Polygon zkEVM Mainnet Beta Welcomes Update as Ecosystem Impresses in DeFi and NFT Niches

Polygon’s broad ecosystem has charted impressive growth across the decentralized finance (DeFi), gaming, and non-fungible tokens (NFT) fields undeterred by the headwinds in the sector.

The Polygon PoS chain has maintained steady growth in cumulative addresses and the number of transactions on the network. Data from the Polygonscan explorer tool shows the number of unique addresses has increased by 26% in the last two months and is now approaching the 300 million milestone. The average number of daily transactions has also recovered slightly after slipping below 2 million on three occasions last month – the first time since May 2021.

Polygon PoS chain cumulative address growth chart. Source: Polygonscan

The ecosystem has tracked similar success in the NFTs space thanks to the sidechain’s inherent low transaction costs and the popularity of its top NFT collections. Polygon’s integrated zk-rollup, Polygon zkEVM, has equally been thriving as reflected in its growing total value locked (TVL) figure which is currently approaching $35 million.

Polygon zkEVM is trending up, metrics reflect steady growth

zero-knowledge Ethereum Virtual Machine (zkEVM) uses zero-knowledge proofs (zkSNARKs) to provide Ethereum Virtual Machine (EVM) equivalence allowing for the execution of smart contracts on Ethereum in a privacy-preserving manner. zkSNARKs enable users to prove the correctness of computations without exposing the underlying data, thus providing enhanced privacy and scalability. Polygon zkEVM, whose mainnet beta was released to the public in March, serves as a secure bridge to Ethereum with low-cost and fast execution of smart contracts.

On Wednesday, Polygon Labs communicated that Polygon zkEVM developers will start working with infrastructure partners to update some of the network’s services this week.

“The update of Polygon zkEVM Mainnet Beta is complete, and full networks service has resumed normally. Please ensure you are using the latest versions of the node & prover, as they are the recommended packages for Polygon zkEVM. The latest bridge service version remains: v0.1.0,” Polygon’s development and growth team said in an update tweet.

Polygon network seeks to establish itself as a hybrid ecosystem leveraging AI, zero knowledge, and mobile concepts to drive innovation. Co-founder Sandeep Nailwal shared in a Twitter thread how Polygon is spearheading the convergence of these technologies. In a separate tweet, Nailwal narrowed down on Polygon zkEVM noting that its adoption will lead to “hyper-blockchainization of world” in the near future.

Polygon zkEVM TVL chart

Markedly, activity on Polygon zkEVM has been soaring in recent months as more builders come round to it translating to a swelling total value locked. L2beat data shows Polygon zkEVM ranks 11th among L2s in TVL with a figure of $32.10 million.

Improvements on Polygon zkEVM Mainnet Beta inspire user activity

Last month, Polygon saw remarkable growth on the Polygon zkEVM mainnet beta, with steady progress and increasing network activity. Polygon zkEVM’s aggressive growth is attributable to recent changes to critical metrics, including gas optimizations and liquidity influx, which have impacted transaction fees and user engagement. Gas optimizations have played a pivotal role in reducing transaction costs on the network – recent improvements have resulted in these substantial fee cuts, making the Polygon chain one of the most cost-effective layers two roll-up solutions.

Liquidity is another a driving force behind the vibrancy of the Polygon zkEVM mainnet beta.

“Assets tied to DeFi protocols passed the $10M mark, and the total assets on the network are now over $18M,” Polygon Labs wrote in a May 30 report on the solution.

This liquidity influx has been mirrored by a remarkable increase in Total Value Locked (TVL) on QuickSwap, which has recorded a staggering 1,000%+ growth in the last 30 days according to DeFiLlama data.

Lower fees drive user adoption

The rise in network activity has resulted in lower Polygon zkEVM Mainnet Beta fees. Unlike Ethereum, where fees tend to increase with heightened activity, rollups like Polygon zkEVM Mainnet Beta become more cost-effective as user engagement intensifies. The amortization of proof generation costs across multiple transactions in a batch leads to slashed fees for each user. L2fees transaction fees dashboard shows Polygon zkEVM is one of the cheapest Ethereum layer-2 ecosystems in terms of cost incurred to send ETH and swap tokens.

L2 fees comparison

The surge in transaction volume is equally a testament to the growing popularity of Polygon zkEVM mainnet beta. On May 25, the network processed over 25,000 transactions in a single day, breaking previous all-time highs. This surge in activity has attracted new users, with a 54% increase in unique active wallets in the month between April 25 and May 25.

Polygon zkEVM activity

Meanwhile, Polygon Labs remains committed to further enhancing the efficiency of the Polygon zkEVM Mainnet Beta. In the coming months, it plans to implement data compression techniques and introduce EIP-4844, which will further reduce fees on the network. These developments should make Polygon zkEVM Mainnet Beta an even more attractive and cost-efficient solution.

Strategic partnerships

Last week, the software development company specializing in scaling infrastructure announced a partnership with digital asset infrastructure firm Taurus to enable banking institutions to issue and custody tokenized assets using the Polygon blockchain. Through the integration, the Swiss-based now offers its clients, including Credit Suisse and Deutsche Bank, the ability to tokenize various assets such as equity and debt.

Taurus integration with the Polygon blockchain

Tokenization, wherein real-world or digital assets are represented as tokens on a blockchain, is regarded as the transformative application within the crypto space. Boston Consulting Group estimates that by 2030, tokenization of global illiquid assets could present a $16 trillion business opportunity, equivalent to 10% of the global GDP. Head of JPMorgan’s digital assets platform Onyx Tyrone Lobban recently said that tokenization is potentially a killer app for traditional finance.

By enabling fractional ownership, liquidity, and transferability, tokenization unlocks the value of otherwise illiquid or indivisible assets, such as real estate. Proponents argue that tokenized assets can be easily traded, transferred, and accessed on blockchain platforms, appealing to mainstream financial institutions. Taurus’s tokenization business has seen significant growth in recent months, with 70% of its clients now utilizing its tokenization platform, compared to a mere 10% two years ago.

The integration with the Ethereum scaling layer expands its tokenization platform, which already supports Ethereum, Tezos, and Cardano. The firm previously raised $65 million in a Series B round, led by Credit Suisse. This fundraising took place shortly before Swiss authorities forced the investment banking company to be sold to UBS Group for $3.2 billion due to concerns of a potential collapse.

Telecom giant Deutsche Telekom links up with the Polygon as a network validator

In a separate development, Deutsche Telekom recently became a validator on the Polygon, a strategic move that underscores the company’s commitment to blockchain technology. The link-up with the integrated telecommunications company with a global presence, adds Polygon to a list featuring Flow, Celo, Chainlink, and Ethereum as chains the German firm has extended infrastructure services to. The telecommunications giant will provide staking services for Polygon’s Supernets, which serve as application-specific chains with a stake on the associated rootchain (PoS mainnet).

Supernets are meticulously structured to be scalable while offering interoperability for dApps. By joining the network as one of its 100 validators, Deutsche Telekom essentially contributes to the validation services offered by Polygon’s Supernets solution. Dirk Röder, the head of Deutsche Telekom’s Blockchain Solutions Center, noted the significance of operating Polygon nodes as a pivotal step for Deutsche Telekom in unlocking the immense potential of blockchain technology and enabling applications primed for widespread adoption.

Röder further highlighted that leveraging the company’s infrastructure as a validator while simultaneously monetizing the native token of the underlying blockchain network gives Deutsche Telekom a reliable, innovative, and scalable source of revenue. He also gave away that Deutsche Telekom is working on an advanced solution tailored specifically for the Ethereum network.

Polygon NFT ecosystem

Polygon ranks fourth behind Solana in NFT sales volume and fifth overall among blockchains, CryptoSlam data shows. In May 2023, the blockchain recorded $36 million in NFT sales, down from $48 million in April, while the average sale figure fell from $42.49 to $19.56. May nonetheless saw more activity, recording the highest number of unique sellers (188,388) and buyers (363,357) thus far this year. The total monthly transaction figure of 1,847,130 across May is also an all-time high for the blockchain.

Polygon NFT summary

Ethereum remains the most active platform by far, recording $356.82 million in NFT sales during the same period, followed by Bitcoin and Solana whose NFTs sales volume totaled $196 million and $44 million respectively in May. y00ts’ migration from Solana to Polygon has been one of the significant contributors to this growth alongside the popularity of Reignmakers PGA tour NFTs. The latter’s sales volume has increased 19.27% in the last 30 days propelling it to first place in Polygon NFT collection rankings.

MATIC loses ground above $0.80 as US SEC labels the Polygon native token securities

The US securities regulator on Monday filed a lawsuit against Binance followed by a second complaint filed in Manhattan federal court on Tuesday, this time, against Coinbase. Though the cases against the cryptocurrency platforms are different, they are both part of a crackdown on the industry. The SEC accused the exchanges of offering unregistered securities to investors, highlighting Solana (SOL) and Cardano (ADA) as some of them.

Polygon PoS chain daily transactions chart

Tuesday’s charges against Coinbase seek civil fines as a penalty for benefitting from ill-gotten gains. Binance was, on the other hand, accused of misleading its users about its controls, manipulating trading volumes, mismanaging customer funds, and commingling assets. The bearish narrative weighed heavy on crypto assets including the MATIC which lost support at $0.90 on Monday before dipping further below $0.78. MATIC was last spotted on a path to reclaim $0.80.

MATIC/USD chart. Source: TradingView

Speaking before a House Energy and Commerce Committee Subcommittee on Wednesday, Polygon Labs President Ryan Wyatt called to attention the potential of blockchain technology beyond pure economic value. Wyatt also pointed up the importance of policy-making authorities and industry participants working together to create a healthy and well-regulated blockchain ecosystem that supports technological innovations and protects consumers in the US market. The Polygon Labs executive noted that the failure of regulations to “meet novel technology where it is” could neutralize the US market’s progress at the expense of other countries.

To learn more about Polygon visit our Investing in Polygon guide.