The battle against Ethereum transaction fees wages on and Polygon is leading the charge. But, is it too late to invest in MATIC?
Updated Feb 9, 2023
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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.
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?
Polygon is a proof of stake (PoS) blockchain network that serves as a decentralized Ethereum scaling platform. In other words, it was created as a solution to the congestion and high transaction fees on the Ethereum network.
Polygon (previously Matic Network) 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.
Polygon price skyrocketed in popularity in 2021 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.
The price of MATIC has become relatively cheaper now compared to at 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.
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 aims to be the premier blockchain for Etheruem-based enterprise applications.
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.
Another way to buy MATIC is by buying it from a centralized exchange. If you're comfortable keeping your MATIC in a custodial wallet, Crypto.com is a 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.
Alternatively, you can buy MATIC on Coinbase, but there's a catch. If you're buying MATIC to use the Polygon network, you'll have to move it on the Polygon blockchain—not Ethereum. Coinbase supports withdrawals to both the Ethereum and Polygon networks, but you’ll have to make sure you pick the right one before you withdraw.