It appears that – for now – the altcoin market has finally broken out of its holding pattern with Bitcoin (BTC), as several DeFi projects have posted impressive gains over the past week. One of the leaders is Polygon zkEVM (MATIC), up over 20% in a seven-day timespan. In what’s been an otherwise dour year for the scalability project (down nearly 30%), the market rally has given investors new confidence that DeFi activity may be on the up.

Source: CoinMarketCap

Polygon zkEVM Total Value Locked (TVL) Breaks All-Time High

A common way to measure the health of a decentralised network is through total value locked (TVL). This is because most protocols rely on proof-of-stake (PoS) mechanisms – locked-up tokens – to secure their network and validate new transactions. So not only does a growing TVL mean the community is interacting with an ecosystem’s apps, it also means it is better protected from economic pitfalls.

While the original Polygon PoS network is struggling, with TVL and on-chain activity dropping, the opposite is true for the project’s new network – the Polygon zkEVM. As a result, the ecosystem’s native coin (which can be used on both protocols), MATIC, has breached the 60-cent barrier (AU $0.93) for the first time since August.

Source: L2beat

What is Polygon zkEVM?

At its core, the broader Polygon ecosystem is intended as a scaling solution for the Ethereum (ETH) blockchain. Ethereum hosts a large number of applications and DeFi users, but lacks the infrastructure to support such a high volume. As a result, transaction fees and blockchain confirmation have blown out. 

The original Polygon Layer 2 relied on proof-of-stake mechanisms to push Ether transactions onto a sidechain to avoid congestion. Conversely, Polygon zkEVM relies on zero-knowledge technology to finalise transactions off-chain with even lower fees and faster speeds than the original L2. 

Perhaps the biggest drawcard of the zkEVM protocol is for dApp (decentralised applications) developers. Traditionally, porting an Ethereum Virtual Machine (EVM) application to another network requires the developer to alter code in some way. This can cause bugs, or worse, holes in the application’s security. However, zkEVM is designed to have enhanced compatibility with EVM, meaning applications can run on Polygon’s scaling solution without developers needing to switch up their code.

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Filed under: Bitcoin - @ October 25, 2023 10:17 pm