What is Polygon?

Polygon is a “layer two” or “sidechain” scaling solution that runs alongside the Ethereum blockchain — allowing for speedy transactions and low fees. Polygon is emerged to provide faster transactions and lower costs for users. It acts as a speedy parallel blockchain running alongside the main Ethereum blockchain.

You can picture Polygon as being like an express train on a subway — it travels along the same route as the regular train, but it makes fewer stops and thus moves much faster. (In this analogy the main Ethereum blockchain is the local train.) Polygon uses a variety of technologies to create this speedy parallel blockchain and link it to the main Ethereum blockchain.

MATIC is the network’s native cryptocurrency, which is used for fees, staking, and more. The name MATIC comes from an earlier stage in Polygon’s development. After launching as Matic Network in October 2017, developers rebranded as Polygon early in 2021.  

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Polygon Hard Fork

Polygon Completes Hard Fork to Reduce Gas Fee Spikes, Disruptive Reorgs:

The Polygon software upgrade occurred at 10:45 UTC (5:45 a.m. ET) on Tuesday, (Block Number #38189056) according to a tweet from Polygon Labs, the lead company behind the project.

The two proposals included in the hard fork were put forth in December. Some 87% of Polygon validator teams that participated voted for approval. Only 15 validator teams took part in the voting process, which is extremely low given the number of active validators at a time is limited to 100.

The first proposal adjusted a mechanism that sets gas fees – a kind of tax one pays in order to transact on a blockchain. The new mechanism aims to keep gas prices low when there is a lot of activity on the network.

The second proposal aims to reduce the amount of time it takes to complete a data block – part of an effort to prevent frequent reorgs, which occur when a validator node receives information that temporarily creates a new version of the blockchain.

Source: Coindesk

Tejarat Exchange

Dashboard Introduction and Methodology

In this dashboard, I am going to analyze the activity over the Polygon chain and its users’ behavior in the days leading up to and the days following the Polygon Hard Fork on January 17, 2023.

I am going to separate this analysis’s timespan into 2 parts based on the block number that Hard Fork was implemented (block number #38189056)

1- Before Hard Fork: 1 Month Before The Polygon Hard Fork (17 December 2022 - 17 January 2023 | Block Number #38189055)

2- After Hard Fork: 1 Month After The Polygon Hard Fork (17 January 2023 | Block Number #38189056 - 17 February 2023)

I am going to mainly focus on the overall activity on the Polygon chain during this time period and also examine the mentioned metrics (in the previous part) such as (and especially) transaction fees, block production. So, here are what you will see analyzed in this dashboard:

• Overall Overview of Polygon Transactions, Success Rate, Transactions Volume, Active & New Users on Chain.
• An in-depth Analysis of Gas production (transaction fees) on Polygon (for example, the generated fee per block, per day, per hour in a day, per 1M $USD transferred liquidity on the chain)
• Block production and speed of this process on Polygon.

All of the above metrics are analyzed in 2 mentioned time periods over time and then, an average daily comparison of these metrics will be done during the 2 mentioned time periods.

The main tables that I am going to use for this analysis are Flipside’s Polygon.core.fact_transactions, Polygon.core.ez_matic_transfers, Polygon.core.fact_blocks.

The main goal of this dashboard is to realize whether the software upgrade led to lower gas fees as hoped and have these changes affected any meaningful user metrics, such as volume, activity, monthly active users, etc on Polygon network or no.

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Polygon Transactions Overview

According to the above analysis, The activity on the Polygon chain has slightly decreased after the Hard Fork which also continues till today! As we see, the number of Polygon transactions has almost a steady trend line over time (before and after the hard fork) but the number of active and especially first-time users on the Polygon chain has decreased significantly after the hard fork and is decreasing more and more as time goes on!

The success rate of Polygon transactions has also decreased slightly after the Hard Fork. especially during recent days which is also another negative point.

The only metric that has increased slightly after the Hard Fork upgrade and also continues till today is the volume of transactions on this chain.

Moreover, the number of transactions per minute, per second, and also the number of active users per minute on the Polygon chain has almost a steady trend line over time which is slightly decreasing as time goes on.

In an average daily analysis, we can see an equal average daily number of performed transactions on Polygon but the average daily number of active & new users has decreased after the hard fork (which is not good news).

But, the average daily activity of an average Polygon user has increased slightly after the Hard Fork but the negative point is that the average daily paid fees on Transaction by an average Polygon user after the Hard Fork is way more than before Hard Fork (which was not supposed to!)

Transaction Fees

Here we can see some frustrating results on Polygon and its Hard Fork. The volume of daily generated fees on Polygon and also the average, median & maximum transactions fees on this chain during the days after the Hard Fork has increased significantly compared to the days before that! While according to the announcements and developers’ comments, the transactions were supposed to generate less fee after this Hard Fork!

On the previous part, we have not seen a significant uptrend on number of daily Polygon transactions while the daily generated fees on this chain is increasing dramatically as time goes on!

On the right average daily chart, its obvious that average daily transaction fees and also average transaction’s fees after the Hard Fork has increased dramatically compared to the days before the Hard Fork.

On the left charts, the results are also frustrating.

Before the Polygon Hard Fork, the share of transactions with 0.001 - 0.01 $MATIC fees was more than other categories but after Hard Fork, we can see the majority of transactions have generated 0.01 - 0.1 $MATIC fees!

Also, on the right over-time chart, we can see a significantly increasing share of transactions with 0.01 - 0.1 $MATIC fees over time and on the other hand, the share of transactions with 0.001 - 0.001 $MATIC fees is decreasing as time goes on. another disappointing metric is the increasing share of higher fee transactions (0.1 - 1 MATIC), especially in recent days!

According to the left chart, the average generated gas per block on Polygon has also increased significantly after the Bedrock upgrade which is not good!

this metric is significantly increasing over time and reached its highest amount on Feb 16, 2023, almost 1 month after the Hard Fork.

in this part, I have analyzed the average generated fee on Polygon network per $1M liquidity transfer on this chain.

As we see, during the days before the Upgrade (275 $MATIC ) the generated fee was less than the days after the update (628 MATIC) and this is another negative point for this Hard Fork!

Blocks’ Performance

On the left chart, we can see the correlation between total volume of transactions on Polygon & average generated fees per transaction, before & after the Hard Fork.

As we see, the results here are also disappointing!

After the hard fork, we can see higher generated fees per transaction when there are higher volume of transactions, compared to the days before the Hard Fork.

One of the main goals of Polygon Hard Fork was to keep gas prices low when there is a lot of activity on the network.

So, in the left chart, I have visualized the correlation between network traffic & average transaction fees. But as we see, this aim was not successfully achieved And there are still high average transaction fees during the high network traffic moments.

Summary & Conclusion

• According to the above analysis, at least so far, the Polygon Hard Fork has not been as successful as it should be on this chain. This Hard Fork not only failed to reduce the transaction fee, but we also saw that the daily generated transaction fee and average fees per transaction have increased as well as the gas produced per block and per 1M $USD liquidity transfer on Polygon, which is not at all a good point for the Polygon network at all!

• Also, during the times when the network become crowded, we did not see better management of transaction fees on the Polygon chain.

• The number of active users, new users, and also the success rate of transactions on Polygon has decreased after the Hard Fork which is another negative point.

• The only metric that slightly increased after the hard fork was the volume of transactions done on this chain.

• The block production speed also has not increased after the Hard Fork. We have seen that the average time difference between production of 2 blocks in Polygon before Hard Fork was lower than after this upgrade!

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The second goal of Polygon Hard Fork was to reduce the amount of time it takes to complete a data block – part of an effort to prevent frequent reorgs, which occur when a validator node receives information that temporarily creates a new version of the blockchain.

So, there must be a higher number of produced blocks per day over time after the Hard Fork. but in the 2 above charts, not only we do not see an increasing number of produced blocks per day, but also there is a slightly decreasing trend of block production after the Hard Fork!

Also, we can see that the time difference between two polygon blocks has increased significantly after the Hard Fork which is completely the opposite of what it should be! Before the Hard Fork, the average time between 2 Polygon blocks was 2.14 seconds but after Hard Fork, this time has increased to 2.23 seconds !

Blocks Gas