Polygon (CRYPTO: MATIC) has been in the news a lot lately, and for all the right reasons. Most recently, Polygon became one of just six projects added to Disney‘s highly prestigious Accelerator program for 2022, suggesting that Disney is actively looking for ways to integrate Polygon into upcoming entertainment projects. This is a move that already has some people talking about MATIC and the role it could play in the future of gaming and entertainment.
But there are two new reasons to buy Polygon right now, and they are just as exciting. Most importantly, MATIC is gaining momentum due to the upcoming Ethereum (CRYPTO: ETH) merge in September. Investors are searching out cryptos that could indirectly benefit from the upgrade, and they’re flocking to Polygon as a result. At the same time, Polygon has just released a major new technological upgrade that will make MATIC even more valuable and attractive to developers and users.
Polygon and the merge
When people think about how to leverage the upcoming merge, all eyes are on Ethereum. However, with just under two months to go, a growing number of savvy investors are now searching for other cryptos that could benefit indirectly from the merge. They are focusing on Layer 2 blockchains that sit on top of the Layer 1 Ethereum blockchain. In basic terms, Layer 1 chains provide the main blockchain architecture, while Layer 2 chains are built on top of this main base layer. Since Polygon is the most important Layer 2 blockchain on Ethereum, it’s no surprise that all the excitement surrounding ETH and the merge is boosting MATIC as well.
If you look at recent trading data, it’s easy to see this at a glance. Over the past month, MATIC has more than doubled in price. This makes sense, right? If you’re bullish on a particular tech stock, for example, wouldn’t you also be bullish on the prospects of other tech stocks directly tied to its success? While investors are concerned that some Layer 2 blockchains may not survive the merge, that certainly does not seem to be the case with Polygon, which is the premier Layer 2.
Polygon’s new technology upgrade
The best way to think about Polygon is that it makes everything on Ethereum run better, cheaper, or faster. That’s why many people like to describe Polygon as a “scalability solution” for Ethereum. By helping Ethereum to scale, Polygon reduces congestion on the blockchain, improving speeds and reducing transaction fees. Thus, any new innovation that improves Polygon’s ability to scale Ethereum is going to get attention.
And what’s getting a lot of attention right now is a new technological solution called zkEVM. In fact, crypto influencers are even creating YouTube videos suggesting that it is the future of crypto. So what in the world is Polygon zkEVM and why does it matter? The simplest answer is that “zk” stands for “zero knowledge” and “EVM” stands for “Ethereum Virtual Machine.” Combine them together, and you have a highly sophisticated cryptographic methodology for verifying transactions on the Ethereum blockchain. zkEVM will make it possible to “roll up” thousands of transactions at one time, very quickly and very efficiently.
If that sounds like a lot of crypto mumbo-jumbo, fair enough. People have gotten burned recently investing in cryptos they didn’t understand, so you should question everything. In basic terms, a zero-knowledge proof is a method that allows one party to show only that they have a piece of information without revealing the information itself or any additional information. This zk methodology is so powerful that it has been used to create new blockchain protocols as well as new cryptocurrencies. The big takeaway here is that zkEVM is going to make Polygon much more valuable. As such, Polygon is going to widen its lead even further over other Layer 2 blockchains on Ethereum.
Polygon’s many angles
Polygon has been on fire recently, and it shows no signs of cooling down. All the excitement around the merge is going to continue to have a direct impact on Polygon for the foreseeable future. If ETH goes up, so will MATIC. And, best of all, Polygon continues to prove that it is a market leader when it comes to rolling out new technological solutions. We saw that first with the Disney Accelerator program and now with the release of a powerful new scalability solution for Ethereum. As a result, the buy signals around Polygon are becoming almost impossible to ignore.
Dominic Basulto has positions in Ethereum and Polygon. The Motley Fool has positions in and recommends Ethereum, Polygon, and Walt Disney. The Motley Fool recommends the following options: long January 2024 $145 calls on Walt Disney and short January 2024 $155 calls on Walt Disney. The Motley Fool has a disclosure policy.