Polygon (MATIC), a prominent Ethereum layer-2 scaling solution, is experiencing a disconnect between its technological advancements and the profitability of its users. Recent data from IntoTheBlock (ITB) paints a concerning picture, with only 5.63% of Polygon addresses currently in profit or breaking even.

This stands in stark contrast to the widespread adoption of Polygon’s technology. The Polygon CDK, a toolset for building custom blockchains, has been embraced by industry leaders like Flipkart and OKX. Additionally, Polygon zkEVM showcases the platform’s cutting-edge capabilities.

However, despite these innovations, the price of MATIC has fallen significantly. In the last 24 hours alone, it dropped by nearly 5%, adding to a monthly decline exceeding 24%. This price slump directly impacts the profitability of addresses within the Polygon ecosystem.

Interestingly, this trend seems specific to the Ethereum layer-2 space. While most altcoins mirror Bitcoin’s on-chain metrics, Polygon and other L2 solutions appear to be on a different trajectory. Bitcoin‘s address profitability remains high at 86.81%, even amidst recent market selloffs.

A glimmer of hope exists for Polygon. Similar leading L2 protocols, like Arbitrum (ARB), are experiencing comparable profitability woes. ITB data suggests over 97% of Arbitrum addresses are currently underwater, despite a robust user base.

While the reasons behind this divergence remain unclear, it raises questions about the sustainability of the L2 ecosystem. Only time will tell if Polygon’s strong fundamentals can overcome these profitability challenges and translate into future price growth for MATIC.

Despite the current profitability slump, several factors fuel long-term optimism for Polygon. First, widespread adoption by industry giants like Flipkart and OKX signifies real-world utility for its developer tools. Second, Polygon zkEVM positions the platform at the forefront of scalability solutions.

Additionally, the resilience of Bitcoin’s profitability suggests a potential decoupling of L2 health from broader market woes. Finally, the struggles of other top L2s like Arbitrum indicate a potential industry-wide correction, not a Polygon-specific weakness. These combined factors suggest Polygon’s strong fundamentals could propel MATIC’s price upwards once market conditions improve.

By Joadin Maina

Beyond the hype, I untangle the web3 revolution, guiding curious minds through the labyrinth of decentralized possibilities.