Polygon zkEVM’s Recent Challenges
Last week, the active addresses on Polygon’s zkEVM experienced a significant decline, raising concerns about its network activity. Fortunately, Ethereum’s upcoming Dencun upgrade holds the potential to reverse this trend.
Dencun Upgrade and Its Impact on zkEVM
Artemis’ data analysis by AMBCrypto indicates a recent drop in zkEVM’s network activity, reflected in the decrease of daily active addresses over the past week. This decline has also impacted the number of daily transactions on the Layer 2 (L2).
The diminishing network activity has taken a toll on zkEVM’s captured value, leading to a noticeable decrease in both fees and revenue over the last seven days.
Ethereum’s Dencun Upgrade
Ethereum’s Dencun upgrade, scheduled for March 13th, is poised to be a game-changer for L2 networks. This significant update follows last year’s Shapella upgrade and focuses on enhancing scalability and efficiency by reducing transaction costs on L2.
The Dencun upgrade introduces several features, including proto-danksharding, paving the way for increased transactions per second.
According to a recent tweet by IntoTheBlock, the update is expected to reduce L2 transaction fees by up to 10 times, potentially attracting more transactions to L2s like Polygon zkEVM.
zkEVM vs. Competitors
Despite the potential benefits of the Dencun upgrade, zkEVM still faces stiff competition. Artemis reports that both daily active addresses and daily transactions on Polygon zkEVM are considerably lower than those on zkSync Era and Base.
Moreover, zkEVM’s Total Value Locked (TVL) in the DeFi space remains lower than its counterparts at present.
MATIC Price Movement
While zkEVM navigates these challenges, the price of MATIC, Polygon’s native token, has gained bullish momentum. CoinMarketCap reports a more than 10% increase in MATIC’s value over the last seven days, with the token currently trading at $0.8567 and a market capitalization exceeding $8.2 billion, securing its position as the 14th largest cryptocurrency.