The choice of coins in the cryptocurrency market is not just huge. It continues to grow and analysts note that over the past month, the rate of emergence of new coins has increased markedly. But this does not mean that all new projects deserve close attention. It is much wiser to focus on the ones that have already been tested by time.
The undisputed candidates No. 1 and No. 2 for a place in the investment portfolio are Bitcoin and Ethereum. However, the stability of the pillars of the market has a downside: a rapid rise in prices by hundreds of percent, although not excluded, is very unlikely. But inexpensive coins are quite capable of such market exploits. One of them is MATIC, the native token of the Polygon network.
Why did you need Polygon
The pioneers of the crypto industry dreamed of revolutionizing the finance industry. The launch of the Ethereum blockchain has opened a fundamentally new page in the economy – decentralized applications and smart contracts. However, the early blockchain could not cope with the influx of users who appreciated the new opportunities. The popularity of any single DApp was immediately reflected in the performance of the entire network.
One of the solutions to the Ethereum scaling problem was the second layer solutions. It was for this purpose that the Matic Network was created, later renamed the Polygon. Polygon is not a separate blockchain, but an add-on to Ethereum that helps users use the functionality of the main blockchain. Transactions are first processed by Polygon using Plasma technology, and then they are fixed on Ethereum. The network processes about 7,200 transactions per second.
The developers did not stop there. In 2021, along with the rebranding, the network received additional functions. On its basis, it became possible to create second-level blockchains. At the beginning of 2022, the project attracted the attention of large investors, which made it possible to continue developing Web 3.0 applications. А few months later, Tether made the decision to launch USDT on Polygon.
Cryptocurrency MATIC and its prospects
Technically, MATIC is an ERC-20 standard token. It operates on the basis of the Proof of Stake (PoS) consensus mechanism, which means that token holders can receive passive income from their coins.
The popularity of the network and its native token is due to the scalability issues of the underlying blockchain. Until this problem is fixed, the Polygon project will be in demand. However, its fate is directly related to the further modernization of the main network. Among the goals of the transition of the Ethereum blockchain to PoS, it is stated to increase the scalability of the network and achieving the desired result can reduce the demand for Polygon services. It is worth noting that this is not a one-day process and you do not have to change MATIC to ETH right away, fearing an instant depreciation of the coin.
Polygon developers have taken into account the risks associated with the modernization of the main network and are also not sitting idly by. In addition to scaling, the Ethereum project also aims to eliminate the fragmentation of blockchains. In this area, he already has competitors, in particular Cosmos and Polkadot. All existing solutions are still imperfect and their real application is still indefinitely far away.
So is it MATIC or BUSD?
MATIC is a relatively young asset of an ambitious project aimed at the promising areas of Web 3.0 and DeFi. The token is included in the TOP-20 largest cryptocurrencies and, importantly, can generate passive income from staking. Based on the totality of its characteristics, it can be considered as an investment-attractive and potentially profitable asset in the short and medium term.
BUSD and other stablecoins play a completely different role. First of all, they serve as a store of value during periods of market volatility, as well as a convenient means for accumulation. When forming an investment cryptocurrency portfolio, it is very desirable to keep part of the funds in stablecoins. This is necessary to reduce the risk of losses in the event of a market fall, and besides, when the BUSD to MATIC exchange rate starts to grow, you can buy MATIC.
Since BUSD belongs to the Binance ecosystem, its prospects are highly dependent on the parent company. For reasons of financial security, it would be wise to include more than one stablecoin in an investment portfolio.
