Polygon's Rapid Growth - Q3 2023

In Q3 of 2023, the Polygon ecosystem exhibited substantial growth with transformative developments on various fronts. Polygon PoS registered an average of 364,000 daily active addresses and maintained consistent transaction levels. The sector of Non-Fungible Tokens (NFTs) saw a skyrocketing 131% surge in weekly sales volume, driven largely by the DraftKings' Reignmaker collection. Polygon PoS' gaming sector, known for its robust gamer activity, returned to its previous 2022 engagement levels, with an exciting introduction of the Immutable zkEVM testnet slated to boost the gaming landscape further. Polygon zkEVM demonstrated impressive growth with daily transactions averaging 44,000 and a boost in Total Value Locked (TVL). The Polygon Chain Development Kit (CDK) emerged as an essential tool that enabled the launch of numerous projects. As Polygon eagerly awaits the Q4 2023 mainnet launch of Immutable zkEVM and continues to evolve into Polygon 2.0, the future appears vibrant for its ongoing expansion and influence in the Web3 arena.

Introduction

The third quarter of 2023 witnessed significant developments and changes within the Polygon ecosystem, encompassing key insights, financial analysis, network analysis, development updates, and future plans. Let's look into the intricate details that shaped the Polygon narrative during this period.

Polygon PoS

Polygon PoS is averaging 364,000 daily active addresses, a 1.4% quarter-on-quarter growth. Transactions on Polygon PoS remained stable, with an average of 2.3 million daily successful transactions and 82,000 daily unsuccessful transactions in Q3.

Within the Polygon PoS ecosystem, Uniswap was responsible for 40% of the total DEX trading volume. Quickswap, one of the first DEXes to launch on Matic Network, took second with 21%.

NFTs

According to Messari, the third quarter saw a 131% quarter-on-quarter increase in weekly NFT sales volume, reaching $20 million. This surge was primarily attributed to the DraftKings' Reignmaker NFT collection, which secured its position as the top collection on Polygon PoS. Polygon PoS held as the second highest blockchain in NFT sales volume for multiple months in Q3, only behind Ethereum.

OpenSea remains the predominant NFT marketplace on Polygon PoS, representing 85% of Q3's total NFT sales volume. Magic Eden currently holds the second spot with 5.8% market share, followed by Rarible at 5.4%. Magic Eden has announced a $1 million NFT Creator Fund to further incentivize NFT activity.

Gaming

In the recent quarter, Polygon PoS's gaming sector, which previously boasted the highest number of active gamers among all EVM chains, has seen a return to activity levels observed in 2022. The ecosystem continues to be primarily fueled by popular games such as Pixels, Arc8, Benji Bananas, Sunflower Land, Skyweaver, and IMVU.

A noteworthy highlight in the gaming realm during this period was the introduction of the Immutable zkEVM testnet. Immutable zkEVM stands out as one of the pioneering external networks to leverage the capabilities of the Polygon Chain Development Kit. This strategic move is anticipated to draw a significant influx of gamers into the Polygon ecosystem. The awaited mainnet launch for Immutable zkEVM is scheduled for the fourth quarter of 2023, adding an exciting layer to the gaming landscape within the Polygon network.

Polygon zkEVM

During Q3, Polygon zkEVM reported an average of 44,000 daily transactions (+123% QoQ). Over the last 30 days, the TVL on Polygon zkEVM has increased nearly 100% to $100M. QuickSwap was the leading protocol by TVL with $11 million, representing 57% of the zkEVM’s overall TVL.

Polygon zkEVM daily active addresses are averaging around 12.5K. This is an increase of more than double from 3 months prior.

Polygon CDK

Polygon Labs announced their Polygon 2.0 vision with the Polygon Chain Development Kit (CDK). Polygon CDK is an open-source development framework for launching Zero Knowledge Layer 2 blockchains on Ethereum. Since launch, the number of quality projects launching on the Polygon CDK has exploded.

Some of the major projects that have launched or are planning on launching using Polygon CDK:

Astar Network: Astar, a leading blockchain from Polkadot, is leveraging Polygon's ZK technology to create Astar zkEVM.

Immutable zkEVM: Immutable zkEVM is an EVM compatible ZK-rollup powered by Polygon technology that will make developing Web3 games faster, easier and less risky for large game studios and independent developers alike.

Manta Network: Manta Pacific, a ZK dApp hub, prioritizes security and finality by utilizing ZK technology. Polygon CDK offers a modularity and sovereignty, allowing flexibility for both short term needs and long term adaptability.

Gnosis Pay: Gnosis Pay is the world’s first decentralized payment network and self custodial debit card. With Gnosis Pay, you can spend your digital assets directly from you wallet wherever Visa is accepted.

Wirex: Wirex is using Polygon CDK to build its payment focused appchain. Wirex is harnessing the power of Zero-Knowledge technology to bring its award winning payment infrastructure and its 6 million strong customer base into the on-chain realm.

Capx: Capx Chain is a validium solution designed to enhance Ethereum's scalability. It consists of two main components: the polygon zkEVM, which validates EVM execution in Layer 2, and the need to develop a comprehensive L2 architecture and data availability solution to transform Capx Chain into a full validium on Ethereum.

Aavegotchi: Aavegotchi has announced they are building "GotchiChain" a Layer 2 built using Polygon CDK. Gotchichain will be the dedicated blockchain for all things Aavegotchi. Lower fees and faster confirmation times will make it the ultimate user experience for blockchain gamers, and the perfect building ground for developers and game studios.

Canto: Canto, initially launched as a Layer 1 blockchain, is using Polygon CDK to migrate to the Ethereum ecosystem.

Many more projects are planning to launch their own Layer 2 using Polygon CDK. Check out the full list and deep dive here. We look forward to upcoming announcements soon.

Polygon Miden

On September 29th, Polygon Labs provided insights into the development of Miden and revealed plans for a testnet in the fourth quarter of 2023. As a precursor to the Miden testnet launch, Polygon Labs has shared informative blog posts explaining the components of Polygon Miden.

Transaction Model: This aspect involves accounts, notes, and transactions to make asset transfers smoother. It enables concurrent computation, client-side proving, and the execution of public smart contracts.

State Model: The state model combines account and UTXO (Unspent Transaction Output)-based models. It effectively manages state bloat, ensuring privacy and throughput. The implementation involves using ZK-proofs (Zero-Knowledge Proofs) and user-centric data storage.

Asset Model: Miden treats all assets natively, allowing the creation and trading of both fungible and non-fungible assets through specialized accounts. This approach enhances scalability and privacy when handling assets.

In simpler terms, Polygon Miden is working on improving the way transactions, states, and assets are managed in the blockchain. They are introducing innovative models to make transfers more efficient, maintain privacy, and handle various types of assets seamlessly. The upcoming testnet launch will provide an opportunity to explore and test these advancements.

Polygon ID

In the third quarter, Polygon Labs rolled out Polygon ID Release 4, bringing in technical improvements to make things easier for developers. They introduced the Explore Schema Builder, allowing developers to create and handle credential schemas more efficiently. There's also a better query builder that lets developers create dynamic queries using ZK-proofs, adding an extra layer of security.

The Issuer Node has been improved, and soon, there will be native support for Wallet SDK on iOS devices. Additionally, a new version of JS-SDK has been released, making it simpler for developers to integrate Polygon ID into their projects. These updates aim to enhance the overall experience for developers working with Polygon ID.

Conclusion

In conclusion, the third quarter of 2023 has been a pivotal period for the Polygon ecosystem, witnessing a spectrum of noteworthy developments across various sectors. Polygon PoS exhibited robust growth, with an average of 364,000 daily active addresses and a stable transaction environment. NFT sales volume surged by 131%, propelled by the success of the DraftKings' Reignmaker collection, solidifying Polygon PoS as a key player in the NFT space. The gaming sector, driven by popular titles, witnessed a return to activity levels seen in 2022, while the introduction of the Immutable zkEVM testnet promises to further elevate the gaming landscape in the upcoming quarter. Polygon zkEVM reported significant growth, with an average of 44,000 daily transactions and a notable increase in Total Value Locked (TVL). The Polygon Chain Development Kit (CDK) played a pivotal role, facilitating the launch of diverse projects.

The collaborative efforts within the Polygon ecosystem underscore its commitment to fostering innovation, scalability, and a thriving blockchain community. As we eagerly anticipate the mainnet launch of Immutable zkEVM in Q4 2023 and the continued evolution of Polygon 2.0, the future holds promising prospects for Polygon's continued growth and influence in the Web3 space.