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In terms of the establishment of ERC20 token smart contracts, the use of DeFi agreements, and stable currency transactions, Polygon seems to be “anti-customer-oriented”.
Written by: Ling Young Loon, Nansen Analyst Translator: Perry Wang
There have been many debates about the best aspect of Ethereum, Layer 1 and Layer 2 as well as the best aspect of the trinity of management scalability, security, and decentralization. Around the non-Ethereum chain and various L2 solutions, a new decentralized application (DApp) ecosystem is being formed, allowing users to enjoy the same DeFi experience at a lower gas cost.
Binance Smart Chain (BSC) and Polygon are examples of this.
Polygon’s gas cost is definitely lower. The number of daily active transactions on Polygon far exceeds that of Ethereum, but the total amount of Gas fees paid per day has never exceeded $10,000. In contrast, Ethereum users spend up to 7 million U.S. dollars in gas fees per day for transactions.
But beyond that, the strange difference between Polygon and Ethereum’s on-chain activities is also worthy of further investigation. In this article, we conducted a brief exploratory analysis of the data on the Polygon mid-chain and compared it with the activities on Ethereum.
Contract deployment activities
Contract deployment activities may be a good barometer of the development status of blockchain projects. When comparing the data between Ethereum and Polygon, some anomalies will be very obvious.
I noticed that, on the one hand, the total number of ERC20 token contracts deployed on Polygon accounts for a much higher proportion. Since April, for every 220 other contracts deployed, one ERC20 token contract will be deployed on Polygon. On Ethereum, 1 ERC20 token contract will be deployed in every 1430 other contracts!
In fact, tokens with duplicate names often appear on Polygon. It is mainly due to two reasons: some people deploy fake tokens to induce people to buy them; and some developers are conducting production tests. This is the “miracle” brought about by cheap gas fees.
Number of tokens with the same name
If you stay on the Ethereum tracker dashboard on Nansen long enough, you will know that as many as 60% of the Ethereum contracts deployed each month are ChiToken contracts. As a way to save gas fees, these tokens are deployed and then destroyed along with the transaction. And there seems to be almost no such contracts on Polygon—they don’t need them at all.
Ethereum monthly contract deployment number
Addresses across Ethereum and Polygon at the same time
We also tracked the number of active addresses across Ethereum and Polygon at the same time. As of June 9, this number accounted for approximately 34% of all Polygon addresses.
I decided to analyze transactions across Ethereum and Polygon since April 2021 to quickly understand the role of these addresses on the two chains. The most used project contracts of this user group on Polygon belong to QuickSwap and Polycat.Finance. On Ethereum, Uniswap V2 routers are used most frequently.
What’s more interesting is that among these overlapping addresses, nearly 17,000 people have joined Aave on Polygon-but they have never used Aave on Ethereum. When it comes to Curve.Fi, the number is about 3,000.
The number of users of Aave and Curve on the Ethereum mainnet and Polygon
On Ethereum, USDT occupies the dominant position in stable currency circulation with a huge advantage-the daily transaction volume of USDT is almost twice the sum of USDC and DAI! However, on Polygon, USDC seems to be the stable currency of choice-always accounting for more than 50% of stable currency transfers.
Several Polygon native stablecoin protocols are under development, among which IRON and miMATIC are two notable projects.
) Daily transfer amount of stable currency on Polygon
Average daily number of stablecoin users on Polygon
The first mover advantage is likely to take effect here. The earliest QuickSwap mining pool has a token pair that uses USDC instead of USDT. The earliest project on Polygon has greater incentives for the USDC mining pool. In fact, QuickSwap has more tokens paired with USDC than WETH.
Percentage of trading pairs on QuickSwap
The token pairs on Uniswap are different. As many as 74% of the currency pairs are created for Wrapped Ether, while the currency pairs created for USDT are only 3.5%.
Stablecoin transaction value in U.S. dollars
The average value of stable currency transfers in U.S. dollars is a good indicator of the general capital size of Polygon users. A useful chart of Nansen is the value distribution of transaction size over time, which can be found on our Ethereum stablecoin main dashboard.
I performed the same analysis using on-chain data from Polygon, and to my surprise, in the past few days, more than $1 million in transactions accounted for 65% of the daily trading volume of stablecoins. The chart looks very similar to the chart on Ethereum, and the “Giant Whale” is clearly entering Polygon.
) Distribution of single transaction volume of stablecoins on Polygon
It is worth noting that stablecoin transactions with a scale of about 10,000 to 100,000 US dollars account for about 10-15% of the total stablecoin transaction volume on Polygon, but only account for 6-10% of the total transaction volume on Ethereum. At least in the past few weeks.
The same characteristics appeared in transactions between US$10 and US$10,000. This may confirm that higher gas fees on Ethereum will discourage transactions with lower dollar value.
The following figure is a visual chart of the average total transaction volume percentage in each trading range of Ethereum and Polygon. The data is taken from June 1 to 7, 2021.
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