According to data from DeFi Llama, the current lock-up value (TVL) of the Polygon network is approximately US$4.7 billion. On June 15, the data was 10.5 billion. This means that in the past 3 months, Polygon’s lock-up value has dropped a full 55%.
What happened to Polygon?
While PolygonTVL fell, data on public chains including Ethereum, Solana, Fantom, Terra, Avalanche, etc. all rose.
also. Recently, the Layer 2 concept has started to go viral, and the TVL on the chain of the two Layer 2 projects, including Arbitrum and Optimism, has risen rapidly.
Does this mean that with the mainstream public chain’s efforts and the real Layer 2 project going online, the lAYER concept project like Polygon may encounter a development bottleneck?
Polygon network TVL data plummeted, is it because of “point back”?
Why did Polygon’s TVL reach a staggering $10.5 billion on June 15?
By looking at the data, it can be found that the TVL of the Polygon network on May 23 was US$4.45 billion, which is comparable to the current TVL. Since then, the data began to soar, especially after June 12, when its TVL skyrocketed from US$6.1 billion to US$10.5 billion in just 5 days. Subsequently, TVL experienced a sharp drop, falling back to about US$4.5 billion in just one week.
So, what happened in mid-May that caused the TVL on Polygon to soar?
We found that at that time, the Way of DeFi published an article entitled “New DeFi Gameplay丨What are the most worthwhile agreements on Polygon?” Get started in 20 minutes! “The article, the article opened: Polygon’s growth in recent weeks is absolutely explosive, and new and old agreements are deployed on it every day.
Intensive reports of Polygon’s cooperation with other projects in mid-June
We can completely say that Polygon’s TVL surge at that time was due to the concentration of a large number of projects on the line Polygon.
Why go to Polygon? This is of course because of the Ethereum card. Polygon’s experience of transferring funds quickly and at low cost complies with the “law of true fragrance”. However, one thing that cannot be ignored is: the high benefits brought by subsidies!
For example, on June 11, the decentralized exchange protocol 0x officially announced with Polygon that it will encourage developers to build DeFi infrastructure in Polygon for $10.5 million.
In fact, Polygon may be a bit “point back”. Because it was the week when TVL made historical records. Bitcoin plummeted. Directly from 60,000 U.S. dollars to the range of 30,000 U.S. dollars. Since then, Bitcoin has consolidated and fallen all the way, and Polygon has never returned with the unique treatment of the Layer2 concept.
Polygon is frantically engaged in alliances, but TVL data shows that development has stagnated for 4 months!
If you follow Polygon’s social media, you may have a feeling, how Polygon cooperates with a certain agreement every day, and a certain agreement goes online with Polygon. This kind of social marketing gives people a feeling that the Polygon network is developing very well, and it is attracting developers from Ethereum to settle in.
This kind of “alliance” gameplay is not uncommon in the blockchain world. For example, Chainlink, this project has risen from around US$2 in April 2020 to US$20 in August. During the period, Chainlink kept releasing news about cooperation with different project parties, and the popularity of social communication continued to be very good.
However, if we look at the specific data, we will find that Polygon’s soaring TVL may not be healthy. Babbitt wrote in a newsletter: Polygon’s locked position exceeded $7 billion, a record high. The three agreements with the largest amount of locked positions on the chain are: Aave (US$3.4 billion), SushiSwap (US$1.3 billion) and QuickSwap (US$1.3 billion), totaling approximately US$6 billion. This means that the TVL of these three agreements is as high as 85.7%.
Today, DeFi Llama data shows that the top three TVL on Polygon are Aave, QuickSwap and Cruve. The three TVLs are 1.88 billion U.S. dollars, 812 million U.S. dollars and 380 million U.S. dollars. Compared with the above-mentioned May data, it has fallen a lot. More data shows that in the past seven days, the TVL of these three fell 16.11%, 19.86% and 8% respectively.
This means that if you only look at TVL, Polygon’s data is largely dependent on the data performance of the above-mentioned head items. When these item data are exaggerated, Polygon data is ugly.
However, if you exclude the extreme data of Polygon network TVL that has skyrocketed in a short period of time after mid-May, in fact, Polygon’s TVL data has fluctuated around US$5 billion for more than four months, without a big increase or a big drop. To put it wittily in one sentence: it seems to have been stagnant for a full 4 months.
With the rise of the real Layer 2 project, will the popularity of Polygon go out?
In the four months when Polygon TVL data was almost stagnant, the blockchain world was turned upside down.
The real Layer 2 project that can fight and resist is up. For example, the two chains of Optimism and Arbitrum both use Optimistic Rollup technology. For example, zkSync based on ZK Rollup technology. In addition, there are some Layer 2 chains that have not come out, but chain-based applications, such as dYdX based on Stark Ware.
L2beat.com records a batch of Layer 2 project data, and its definition of Layer 2 is: a chain that obtains security from the first layer of Ethereum in whole or in part, and users do not have to rely on the honesty of L2 verifiers to ensure the safety of their funds.
Obviously, Polygon does not belong to the real Layer 2 category.
List of Layer2 Project TVL
Recently, the launch of Arbitrum has stirred the nerves of the entire DeFi participant. A batch of leading DeFi projects followed the deployment of their respective contracts. Just like they once flocked to Ploygon, this time they are about to rush to the “Arbitrums”.
According to data from L2beat.com, Arbitrum’s TVL is currently $2.2 billion. What is the growth in the past week? 3263%. This data accounts for about 73% of the total TVL of the projects included in L2beat.com.
Once, before the real Layer 2 project came out, Polygon, even BSC, Heco, etc. might be alternative solutions for the expansion of Ethereum. But when Arbitrum is really up, how should Polygon’s story be told?
On September 13, a Weibo big V posted: “It is estimated that a large part of the funds migrated to the second layer comes from the Polygon chain. When the true second layer comes out, its positioning is a bit awkward. Other public chains that are compatible with EVM, at least have a clear positioning. BSC has the ecological blessing of Binsheng Security, mainly self-built ecology, although the majority of imitation disks, but it has been self-contained System. HECO and OEC are self-aware, and their strategic positioning is passive defense + CEX backup. Avalanche and Fantom are only compatible with EVM, and the technical routes and ecology are independent and self-built. In addition, some chains have large enough ambitions. Strategically, It is to PK Ethereum, such as Solana and Polkadot .”
This passage is very general and not accurate. But it does describe today’s public chain competition and Polygon’s awkward position.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/really-layer-2-is-coming-polygons-tvl-plummets-by-55-want-to-be-cool/
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