With ETH Gas Fees So High — Why Isn't Polygon Breaking Out?

In recent months, Ethereum gas fees have hit staggering highs locking some users out of DEX swaps. But as Ethereum remains exceedingly behind schedule with the implementation of ETH 2.0 and a host of other technical upgrades, a host of other platforms termed as “Ethereum Killers” have emerged.

One such platform that is giving Ethereum a run for its money is Polygon (MATIC). For the better part of 2021, Polygon has hit the news for all positive reasons. It has highly been rated an alternative to Ethereum, considering that it’s built on the same network and virtually everything on the Ethereum blockchain except for the high gas fees. Polygon allows users to store, transfer, and use their favorite Ethereum tokens with very low transaction fees.

But despite Polygon’s immense growth in the past months, the platform is yet to break out past Ethereum. Here are the possible reasons and analysis as we advance.

What is Polygon?

Founded in 2017 by a team of talented Ethereum developers, Polygon (previously Matic Network) is a framework and protocol for linking Ethereum-compatible blockchain networks. The protocol supports a multi-chain Ethereum ecosystem, accelerating the transaction speed and lowering the transaction fee.

Polygon is essentially a layer-2 scaling Ethereum solution to solve its predominant challenges, notably slow transaction speeds and high gas fees without sacrificing security. It does this by creating a smaller side-copy of the Ethereum blockchain referred to as child chains. The child chains facilitate an exponential increase in scalability, processing transactions 500 times faster than Ethereum.

Polygon’s impressive transaction speed and low fees have made it an ideal alternative to Ethereum, especially since many of Ethereum’s most popular dApps have been migrating to Polygon. What’s more, it’s inherently more powerful, secure, and open as compared to Ethereum.

Polygon is powered by a native currency referred to as MATIC- an ERC 20 token. The token is viable for staking, governance, and payment of transaction (gas) fees via the PoS consensus mechanism. The token can also drive development across the Polygon ecosystem.

Polygon’s Immense Growth

Polygon has grown immensely in recent years, thanks to increased uptake from developers and users. The platform has everything that Ethereum has to offer but with higher scalability and cheaper gas fees, making it an outstanding alternative to Ethereum. As such, popular Ethereum dApps have migrated to Polygon. Currently, the platform has over 100 functioning dApps dealing in payments, decentralized exchanges, gaming networks, and third-party applications with over 150 000 active users.

Following Polygon’s immense uptake, MATIC has also displayed impressive price rallies from the start of the year. The token kicked off the year at $ $0.018 and has continuously grown since then. In May 2021 alone, MATIC gained over 1102%, hitting an all-time high of $2.65 on May 18th. Soon after, the token witnessed a price correction causing the price to crash to a low of $ 0.75. At the time of writing, Matic is trading at $1.28, representing 52.51% below ATH.

Why is Polygon yet to Break Out?

It’s without a doubt that MATIC is one of the best performing altcoins in 202, returning more than 9 000 % YTD in 2021 alone. However, Polygon is yet to break out past Ethereum, which is the godfather of all dApps. Ethereum is way far ahead when compared to Polygon. For instance, in terms of market cap, Ethereum has a market cap of $441,280,730,541.34 compared to Polygon’s $8,596,733,677.20.

Ethereum also has a higher rate of contract deployment compared to Polygon. From April 2020, the ERC-20 token contract has been deployed on Polygon for every 2020 other deployed contracts compared to 1430 contracts for one ERC contract on Ethereum.

Despite Polygon seeming like a perfect alternative to replace Ethereum, it has its fair share of shortcomings that hinder its growth. Thanks to Ethereum’s scaling issues and high gas fees, which many expect to end with the implementation of Ethereum 2.0, the Polygon network has attracted a great deal of attention as the largest Layer 2 protocol. That is notwithstanding the platform’s security concerns as well as the poor customer support.

While Polygon claims to be more secure than Ethereum, it’s not that secure. Even so, the security provided by Polygon’s Plasma contracts piggybacks is dependent on Ethereum’s security. So, if Ethereum’s security is compromised, the user’s funds on Polygon will be at risk.

What’s more, unlike Ethereum, Polygon has some security shortcomings owing to the integration of binary options on the protocol. The binary option reduces the credibility of any blockchain network as it allows unfair practices.

Polygon is also yet to break out owing to the considerable increase in gas fees. Following increased development and the number of transactions on the protocol, the gas fees have escalated considerably. Over the past few months, Polygon’s gas fees have increased from $0.0005 to $0.002, marking a 400% increase in gas fees.

In the same period, Ethereum’s gas fees have been steady despite being pretty high. In line with the current trend, it seems the increase in transaction fees will be directly proportional to the growth in the network’s traffic and the increase in the price of the MATIC token.

Like Ethereum, Polygon will start with low transaction fees owing to the low transaction rate. Minimal congestion and the low value of MATIC. However, increased traffic leading to several issues such as scalability problems and security will push the gas fees to immense heights-as was displayed by the Ethereum blockchain.

The other issue hindering Polygon’s breakout is poor marketing. Despite the immense developments on the network, including the integration of an NFT marketplace and partnerships with various blockchain companies, Polygon clearly lacks serious marketing, evidenced by the low social media activity. That hinders its growth in popularity and breaks out.

Closing Words

Following the continued Decentralized Finance (DeFi) boom, there has been a significant rise in the development of Ethereum-scaling solutions. Polygon is a layer 2 scaling solution for Ethereum that many highly rate as an alternative to Ethereum. The platform can process 65 000 transactions per second with less than two seconds of block confirmation time. Currently, Polygon hosts more than 1200 dApps, some of which have migrated from Ethereum.

At the moment, the Polygon seems to be thriving thanks to Ethereum’s scalability issues and extremely high gas fees. However, it’s yet to make a break out thanks to several issues that deter its uptake. These issues include security concerns, rising gas fees with increased traffic, and poor marketing amidst Ethereum’s enormous popularity. As the launch of Ethereum 2.0 nears, Polygon will certainly witness a dip in uptake.

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