Is Polygon (MATIC) a Good Investment?

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Contributor, Benzinga
Updated: April 12, 2022
verified by Ryan McNamara

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Decentralized finance (DeFi) is becoming increasingly popular, and many DeFi protocols are built on the Ethereum network. However, there are several problems with Ethereum revolving around scalability and transaction fees. Transferring cryptocurrencies between wallets on Ethereum may cost around $10, while trading and lending using Ethereum's blockchain may cost hundreds. For this reason, investors sometimes prefer to use other blockchains to interact with DeFi.

Many retail investors chose to use other smart contract blockchains, such as Solana and Avalanche, to save on fees. Polygon, however, makes using Ethereum more affordable and accessible for retail investors that don't want to spend high fees on Ethereum's mainnet. Since Polygon is built on Ethereum, you're able to use common Ethereum applications like Aave, Uniswap, DAOhaus and SushiSwap.

Polygon is looking to solve some of these problems by adding its own protocols to the Ethereum chain. Learn more about Polygon now to determine if MATIC is a good investment for you.

What is Polygon?

Polygon is a layer-2 protocol, meaning it allows transactions on Ethereum to be conducted off of the main network to reduce transaction fees to end users. Polygon mainly seeks to add interoperability and scalability to the Ethereum network.

There are currently 7.81 billion MATIC tokens in circulation, with a maximum supply of 10 billion MATIC. New tokens are minted monthly in the form of staking rewards.

Polygon allows users to connect Ethereum-compatible networks. Users can create new chains, add to the Ethereum chain and even create their own currencies. This allows users to take advantage of the security Ethereum offers while avoiding the expensive fees. 

Polygon uses a proof of stake consensus model to verify transactions. Proof of stake works by employing validators to lock their tokens on the chain. In doing so, they can earn rewards for verifying transactions. 

The chain can use the locked tokens as collateral and punish those who fail to validate transactions properly. Transactions are verified periodically at checkpoints before being placed onto the Ethereum chain. This allows Polygon to be somewhat separate from Ethereum while still reaping the benefits of the chain. 

Polygon (MATIC) Price History

MATIC is currently in the top 20 most popular cryptocurrencies by market capitalization, with over a $10 billion market cap. It is currently trading around $1.40 per token. Ethereum co-founder Vitalik Buterin's support of Polygon and the announcement that Polygon will focus on ZK-Snarks will likely be a key price catalyst for MATIC moving into the second half of 2022.

In early 2021, MATIC was trading for less than $0.02 per token. 5 months later, in May 2021, it hit all time highs of over $2.65. That is nearly a 15,000% return in under 5 months. However, its growth has slowed down in the latter half of 2021, and the token is currently trading below its all-time high price in 2022.

Polygon's Competition

While there are many major competitors of Polygon, Polkadot is the largest as of right now. Other competitors include Cosmos, Kusama and Arbitrum. Polygon looks to mainly improve the Ethereum network by connecting it to other Ethereum-compatible blockchains and helping scale the Ethereum network. Polkadot looks to create a network of many blockchains, not just Ethereum-compatible chains.

Polygon hopes to expand the Ethereum network by creating a “multi-chain system.” It allows for almost anyone to create new protocols on the Ethereum chain. Polygon can take advantage of the security and decentralization of the Ethereum network. 

Polkadot is a network that looks to connect many smaller blockchains. It differs from Polygon in that it’s a layer 1 solution, meaning that it utilizes its own blockchain separate from Ethereum. Polkadot currently supports over 100 different chains. The project hopes to help blockchains “communicate” with each other by connecting them.

How to Buy Polygon (MATIC).

Polygon’s popularity has dramatically increased over the course of the past year, and several prominent crypto trading platforms have begun offering the token. Coinbase and FTX are both large exchanges that proudly offer MATIC. Another good option is Gemini, which allows you to earn interest on your cryptocurrency holdings.

Opening an account on either platform is fairly simple and typically takes around 5-10 minutes. After you sign up using an email and password, you may have to enter in some basic personal information. Once that is verified, you can begin trading MATIC.

You can also obtain MATIC from a decentralized exchange (DEX) such as Uniswap or SushiSwap using wrapped ETH. However, using an centralized exchange may be more suitable for novice crypto users.

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Best Hardware Wallet For Polygon (MATIC)

While a crypto brokerage can be an easy way to buy and sell MATIC, it may not be the safest location to store it. A hardware wallet is a great way to add an extra level of security to your crypto holdings. 

Best Hardware Wallet: Ledger

Ledger is a hardware wallet that allows users to securely store crypto. It stores private keys on a physical device, so crypto can only be accessed if the device is present. Ledger wallets support the sending and receiving of MATIC.

Ledger currently offers 2 hardware wallets: the Ledger Nano s and Nano X. The Nano S is cheaper and more beginner friendly. The Nano X is more expensive and offers more advanced features, such as more storage.

If you plan on obtaining MATIC from a DEX, having a wallet is necessary. Ledger’s hardware wallets may be a great option for those looking to safely store crypto.


Bonus Section

Keep an eye out for the release of ETH2.0. This may impact both the uses and price of Polygon.

Cryptocurrency Market Outlook

While some say that the markets have yet to bottom our, others are expecting the cryptocurrency bull market to continue into 2022 and some even claim it will extend into 2023. No matter which way the markets go, make sure to be cautious with your investments. If you want to see where the market currently stands, take a look at Benzinga’s crypto price table.

Is Polygon (MATIC) a Good Investment?

Polygon is a protocol hoping to improve upon the shortcomings of Ethereum. It has seen dramatic price increases in 2021, and some see even more potential for price increases. 

However, Ethereum is hoping to release ETH2.0 in 2022. This may make Ethereum more scalable and limit the need for Polygon. 

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