- The Polygon (MATIC) network has recently witnessed a steady rise in address activity.
- Recent suspicious transfers cast doubt over whether the recent rise in activity indicates growing adoption.
- The findings have sparked debate within the crypto community.
In crypto, on-chain metrics allow investors and enthusiasts to gauge whether or not blockchains and blockchain applications have a desired value proposition. However, these metrics are not infallible and can sometimes be misleading.
In the latest instance, the Polygon (MATIC) chain has steadily recorded high address activity in the past few days, culminating in a three-month high on Wednesday, January 3. While such a rise in network activity typically indicates growing adoption, deeper analysis of on-chain activity suggests there may be more to it than meets the eye.
Polygon (MATIC) Metrics Spoofed?
As recently highlighted by Polygon co-founder Sandeep Nailwal, the Polygon network has recorded its highest number of daily active addresses since October 2023 and is currently averaging about 500k daily. Specifically, Artemis data showed that the network saw over 519,000 active addresses on January 3, its highest since between October 22 and October 23. This metric continued to rise and hit 540,000 on Thursday, January 4.
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While this rise in network activity typically indicates soaring adoption, recent findings have raised doubts. Analysts have found at least two entities spoofing metrics by repeatedly sending funds to an address only to send them to a new one instantly.
The first example of this suspicious activity highlighted by Blockworks Senior Research Analyst Daniel Smith on Tuesday, January 2, shows an address carrying out these transfers with about 2,000 MATIC (worth approximately $1,760 at the time of writing) at an average cost of 0.001353 MATIC (about $0.0012 at the time of writing).
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The second example highlighted by “Cryptocondom Intern” shows a whale withdrawing $53.53k worth of MATIC from Coinbase to multiple wallets, sending it through the Polygon Plasma bridge and then through a mixer back to Coinbase. The analyst noted that they had witnessed this process with at least 14 other wallets.
Unsurprisingly, the findings have sparked speculation within the crypto community.
Airdrop Farming or Something More Sinister?
Reacting to the suspicious activity, prominent Defi Llama analyst “0xngmi” suggested it could be part of an airdrop farming operation.
"A possibility is just a user trying to create a bunch of accounts with old wallet age for future farming operations," they wrote.
Still, Polygon skeptics suggested that the explanation for the suspicious activity could be something more sinister.
"Polygon is faking something to drive retail interest? No they would never (do this again for the 700th time)," one user quipped.
Blockworks’ Daniel Smith had noted that it would cost the first entity only $641 to fake Polygon’s current average active daily addresses count, adding that the user had enough to perpetuate the transfers across 1.4 million addresses.
Polygon Labs and Polygon Labs CEO Marc Boiron have yet to return a DailyCoin request for comment at the time of writing.
On the Flipside
- The reason for the suspicious activity remains unclear.
- Polygon is not the only chain susceptible to this type of metric manipulation. In a December 2022 analysis of how much it would cost for a malicious actor to double the active address count on Ethereum, Polygon, and Solana for a year, “0xOsprey.eth” found that Solana was the most susceptible to manipulation. At the time, he outlined the cost for each chain at around $139 million, $372k, and $18.9k, respectively.
- Despite the speculation, Polygon Labs has recently churned out impressive technological products, including the Polygon CDK.
Why This Matters
Recent suspicious activity on Polygon highlights the susceptibility of on-chain metrics to manipulation and the need for crypto investors to look beyond these metrics to gauge the value of blockchains and blockchain applications.
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