Polygon powers Layer 2 network, aims to connect 50 million users to Ethereum
- Polygon’s open-source codebase helps OKX build a Layer 2 network to bring more users to the Ethereum ecosystem.
- The sovereign Ethereum Layer 2 chain, X1, is powered by Polygon.
- MATIC price yielded 27% weekly gains, on-chain metrics signal local top in the Layer 2 token.
OKX used Polygon’s open-source codebase, CDK, to build a Layer 2 network X1 that onboards its users to the Ethereum ecosystem. Polygon’s technology makes it possible for users to join the global on-chain ecosystem of Ethereum and access other CDK chain’s liquidity.
Also read: MATIC price gains might be sustainable as token leaves exchanges in large volumes
Polygon powers OKX’s Layer 2 protocol X1
Polygon, a leading Ethereum scaling solution, offers its Chain Development Kit (CDK) to build Layer 2 protocols for onboarding users to the ETH ecosystem. OKX used Polygon’s CDK to connect over 50 million users to the global Ethereum ecosystem, through its Layer 2 protocol X1.
Polygon’s technology helps power sovereign Layer 2 chains that utilize CDK liquidity and Ethereum’s security and infrastructure. This makes the ETH ecosystem accessible to more users, through Polygon’s open-source codebase.
OKX is using Polygon CDK to build a ZK-powered Layer 2 network that connects the 50 million+ OKX user base to the broader Ethereum community, to allow anyone to take part in a truly secure and unified global onchain ecosystem.
— Polygon (Labs) (@0xPolygonLabs) November 14, 2023
It’s called X1.@X1_Network will be a secure,… pic.twitter.com/1pxS9Tmx81
The bullish development supports MATIC’s recent price gains. The Ethereum scaling token is up 2.86% on the day and 27% over the past week.
On-chain metrics signal local top in MATIC
According to on-chain metrics from crypto intelligence tracker Santiment, MATIC price likely hit its local top. Network Realized Profit/Loss (NPL) indicator that computes daily network-level ROI for an asset’s transactions, identifies whether traders are selling at a profit or a loss. Strong spikes in NPL indicate holders are selling at significant profits; spikes are also typically associated with local tops.
As seen in the chart below, NPL spikes are concentrated between November 3 and 15, coinciding with the MATIC price rally to $0.94.
 [10.14.40, 15 Nov, 2023]-638356248075011665.png)
Network Realized Profit/Loss and price
Another on-chain metric, the 30-day MVRV helps determine the average profit/loss of traders who purchased ADA over the past month. In the chart below, Market Value to Realized Value (MVRV) for MATIC signals profit-taking by MATIC traders.
 [10.21.50, 15 Nov, 2023]-638356248404520512.png)
MVRV Ratio (30-day) and price
The two on-chain metrics add credence to the bearish outlook and possibility that MATIC price has hit a local top, traders are engaging in profit-taking.
At the time of writing, MATIC price is $0.94 on Binance.
Author
Ekta Mourya
FXStreet
Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.
