Bernstein Says Polygon Blockchain Is Bringing Crypto to Consumers

The blockchain’s success has come from its ability to build a more mainstream customer gateway, the report said.

AccessTimeIconSep 29, 2022 at 8:41 a.m. UTC
Updated May 11, 2023 at 4:25 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

The success of the Polygon blockchain in bringing scalability to Ethereum shows that developers have to reach out to mainstream consumers and not operate solely within the “crypto cult,” Bernstein said in a research report Wednesday.

Polygon has a large user base of about 170 million addresses, of which some 300,000 are classed as active, Bernstein said. It’s growing at a pace of 80,000 new users a day.

  • How NEAR Enables Multichain Access From One Account
    00:56
    How NEAR Enables Multichain Access From One Account
  • Why the NEAR foundation Chose Eigenlayer as a Security Partner
    00:54
    Why the NEAR foundation Chose Eigenlayer as a Security Partner
  • Judge Kaplan Had 'No Love' for Sam Bankman-Fried, Legal Expert Says
    07:08
    Judge Kaplan Had 'No Love' for Sam Bankman-Fried, Legal Expert Says
  • How Bitcoin and Ether's Options Contracts Combined Expiry Could Spike Volatility
    01:11
    How Bitcoin and Ether's Options Contracts Combined Expiry Could Spike Volatility
  • The network was the first platform to offer scalability for Ethereum with its proof-of-stake (PoS) chain, Bernstein said, which encouraged leading decentralized finance (DeFi) and non-fungible token (NFT) applications to offer their products on the system. Polygon also has lower fees, making it easier for applications such as trading platforms Uniswap and OpenSea to cater to retail demand.

    The broker notes that Meta (META), Stripe, Starbucks (SBUX) and Robinhood (HOOD) all chose Polygon as their “first integration partner to build Web3 experiences.” A strong partnership pipeline gives Polygon growth and on-ramps to millions of users, it added.

    The “other secret” behind Polygon has been organizational. The blockchain has hired from YouTube, Airbnb (ABNB), Electronic Arts (EA), Amazon Cloud and other large corporations to build a “truly global organization,” analysts Gautam Chhugani and Manas Agrawal wrote.

    DeFi is an umbrella term used for lending, trading and other financial activities carried out on a blockchain without the use of traditional intermediaries. NFTs are digital assets on a blockchain that represent ownership of virtual or physical items and can be sold or traded.

    With Ethereum’s recent migration to PoS, known as the Merge, the blockchain is building a “rollup-centric scalability roadmap,” the note said.

    Given this context, “the supporting ecosystems such as Polygon would continue to invest in building rollup technologies such as zero-knowledge rollups, but their success is likely to be more determined by organizational and business development efforts,” Bernstein said, adding that “they are more business-orientated ecosystems focused on building a consumer gateway leveraging partnerships with leading consumer brands.”

    Polygon’s success so far, has shown its ability to build a “more mainstream customer gateway,” the note added, with focus now on the zero-knowledge (ZK) ecosystem.

    The Merge is the first of five upgrades planned for the Ethereum blockchain. Rollups expand the Ethereum network by processing transactions and executing smart contracts – computer programs that run on some blockchains – on their own chains.

    Disclosure

    Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

    CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

    Author placeholder image

    Will Canny is CoinDesk's finance reporter.


    Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.