Why Polygon’s MATIC Token Surged on Tuesday

What happened

Cryptocurrency Polygon ( MATIC 3.16% ) charged sharply higher Tuesday, surging as much as 19.2%. As of 12:50 p.m., the token was still up 9.9% over the past 24 hours.

There were several catalysts that helped fuel the cryptocurrency’s rise.

So what

Polygon announced in a press release that it entered into a strategic partnership with Wanchain “that will drive further adoption of Layer 2 cross-chain bridges and accelerate the development of interoperable blockchain technology as a whole.” 

Image source: Getty Images.

Wanchain is a decentralized solution that helps connect isolated blockchain networks. Polygon’s Layer 2 blockchain project runs on top of Ethereum ( ETH -1.48% ) blockchain as a scaling platform, helping reduce congestion on the Ethereum network, and providing faster and less expensive transactions.

Adding Wanchain’s Layer 2-to-Layer 2 bridge will enable cross-chain transactions with other isolated blockchain systems. The company’s solution already supports a host of cryptocurrency networks and tokens, including Bitcoin ( BTC 0.07% ), Ethereum, Litecoin ( LTC -0.25% ), Avalanche ( AVAX -2.88% ), and Polkadot ( DOT 6.91% ), among others.

Now what

This news comes on the heels of a report that suggests that several high-profile venture capital firms are considering an investment in Polygon. Sequoia Capital India and Steadview Capital are among those considering backing Polygon via purchase of its MATIC tokens, in a range of $50 million to $150 million, according to a report that first appeared in TechCrunch.  

This could be a changing of fortunes for Polygon, which has struggled to be taken seriously by the professional investment community. The situation appeared to reach a tipping point earlier this year when Polygon received backing from Mark Cuban. The billionaire investor is also touting the network on his website: “Polygon is the first well-structured, easy-to-use platform for Ethereum scaling and infrastructure development.”

These latest developments point to the growing adoption of Polygon and the utility of its MATIC tokens.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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