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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.
Polygon powers Layer 2 network, aims to connect 50 million users to Ethereum
Ekta MouryaEkta MouryaFXStreet

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. 

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.

NPL

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. 

MVRV ratio

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

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.

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