Layering It On: Is Investing in Polygon Crypto a Good Idea?

Layering It On: Is Investing in Polygon Crypto a Good Idea?

The battle against Ethereum transaction fees wages on and Polygon is leading the charge. But, is it too late to invest in MATIC?

Layering It On: Is Investing in Polygon Crypto a Good Idea?
Guy Ovadia

Published Mar 15, 2022Updated Mar 17, 2022

Crypto

Crypto

Technology

Technology

Active Investing

Active Investing

The day of reckoning in the crypto world came in May 2021 when Ethereum transaction fees reached an all-time high. Everyone agreed that fees are a necessary economic incentive to ensure the blockchain's functionality, but there was no consensus on a solution. 

MATIC has become relatively cheaper now than in comparison to the end of 2021, but there's no indication that the price is due for an increase.

That's when a nascent layer-2 scaling solution, recently rebranded as the Polygon network, became a lifeline for Ethereum users during the fee-pocalypse. Polygon has grown to become one of the leading DeFi networks, but is MATIC crypto a good investment?

What is Polygon?

Polygon is a proof of stake (PoS) blockchain network that was created as a scaling solution to the congestion and high transaction fees on the Ethereum network.

Polygon is technically not a standalone blockchain, but rather a sidechain running parallel to Ethereum, known as a layer-2 network. Polygon can't function without Ethereum because its integrity lies in a system of bridges and checkpoints that inextricably link the two networks

Polygon's native MATIC coin functions similarly to Ethereum's ETH coin in how it's used to pay transaction fees on the network. Polygon allows users to bridge their assets from Ethereum using either the PoS or Plasma bridges. The PoS bridge is more flexible because it allows users to quickly move their tokens back and forth between Ethereum and Polygon. The Plasma bridge is a more secure way to move assets between networks, but it's more restrictive than the PoS bridge. This interconnected structure has made Polygon a popular way for Ethereum users and developers to easily reduce transaction costs.

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Polygon crypto price prediction 

Polygon skyrocketed in popularity last year as one of Ethereum's top scaling solutions, and the network now hosts the third-largest DeFi ecosystem after Ethereum and Binance Chain. MATIC is one of the best proof of stake coins, and its popularity is largely owed to its first-mover advantage in introducing cheaper Ethereum transactions. Most Polygon transactions cost just 0.01 MATIC, which is less than two cents at the current price of $1.42. The MATIC price has gone up more than 20x since the beginning of 2021, and the new burning mechanism introduced in January 2022 reduces inflation by regularly taking MATIC out of circulation. 

MATIC has become relatively cheaper now than in comparison to the end of 2021, but there's no indication that the price is due for an increase. While the MATIC price might be slightly undervalued, it remains on par with coins of competing layer-2 networks like Fantom (FTM) and Harmony (ONE). Polygon is against some stiff competition, so there's a concerted interest in suppressing the price of MATIC to keep transaction costs low.

Is Polygon a good investment? 

When it comes to building a comprehensive crypto portfolio, investors would be amiss if they skipped over MATIC. The Polygon blockchain is far from perfect: It certainly has kinks, experiences periods of network congestion, and has a fair share of outages. Nevertheless, Polygon's developer hiring spree has made it one of the fastest-growing crypto companies and it is garnering institutional support from major funds like Sequoia Capital, which granted Polygon $450 million in February.

Polygon is using this venture capital support to further develop its layer-2 infrastructure. It's introducing innovative technology like zero-knowledge proofs for even cheaper and faster transactions. Despite competition from other layer-2 networks causing a slight decline in users, Polygon has become the prime destination for non-fungible token (NFT) marketplaces, and it's also one of the top metaverse cryptos. Polygon is the second-largest network on Opensea, and Draft Kings' commitment to establishing an NFT marketplace on Polygon illustrates high confidence in the network. All in all, strong price support at the current moment demonstrates that MATIC isn't bucking the upward trend any time soon.

Where can I buy Polygon crypto? 

If you're looking to buy Polygon's native MATIC coin, the quickest way to do so is with a third-party fiat onramp like MoonPay or Ramp. These are services that enable the purchase of MATIC or other cryptos with a debit or credit card and then deposit the coins directly into any crypto wallet. Fiat onramps are the best way to purchase MATIC and have the coins deposited directly into your Polygon wallet without the need for custodial services.

Does Crypto.com support Polygon? 

Another way to buy MATIC is by buying it from a centralized exchange like Crypto.com. If you're comfortable keeping your MATIC in a custodial wallet, Crypto.com is a great way to earn up to a 10% annual yield on your MATIC. Similar to regular DeFi crypto staking, you can also stake your MATIC directly on the blockchain by becoming a delegator, making it one of the best crypto staking coins. Crypto.com is a great platform to buy, sell and spend crypto while earning passive income on your holdings.

cryptocom
Crypto.com

3.5

Crypto

Can I buy Polygon crypto on Coinbase? 

Alternatively, you can buy MATIC on Coinbase, but there's a catch. Coinbase only allows users to withdraw MATIC using the Ethereum network. This may not be a problem for those who are just HODL-ing, but if you're buying MATIC with the intention of using the Polygon network, you'll have to bridge your MATIC from Ethereum to Polygon—and pay both an ETH and MATIC gas fee—if you purchase from Coinbase. The Crypto.com exchange is better for buying MATIC because they support withdrawals to both the Ethereum and Polygon networks.

coinbase
Coinbase

4.4

Crypto

Sometimes it is the people no one imagines anything of who do the things that no one can imagine.

We've come a long way since Bitcoin, but whether that's good or bad is a different question. Obviously, the cryptocurrency world is heading in a certain direction, but what's uncertain is the destination. Perhaps 'more money, more problems' should be taken literally, as a world running on several different blockchains could further fracture an already fragmented society. What do you think is the solution?

Sometimes it is the people no one imagines anything of who do the things that no one can imagine.