- Declining Activity: Analysis reveals a drop in zkEVM’s daily active addresses and transactions, impacting fee revenue.
- Ethereum’s Dencun Upgrade: Scheduled for March 13th, promises to reduce L2 transaction costs, potentially revitalizing zkEVM.
- Competitive Landscape: Despite challenges, MATIC token gains momentum, positioning Polygon’s zkEVM for a resurgence.
Polygon’s zkEVM has faced a recent slump in network activity, raising concerns within the Layer 2 (L2) ecosystem. However, a ray of hope emerges with Ethereum’s upcoming Dencun upgrade, set to bolster scalability and efficiency across L2 networks.
A recent analysis by CryptosNewss, based on Artemis data, reveals a notable downturn in zkEVM’s daily active addresses and transactions over the past week. This decline has also impacted zkEVM’s fee revenue, signaling a challenging period for the platform.
The imminent Dencun upgrade for Ethereum, scheduled for March 13th, promises significant improvements in transaction costs for L2 solutions. By leveraging proto-danksharding and introducing other enhancements, Ethereum aims to substantially increase transaction throughput while slashing fees. IntoTheBlock’s recent tweet hints at a potential tenfold reduction in L2 transaction fees post-upgrade, setting the stage for increased adoption and activity.
The anticipated reduction in transaction fees could catalyze a resurgence for Polygon’s zkEVM, attracting more users and transactions in the coming months.
L2 transaction fees are expected to drop by 10x from a current average of $0.23 thanks to the upcoming Ethereum Dancun upgrade. pic.twitter.com/9GuLgxky08
— IntoTheBlock (@intotheblock) February 10, 2024
However, despite this positive outlook, zkEVM faces stiff competition from rivals like zkSync Era and Base, which currently boast higher daily activity metrics.
Additionally, the DeFi landscape presents challenges for zkEVM, with its total value locked (TVL) trailing behind competitors. Nevertheless, amidst these challenges, the native token of Polygon, MATIC, has displayed bullish momentum, experiencing a double-digit surge in price over the past week.
As of the latest update, MATIC is trading at $0.8567, with a market capitalization exceeding $8.2 billion, consolidating its position as the 14th largest cryptocurrency by market cap.
With Ethereum’s Dencun upgrade on the horizon and positive market momentum for MATIC, Polygon’s zkEVM stands at a pivotal juncture, poised to capitalize on emerging opportunities and solidify its position in the evolving L2 ecosystem.
Disclaimer: Please note that the viewpoints and perspectives expressed by the author, as well as any individuals referenced in this article, are intended solely for informational purposes. They should not be construed as financial or investment advice. It’s important to acknowledge that investing in or trading cryptoassets carries inherent financial risks.