Report Shows Polygon Users Rivaled Ethereum In 2023, But Why Has Price Failed To Clear $1?

Layer-2 network Polygon is reported to have competed with Ethereum in 2023, as both networks saw the most influx of new users. This development has once again raised concerns about MATIC’s price, considering that such an achievement should potentially mean that new money moved into the ecosystem last year. 

According to a report by Blockchain analytics firm Flipside, Polygon and Ethereum led the pack with 30.6 million acquired users in 2023. Giving a further breakdown, Polygon is said to have acquired 15,24 million users, while Ethereum attracted 15.4 million users. Meanwhile, these users are defined as persons who performed at least two transactions on the networks. 

Despite falling about 160,000 short of Ethereum’s numbers, Polygon’s numbers are still impressive, considering that it ranked ahead of other networks like Bitcoin and Solana. The layer-2 network also outperformed other Ethereum L2 networks like Arbitrum, Optimism, and Base, which recorded 7.3 million, 3.3 million, and 1.9 million acquired users, respectively. 

Notably, Polygon hit the ground running as soon as 2023 began, setting the record for monthly acquired users with 2 million in January. Interestingly, January 2023 was the first time MATIC rose above $1 in a very long while. It held above that level until the end of April 2023. After that, MATIC traded below that level for most of the year, only rising above $1 towards the end of December 2023. 

A recent analysis by Blockchain intelligence firm ChainArgos suggested that the Polygon team has been secretly selling off MATIC tokens, something which could have accounted for the significant sell pressures that have risen at different times for the crypto token. This could also serve as a plausible explanation for why MATIC has struggled to hold above $1 despite enjoying great utility. 

The Polygon team was accused of not executing its token allocations in line with the publicly stated plan, with part of the allocated funds accounting for some of the tokens that were sold. These secret sales, which have for long gone under the radar, are said to be circumvented through wallets linked to the crypto exchange Binance. 

So far, about 767 million MATIC have apparently been offloaded in these secret transactions. ChainArgos hinted at how these transactions have no doubt affected MATIC’s price on different occasions, as they noted that the outflows are a “good indicator for an upcoming top and subsequent move lower.”

At the time of writing, MATIC is trading at around $0.73, up in the last 24 hours, according to data from CoinMarketCap.