Shalini Nagarajan

Polygon’s Ethereum-compatible proof-of-stake sidechain (Polygon PoS) underwent a hard fork on Jan. 17 — an upgrade intended to help address gas spikes and chain reorganization issues that have affected the network.



According to <a href="https://blockworks.co/newsletter/issue/30264806">Blockworks Research</a>, the hard fork will result in lower transaction fees and refine the security of blocks. It went live at approximately 4:00 a.m. ET at block height 38,189,056.



Polygon first officially announced the hard fork in a Jan. 12 <a href="https://polygon.technology/blog/hardfork-incoming-upgrading-polygon-pos-chain-to-boost-performance" target="_blank" rel="noreferrer noopener">blog</a>, which also mentions longer-term technical upgrades for the network. The fork was proposed based on a forum discussion and community feedback.



In its blog, Polygon laid out reasons why the upgrade was required. For one, its network faced “gas spikes,” an undesired exponential jump in price encountered during surges in demand on its network following <a href="https://forum.polygon.technology/t/impact-of-eip1559-and-future-possibilities/1749" target="_blank" rel="noreferrer noopener">Ethereum Improvement Proposal-1559</a>. The fork is expected to help smoothen fluctuations in gas prices. 



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="780" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/01/polygon-pos-gas-estimate-1024x780.jpg" alt="" class="wp-image-44188" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/01/polygon-pos-gas-estimate-1024x780.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/polygon-pos-gas-estimate-1024x780.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/polygon-pos-gas-estimate-1024x780.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/polygon-pos-gas-estimate-1024x780.jpg?w=337 337w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/polygon-pos-gas-estimate-1024x780.jpg?w=343 343w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/polygon-pos-gas-estimate-1024x780.jpg?w=287 287w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/polygon-pos-gas-estimate-1024x780.jpg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/polygon-pos-gas-estimate-1024x780.jpg?w=1222 1222w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>



Coming to on-chain reorganization, Polygon said that it wanted to reduce what’s known as “sprint length” — the number of blocks produced by a validator — to reduce the time taken for validation. This results in “fewer reorgs overall,” which impacts the finality of transactions, Polygon said.



Blockworks Research noted the low level of participation in this governance proposal, as the latest fork was passed by just <a href="https://forum.polygon.technology/t/pre-pip-discussion-addressing-reorgs-and-gas-spikes/10623" target="_blank" rel="noreferrer noopener">15 votes</a>, with each Polygon validator team being able to cast one vote.



“While validators still need to implement the new software for the new chain to be canonical, Polygon governance discussions seem to leave a lot to be desired,” the research team said.&nbsp;



Governance matters should expect to see fewer participants during bear markets, according to Hendo Verbeek, head of risk at Spool Finance, a DeFi liquidity aggregator organized as a DAO.



<blockquote class="wp-block-quote">
“By no means should we label this lack of participation as a bad thing because the actors that do remain are generally very high-level and extremely well incentivized to ensure the best outcome for all parties involved,” Verbeek told Blockworks.
</blockquote>



The price of native token <a href="https://blockworks.co/price/matic">MATIC</a>, which is up nearly 20% — in US dollar terms — since the hard fork was announced, has been <a href="https://blockworks.co/news/bitcoin-price-hits-greediest-point-in-4-months-as-it-flirts-with-19k">in line with the recent market rally</a>, and is mostly flat versus <a href="https://blockworks.co/price/eth">ether</a>.



MATIC has significantly underperformed ETH <a href="https://blockworks.co/news/ftx-bankrupt-hacked-investigated-a-timeline-of-events">since the November FTX bankruptcy on Nov. 11, 2022</a>, down around 24%.



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Polygon Upgrade Goes Live Following Low Governance Vote Turnout

Jacquelyn Melinek

<div id="highlights-block_61d7689c0f2ca" class="highlights">
 <ul>
 <li>The total trading volume across 14 NFT marketplaces rose close to 23,000% year-over-year, from $85.7 million 2020 to $19.6 billion in 2021</li>
 <li>The total market cap of NFTs is about $31.4 billion, making up 1.53% of the current $2.05 trillion total market cap for cryptocurrency</li>
 </ul>
 
</div>



OpenSea overall monthly NFTs sales may be down from September 2021 all-time highs, but its Polygon-based NFT sales hit a peak of about $2 million during December, and are starting off the new year strong, according to <a href="https://dune.xyz/queries/130838/257589" target="_blank" rel="noreferrer noopener">data</a> compiled by user niftytable on Dune Analytics.



As of Thursday, there were 426,565 non-fungible token (NFT) Polygon sales in January. If this number continues to grow at the same rate, there will be about 2.2 million Polygon NFT sales for the month of January, a 10% increase from the previous month and nearly 5,000% higher than six months ago.



Polygon’s <a href="https://www.coinbase.com/price/polygon#:~:text=The%20current%20price%20is%20%242.5787,circulating%20supply%20is%207%2C086%2C960%2C741.27%20MATIC." target="_blank" rel="noreferrer noopener">MATIC</a> token spiked near all-time highs to $2.92 on Dec. 26, 2021, but was down 29.2% from that record level to $2.26 on Thursday.



In general, 2021 was an extremely strong year for NFTs. The total trading volume across 14 NFT marketplaces, including OpenSea, Rarible, Axie Infinity, SuperRare, NBA Topshot, rose from $85.7 million in 2020 to $19.6 billion in 2021, according to a <a href="https://www.1confirmation.com/2021-nft-annual-review?latest" target="_blank" rel="noreferrer noopener">report</a> by cryptocurrency-focused investment firm 1confirmation.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh6.googleusercontent.com/1Rpkt33hLzN1mVWkVMoGvJvLyrNqMj_DAsBLrG_EEko-t72k2l7aKx_cNh6qvG0tLUHkir9bYv_rxvs_QOtOF74csrJ4zTdIzDStExlOWicZUPaVkbop4P2PktpoHpyjspmMYBcu" alt=""/><figcaption>Source: 1confirmation</figcaption></figure>



“NFTs had a breakout year in 2021 but the asset class is still small relative to cryptocurrency broadly,” the 1confirmation report noted.



The total market capitalization of NFTs is about $31.4 billion, making up 1.53% of the current <a href="https://coinmarketcap.com/" target="_blank" rel="noreferrer noopener">$2.05 trillion</a> total market cap for cryptocurrency, according to data from 1confirmation and CoinMarketCap, respectively.&nbsp;



However, the investment firm said it thinks NFTs will ultimately be larger than cryptocurrencies by the end of this decade and steps taken by NFT creators in 2022 will contribute to that growth. “2021 was crazy in NFT land, and 2022 is shaping up to be crazier,” 1confirmation stated.&nbsp;



<h3>OpenSea sailing ahead</h3>



OpenSea, the largest NFT marketplace by trading volume, is showing no sign of slowing down in 2022. This week, the company announced a <a href="https://opensea.io/blog/announcementops/announcing-openseas-new-funding/" target="_blank" rel="noreferrer noopener">$300 million Series C</a> funding round led by Paradigm and Coatue. The latest capital raise gives OpenSea a $13.3 billion post-money valuation.



<meta charset="utf-8">“In 2021, the world woke up to the potential of NFTs to unlock utility and economic empowerment across a vast set of industries, communities and creative categories,” Devin Finzer, CEO of OpenSea, told Blockworks. “Our vision is to be the destination for these new open digital economies to thrive. We’ll start this year by lowering the barriers to entry to the NFT space on OpenSea and investing in the ecosystem and the community that powers it,&#8221; Finzer added.



Today, OpenSea has over 1.26 million active users, 2 million collections and over 80 million NFTs. It offers cross-blockchain support across Ethereum, Polygon and Klatyn. OpenSea Polygon traders have increased to record levels from just 15 users in late June 2021 to over 846,433 users as of Thursday, niftytable’s <a href="https://dune.xyz/queries/130852/257620" target="_blank" rel="noreferrer noopener">data</a> on Dune Analytics showed.&nbsp;



Total OpenSea Ethereum traders have also hit new all-time highs — from 36,540 on the year-ago date to 942,721 as of Jan. 5, <a href="https://dune.xyz/queries/2877/5680" target="_blank" rel="noreferrer noopener">data</a> compiled by user rchen8 on Dune Analytics showed.&nbsp;



“We saw the NFT ecosystem explode last year, with OpenSea’s transaction volume increasing over 600x in 2021,” Finzer wrote in a blog <a href="https://opensea.io/blog/announcementops/announcing-openseas-new-funding/" target="_blank" rel="noreferrer noopener">post</a> on Tuesday. “But we’re just getting started,” he added.&nbsp;



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