Polygon (CCC:MATIC-USD) blockchain recently hit a high of about $2.90 per MATIC crypto token on Dec. 16. However, it has since backed off very hard from that price as of Dec. 28 and is at $2.55 per token. However, I think this is just temporary and the crypto is likely to continue to do well next year.
After all, it has had a pretty good run so far in 2021. Since seeing prices around 1.781 cents on Dec. 31, 2020, MATIC crypto has risen 142 times to $2.55 on Dec. 28. This makes it one of the best-performing cryptos for 2021.
Moreover, in the last three months alone, since hitting $1.266 on Sept. 30, MATIC crypto is up 101% as of Dec. 28. In other words, it has doubled in the last three months. That is a fantastic return. Investors should not be surprised that the crypto has backed off a bit from its peak price in the last week.
By the way, this is higher than it has been all year. That includes its peak price in May at $2.45, also when other cryptos were peaking. Later, by July 19, Polygon had fallen dramatically to as low as 69 cents. After that, it rebounded to its peak of $2.92 on Dec. 16.
As it stands now, Polygon blockchain now has a market capitalization of $18 billion, according to Coinmarketcap.com. This ranks it the 14th largest crypto in the world, also according to Coinmarketcap.
Where Things Stand With Polygon
Recently Polygon’s official blogsite posted an article that described by developers are using Polygon for “Web3” over other blockchains. Web3 refers to a newer version of the Internet, a decentralized version, which does not depend on huge server farms to keep all the records.
Web3 refers to different blockchain platforms like Polygon with many different nodes will house the next version of the Internet. This is different from the present system where servers at Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), Amazon (NASDAQ:AMZN), or Microsoft (NASDAQ:MSFT) server farms control much of the internet’s traffic.
The blog post said that the number of Web3 teams using Polygon as an Ethereum (CCC:ETH-USD) migration project blockchain has jumped 100 times in the last year.
One attraction of Polygon for developers is that the cost of transactions is nowhere near the costs at Ethereum. For example, fees rose as high as $200 per transaction in September. Even after the London hard fork, a blockchain upgrade, the high fees persisted, according to the blog post.
By contrast, Polygon has much lower fees and as a result, has attracted some of the largest Defi (decentralized finance) apps. The examples cited in the blog post are (1) the lending platform Aave, (2) luxury goods company Dolce and Gabbana, and (3) Opensea, the NFT (non-fungible tokens) marketplace.
Popularity With the Investing Public
Another reason for the MATIC crypto gains is Polygon’s popularity with the public. Polygon has $5.5 billion in total value locked (TVL) as measured by DefiLlama.com. This is the total in MATIC crypto locked up with various apps, including deposits at digital wallets, deposits with various Defi staking sites.
Staking works like a certificate of deposit (CD) with banks — with various interest rates and terms. (DeFi apps don’t usually want to be seen as paying “interest” or acting as banks.)
The bottom line is that this $5.5 billion is a huge portion of its total $18 billion market cap, about 30% of all its value. That is a very good measure of how much people trust and like Polygon.
Where This Leaves Investors in MATIC Crypto
Polygon’s popularity with developers, Defi sites and the crypto-investing public will power MATIC crypto higher over in 2022.
Now, it may not rise anywhere near as high and fast as it did during 2021. But it could take a clue from the Q3 performance of MATIC crypto. As more and more Defi apps use Polygon in order to avoid Ethereum’s huge costs and its slow transaction times, MATIC crypto will keep rising.
On the date of publication, Mark R. Hake did not hold any position (either directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.