by 388% to $22.7 million in sales.
The weak performance of the Polygon network has led to its removal from the Lido DAO liquid staking in December. Technical analysis of the POL token's four-hour chart shows a descending triangle pattern, with the lower side at $0.4138. The token has failed to drop below this level several times since December last year, indicating a bearish outlook. Furthermore, Polygon has dropped below its 50-period moving average, reinforcing the downward trend. The next key support level to watch is at $0.3425, the token's lowest swing on November 15.
