As Polygon lures in more users, will it help MATIC cross $1

Daily active addresses jumped 63% in a month’s time.
Polygon clocked the third-highest NFT sales volume over the past week.

Proof-of-stake (PoS) network Polygon [MATIC] witnessed a heavy rush of users over the past month.

User engagement spikes on Polygon

According to AMBCrypto’s examination of Artemis data, network participation started to rise in the last week of 2023, with momentum continuing into 2024.

Daily active addresses increased to 678K on the 11th of January, up 63% in a month’s time. Besides, when measured over a year’s period, the active user base more than doubled.

Source: Artemis

That being said, the demand for blockspace has dramatically reduced since the start of 2024. The transaction count on the PoS network tumbled 62% year-to-date (YTD), as per AMBCrypto’s analysis of Santiment data.

On the plus side, the number of new addresses maintained the positive pace seen previous year, implying healthy network adoption.

Source: Santiment

Are NFTs powering user activity?

While the Inscriptions frenzy fueled user engagement in December 2023, non-fungible tokens (NFTs) drove the majority of activity in the new year.

Polygon clocked the third-highest NFT sales volume over the past week, AMBCrypto observed using CryptoSlam’s data.

During this time, the layer-2 (L2) chain achieved a historic milestone by flipping traditional powerhouse Ethereum [ETH] in 24-hour NFT sales for the first time.

Source: CryptoSlam

The state of MATIC

The ecosystem’s native token MATIC reaped the benefits of the bullish crypto sentiment thanks to spot Bitcoin [BTC] approvals. At press time, the coin was up 7.86% over the week, according to data from CoinMarketCap.

However, the Open Interest (OI) in MATIC futures declined in the same time, according to data analyzed from Coinglass.

A plausible explanation for this could be that short sellers were covering their positions and exiting the market, leading to money flow outside the market. The general understanding is that prices will fall once the short covering has run its course.