uring the 2021 crypto boom, Polygon was at the forefront of scaling solutions for Ethereum as one of the leading sidechains. However, the past year has seen a major shift in the ecosystem as zero-knowledge rollups like zkSync and zkEVM have risen to prominence. While Polygon has pivoted its focus to developing Ethereum zkRollups, some observers argue this transition came later than rivals like Arbitrum and Optimism who have a head start.
Competition from Other Protocols
The rapid growth of protocols like Arbitrum and Optimism have directly competed with Polygon for developer mindshare and user adoption. Data shows Arbitrum has overtaken Polygon as the preferred scaling destination for traders, with the most volume and total value locked. Optimism has also seen stronger gains than MATIC over the past year.
Leadership Changes at Polygon
The departure of Polygon's President Ryan Wyatt to become Head of Business Development at Optimism was a notable blow. Wyatt was seen as instrumental in driving Polygon's partnerships and growth during its rise. His exit to a key competitor may have hurt Polygon's momentum over the past year.
Impacts of the Upcoming Ethereum Upgrade
The Ethereum Dencun upgrade planned for March 2023 is designed to boost the efficiency of data availability on Layer 1. However, experts argue that while all rollups will benefit, zero-knowledge rollups like Polygon may see relatively less improvement than optimistic rollups like Arbitrum due to their different transaction validation methods. This could provide Arbitrum with a competitive advantage.
