Polygon developers suggest governance updates

The Polygon blockchain is a popular Layer 2 scaling solution for Ethereum, utilizing sidechains to enable faster and more affordable transactions. The current blockchain infrastructure is struggling to meet the demands of mass adoption, as transactions tend to be slow and have limited throughput.

Several blockchain protocols have block size restrictions, and smart contract platforms often sacrifice decentralization for faster transaction speeds. Polygon addresses these issues effectively and aims to enhance the accessibility of decentralized finance (DeFi) to a broader audience.

Polygon’s popularity continues to rise, with some of the largest Web3 platforms and developers now building on Polygon. Recently, Polygon Labs developers proposed restructuring the governance model as part of the Polygon 2.0 roadmap.

The proposed governance model includes three core components: first, the expansion of the Polygon Improvement Proposal (PIP) framework; second, the creation of a System Smart Contracts Governance pillar; and third, the introduction of a Community Treasury governance structure.

The Polygon Improvement Proposal would enable community members to research and propose upgrades that may later become part of the protocol. The System Smart Contracts Governance pillar would facilitate upgrades to the protocol and be overseen by respected community members.

Additionally, the Community Treasury governance mechanism will help fund Polygon’s growth, and it will be managed by an independent Community Treasury Board.

Fostering greater involvement

The new governance structure has the potential to boost participation in Polygon, attract more developers, and spur the ecosystem’s growth. It is worth noting that at the start of July, MATIC saw a significant rise in transaction volume, a common sign of increasing investor confidence in the coin’s short-term price potential.

On-chain metrics such as transaction volume and unique addresses are critical indicators to monitor. For instance, when MATIC’s price nearly hit $0.90 on July 13, it appeared to signal the beginning of a bullish trend. However, the price has since dropped, and it remains uncertain whether this movement is corrective or indicative of a broader trend.

MATIC remains highly volatile and a risky investment, but broader market conditions play an important role in determining its price movement.

The ongoing pressures from the U.S. Securities and Exchange Commission (SEC), recession fears, and central bank monetary policies will continue to influence the cryptocurrency market in the near future.

The next Federal Reserve meeting is scheduled for July 26, with markets pricing in a 90% chance that policymakers will raise interest rates by 25 basis points. As noted by Antoni Trenchev, co-founder and managing partner of crypto lender Nexo:

“If the Fed signals it’s not done raising rates, all bets are off for crypto and other risk assets. However, if the Fed suggests it’s finished with rate hikes, it could reignite the bull market.”

Technical analysis of Polygon (MATIC)

Polygon (MATIC) has shown a positive trend since early July 2023, rising from $0.64 to $0.89. Currently priced at $0.74, the MATIC price would need to remain above $0.70 to avoid a potential sell-off.

Key support & resistance levels for Polygon (MATIC)

In the chart provided (from April 2023), key support and resistance levels are marked to help traders predict price movements. While MATIC has pulled back from its recent highs, if the price exceeds the $0.90 resistance, it could potentially reach the next target at $1.

The current support level is $0.70, and if this level breaks, it would signal a “SELL” indication, with the next support level at $0.65. A further drop below $0.60 could push the price toward $0.50.

Reasons for the potential rise in Polygon (MATIC) price

Polygon Labs’ proposal for a new governance model could foster greater involvement, attract more developers, and stimulate ecosystem growth. Growing activity on the platform is a positive indicator for MATIC’s price, suggesting the possibility of further upward movement. However, it’s also crucial to consider the broader sentiment in the cryptocurrency market, as it can significantly affect MATIC’s price trajectory.

If MATIC can hold above the $0.70 support, it could serve as a solid foundation for a price rebound. A break above $0.90 would be favorable for the bulls and allow them to maintain control over price movements.

Factors that could lead to a decline in Polygon (MATIC)

Despite its positive momentum in early July, MATIC’s price has retreated since hitting almost $0.90 on July 13, leaving uncertainty about whether the pullback is a corrective phase or part of a larger downtrend.

With support at $0.70, any dip below this threshold could signal further declines, with the next targets being $0.65 and possibly $0.50 if the price drops below $0.60. Additionally, MATIC’s price is closely tied to Bitcoin’s movements, so a drop in Bitcoin’s price below $28,000 could negatively impact MATIC.

Inzichten van analisten en experts

Polygon Labs’ proposed governance restructuring is seen as a positive move for the project’s future, helping to attract developers and drive ecosystem growth. Analysts believe this could be beneficial for MATIC’s long-term performance, but they caution that the overall cryptocurrency market sentiment will play a crucial role in determining its price trajectory.

The good news is that the market remains supported by recent data showing inflation cooling more than expected in June, bolstering investor confidence. There are reasonable expectations that the Federal Reserve may pause its rate hikes, which could reignite bullish sentiment. The next Federal Reserve meeting is scheduled for July 26, and as Antoni Trenchev mentioned, if the Fed signals a halt in rate hikes, this could spark a new bull run.

Disclaimer: Cryptocurrencies are highly volatile and not suitable for everyone to invest in. Never speculate with funds you cannot afford to lose. This information is provided for educational purposes and should not be considered financial or investment advice.