Nansen's Polygon Quarterly Report - Q1 2022

This report provides an overview of Polygon's ecosystem and performance of the chain via on-chain metrics.

Overview

Polygon offers a wide range of secure, fast, affordable and energy-efficient Ethereum scaling solutions for Web 3 developers. The combination of low fees, ease of development and energy efficiency of Polygon PoS has sparked an adoption boom in 2021, followed by a slow down ending Q1 2022. We saw the network attracting some of the biggest projects from inside and outside of the web 3 space. Prominent names that are building on Polygon include Aave (Defi), Dolce & Gabbana (Luxury goods), OpenSea (NFT Marketplace) and Mark Cuban’s Lazy.com. Other high-profile project names include Decentraland and the Sandbox which are building up infrastructure for metaverse and gaming on the Polygon network. 

Polygon's Ecosystem

Source: Polygon News

Polygon continues to roll out Dapps at a rapid pace. The Dapps list shown above  is non-exhaustive. In an update by Polygon Team, the number of teams building decentralized apps (dApps) on Polygon almost tripled every two months since mid last year and stood at 11,400 in January. That’s more than an 11-fold increase from just 1,000 in August. In 2022, Polygon’s activity is back at where it was mid last year. With moves to hire and add a range of talents onto the ecosystem, along with the growth of Dapps with potentially new use cases on Polygon, we could expect activity to stabilize, if not outpace the current levels seen in Q1 2022.

Polygon adoption has also soared exponentially in 2021, seeing more than double the volume of Ethereum in transactions going into 2022. In Q1 2022, we see growth tapering off to reach a more steady average.

Polygon Active Addresses & Number of Daily Transactions

Source: Nansen.ai

We see the number of active addresses on Polygon holding a steady pace going during Q1 2022. Previously, the number of active addresses went on an upward trend starting from Jun 2021 and peaking towards the last quarter of 2021. The number of active addresses has fallen since Q4 2021 but continue to range in levels comparable to Jun 2021. 

In terms of absolute numbers, Polygon’s daily Active Addresses has held steady over 400K active users on a 1, 7, and 30 day average, with the total users over the three different time frames below:

  • 1 day: 369K
  • 7 day: 992K
  • 30 day: 2.24M

Daily Gas Paid

Source: Nansen.ai

The spike in gas activity in January was caused by blockchain game Sunflower Farmers on Polygon. Sunflower Farmers is a resource-gathering game that uses blockchain transactions for in-game actions, and in January, the game’s pace of growth led to congestion in the Polygon network, sending gas prices to sky-high levels. At its peak, the total daily gas paid by users on Polygon network on 5 Jan 2022 (890 592 gweis) was almost 800% more than the total daily gas paid on 30 Dec 2021 (118, 335 gweis).

Since then, SunflowerFarmz gas consumption has stabilized, but it still retains a position among the top 20 gas guzzlers on Polygon till today. As of 28 March, the largest gas guzzlers on the polygon network are familiar dapps such as Sunflower, Decentra Games: ICE, Pegaxy, Sandbox and so on.

Ethereum vs Polygon Transaction Count

Source: Nansen.ai

From Nansen’s Multichain dashboard, we are able to see the ratio of the transactions on Polygon against Ethereum. Since May 2021, transactions in Polygon started to outpace Ethereum, largely due to the lower gas fees on Polygon and Polygon serving as a sidechain to Ethereum. At its peak in June 2021, Polygon was transacting over 700% more transactions than Ethereum. The number of Polygon transactions vs Ethereum transactions has since fallen to a stable range of 200-300% from Sep 2021 till today. This chart seems to suggest that the Polygon network is maturing and moving towards its mean transaction count relative to Ethereum.

Top Polygon Dapps by Transactions over the past 7 Days

Source: Nansen.ai

The following are the top 5 Dapps with the highest activity following transactions over the past 7D:

  1. Tower
  2. Adidas Original Into the Metaverse
  3. Pegaxy
  4. League of Kingdoms
  5. Quickswap

Smart Money Segments on Polygon

Source: Nansen.ai

We see from Smart Money segments on Polygon that 80% of First Mover Staking and 76% of First Mover LPs exist on both Ethereum and Polygon chains. There’s also a high percentage of Smart NFT Minters (71%) and Smart NFT Traders (61%) on the chain. This indicates that Polygon may have interesting opportunities for farming, staking, and NFTs in general.

Polygon Bridge Stats

Source: Nansen.ai

Looking at the Bridge builder dashboard to get a holistic view of cross-chain bridging, we see that Polygon is the top bridge by total Depositors, with over 148K depositors via Plasma Bridge, and over 142K depositors via Polygon’s ERC 20 bridge. In terms of total volume, Polygon’s ERC20 bridge leads in second place with a total of $24.3B of lifetime volume and $491M in total volume over the last 7 days.

Conclusion

The Polygon network continues to see strong utility , with the number of teams building on polygon tripling every few months through Jun 2021 to the end of 2021 and with well over 11k teams now building dApps on Polygon. Although transaction volumes slowed in Q1 2022, this came after a year of strong growth, with a billion transactions recorded in 2021. The average volumes in Q1 2022 are holding steady for Polygon and this is a positive indicator. With the number of big brands and projects now onboard Polygon, the network looks poised to continue its growth trajectory going forward.

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