User Analysis
In the first post, we dealt with the background of Polygon’s birth, including Ethereum’s Trilemma. To briefly explain the Trilemma again, it signifies that in the blockchain, Decentralization, Security, and Scalability conflict with each other, making it difficult for a blockchain to perfectly satisfy all three. We will see how Polygon users have changed, having effectively overcome this.
Next, I would like to introduce indicators that indirectly provide insights into the evaluation of the Polygon network based on the statistics of relevant users. I will explain the metrics related to three key users: developers, users, and investors.
Total Contract Creators
As of May 30, 2023: Over 294,042 users [Source: Polygon official website]
The number of contract developers on Polygon was 234,000 as of December 2022, which represents a staggering 637% increase compared to 31,800 in 2021. As of the current date (May 30, 2023), the total number of contract developers has increased by 25% from 234,000 to 294,042, showing a consistent growth trend.
Deployed Smart Contract
As of May 30, 2023: Over 1.24 million [Source: Polygon official website]
[Source: Nansen]
The number of contracts deployed on Polygon has reached a staggering 1.24 million as of May 30, 2023, with the monthly deployment quantity gradually increasing. In May, there were 28.14 million contracts deployed. This is a similar figure to the number deployed in September 2021
Trading Volume on Polygon as of May 25, 2021: $6.515 billion In 2021, the cryptocurrency market received significant attention, with the emergence of various cryptocurrencies and a large influx of investors. In this environment, the number of contracts deployed on the Polygon network also increased dramatically. However, as the cryptocurrency market experienced a downturn in 2022, there was a sharp decline in deployment.
Trading Volume on Polygon as of May 25, 2023: $328.8 million Even in May 2023, despite the relatively decreased interest in the cryptocurrency market, the number of contracts deployed on the Polygon network continues to increase. This indicates that developers recognize the reliability and excellent usability of the Polygon network and are showing renewed interest and participation, independent of the market downturn in the cryptocurrency industry.
The Number of USERs
- Unique Addresses Total Count
A unique address refers to a unique identifier used for users, smart contracts, and other entities on the Polygon chain. Like Ethereum, these addresses are expressed as 40-character hexadecimal strings.
The total unique addresses count represents the total number of distinct users who have used the blockchain or protocol. This metric increases as new unique addresses are created, allowing us to gauge the user base of the blockchain or protocol.
Here is the total unique addresses count for the Polygon PoS Chain:
Total Unique Addresses: 283,672,167 [23.05.31]
[Source: Polygonscan]
As of May 31, 2023, there were approximately 280 million users who have cumulatively used the Polygon PoS Chain. Additionally, the recent rate of increase in address count is similar to the blockchain boom period of May to July 2021.
Daily Active Addresses (DAA) [as of May 31, 2023]
Daily active addresses include both PoS Chain addresses and ERC-20 addresses.
For PoS Chain addresses, it refers to the total number of externally owned accounts (EOA) that have conducted transactions on the PoS network. On the other hand, ERC-20 addresses represent the total number of addresses involved in ERC-20 token transactions on the network, including internal addresses resulting from internal transactions during smart contract execution.
- The term “internal address” is not an official term but is adopted from the concept of internal transactions. Leading blockchain data analysis platform NANSEN also uses the term “internal address” when explaining active addresses.
The traditional concepts of daily active users (DAU) and monthly active users (MAU) in the web2 context are expressed as daily active addresses (DAA) in web3, which represents the number of unique users involved.
- Daily Active Polygon PoS Chain Addresses
[Source: Polygonscan]
Daily Active Polygon PoS Chain Addresses: 460,487 [as of May 31, 2023]
During May, the average daily active PoS Chain addresses on Polygon was around 421,524. Compared to the average from May 2022 (302,166), this represents a 39.5% increase.
The daily active addresses for both ERC-20 and PoS Chain have shown significant growth compared to a year ago, indicating a rising trend of more users and developers choosing the Polygon network.
- Daily Active ERC-20 Addresses
[Source: Polygonscan]
Daily Active ERC-20 Addresses: 745,251 [as of May 31, 2023]
During May, the average daily active ERC-20 addresses on Polygon was around 769,455, with a peak of 2,389,838 addresses on a single day. This represents a threefold increase compared to the average daily active addresses in May 2022 (252,965).
New Addresses New addresses refer to addresses where transactions occur for the first time, indicating new inflows to the chain. This allows us to track recent interest or evaluation of the chain.
In May 2023, the number of new addresses on Polygon increased by an average of 1.045 million, which is approximately 15 times higher compared to the 67,000 new addresses in May 2022.
UAW (Unique Active Wallets) is a metric used by the platform “DappRadar,” which tracks dApps. It represents the number of unique wallet addresses that interact with a specific dApp’s smart contracts. To be calculated in DappRadar’s UAW, users need to perform blockchain transactions, allowing us to identify the number of users participating in a particular dApp.
By using UAW, we can understand user activity and compare the interest and success of specific dApps with others. It can serve as a criterion for selecting the most actively interacting dApp.
Active Wallets: 1.64 MILLION (as of April 8, 2023) [ Source: Polygon (Labs) Twitter ]
[Source: Polygon (Labs) Twitter]
Network Transaction Volume (On-Chain Transaction Volume)
On-chain transaction volume is a metric that represents the actual quantity of transactions occurring on a blockchain network. It is a reliable and transparent indicator of transaction activity recorded and verified by participants in the blockchain network.
Understanding on-chain transaction volume is crucial for assessing the actual usage and adoption of specific cryptocurrencies or blockchain projects. Analyzing on-chain transaction volume allows us to assess the liquidity and transaction activity information of a particular chain, as well as understand development trends.
By monitoring on-chain transaction volume, we can obtain important information about the actual usage and transaction activity of cryptocurrencies. This helps investors, developers, and others make better decisions based on real blockchain data.
Looking at the average over the past six months, there were approximately 8.8 million transactions per month. While Polygon competed with Binance Smart Chain for the top spot in February this year, it eventually conceded the first place to BNB and is currently ranked second in terms of network transaction volume.
- ERC-20 (Average Monthly) Transaction Count
The ERC-20 transaction count refers to the total number of transactions that occurred on the network, including internal transfers. It has been declining over the past two months, with 2.32 million transactions recorded in May.
- PoS (Average Monthly) Transaction Count
The PoS transaction count represents the number of transactions that occurred on the PoS network, including transactions from external owned accounts (EOAs). In May 2023, the PoS transaction count reached 2.25 million, showing an increase compared to ERC-20.
Trading Volume (Exchange Trading Volume)
On Binance, an average of 100 million coins is traded daily.
More than 60% of Binance’s official trading volume occurs off-chain.
Therefore, it is advisable to consider both on-chain network transaction counts and off-chain trading volumes.
Polygon Transactions by Entity
[Source: Nansen]
Polygon transactions are mainly dominated by Chainlink.
Below are three Chainlink services that Polygon primarily utilizes.
- Chainlink Data Feeds
- Chainlink Verifiable Randomness Function
- Chainlink API Calls
Chainlink provides an oracle network that allows smart contracts to access real-world data outside the blockchain. In Polygon, these services are used as a means to access external data within the network, enabling interaction and offering various functionalities between Polygon and Chainlink.
Conclusion
In this article, we compared the three aspects of decentralization, security, and scalability of Polygon by using the keywords of the trilemma.
First, in terms of decentralization, Polygon demonstrates excellent structural decentralization, excluding the validator count, but ultimately relies heavily on Ethereum. However, it is difficult to evaluate the political decentralization positively, except for the distribution of validators. Metrics such as Gini coefficient, Nakamoto coefficient, and Shannon entropy all have indicators that make it difficult to classify them as decentralized. However, through a governance structure called PIP, Polygon maintains stable logical centralization. Overall, it is challenging to consider Polygon as fully decentralized on its own, but it compensates for this by leveraging Ethereum’s decentralization, resulting in a reasonably decentralized system.
Moving on to security, Polygon is considered to have a high level of fault tolerance, resistance to attacks, and resistance to collusion, making it highly secure.
However, in terms of scalability, the actual TPS (Transactions Per Second) of Polygon averages around 30 TPS, which is very fast and places it second among all blockchains. However, when comparing the theoretical (maximum) TPS of 7,000 to VisaCard’s 24,000 TPS, there is still room for improvement in order to achieve Polygon’s vision of mass adoption. Additionally, while the block creation speed is fast at 2.3 seconds, the finality time of approximately 9 minutes can be considered relatively slow compared to chains like NEAR or Solana. While there have been significant improvements in terms of speed and gas fees compared to Ethereum, it is still challenging to rate Polygon highly compared to other new mainnets.
From the perspective of user adoption, the influx of actual utilization purposes for Polygon is increasing. Polygon has the second highest number of contract deployments among all mainnets, and its growth rate is also the highest. Although the price of Polygon is declining due to the current market downturn, the number of contract deployments is increasing at a rate similar to the bullish market in May 2021. In this regard, there is a positive influx into Polygon’s internal ecosystem, indicating that its foundation is gradually strengthening.
Polygon serves as an L2 scaling solution for Ethereum and is one of the mainnets that is considered first in actual product development. It is expected to maintain this position for a while based on its high compatibility with Ethereum. However, in order to be utilized by real-world companies, there is a need for improvement in terms of scalability, and the current political decentralization metric also shows a relatively low value. If these aspects are progressively improved, a positive future for Polygon can be expected.
Finally, to conclude the post, I will summarize the content we learned today into an easy-to-view three-line summary.
Thank you.
