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Matic buy, hold or sell? We look at the fundamentals of this Coinbase Backed Project

Matic has taken the market by the storm by pumping over 500% in a few days. This project is the talk of the crypto town. While the market waits for Bitcoin to move in either direction or for major alt coins to pump, a few low Satoshi coins on Binance have started popping. Matic is one of the first and everyone on crypto Twitter to paid groups is abuzz of their gains from this token.

Now that it has pumped, it is the time that the market seeks to know whether it is sound fundamentally to hold or should they take profit before it dumps. I got interested in the project but little research reveals how all the “influencers” on Twitter and Youtube are just predicting prices. I am generally wary of a project when I search about them and I see headlines like “this could make you a millionaire” or “this will be $4 at the end of the year”. So we check out the fundamentals of $Matic.

As a trader and investor, would I buy it now? Or if you have a position already, would you Hodl or liquidate? Let’s see where the indicators are pointing:

what is matic network and why it is important
Source: Matic Network

Project Aim

Matic is a second layer solution built on Ethereum. The project aims to solve these scalability problems using sidechains while using the Plasma framework and a decentralized Proof-of-Stake (PoS) validator network to ensure security.

Matic claims to solve Ethereum’s scalability woes. It takes some time to sink in. This is a huge claim and if they solve this problem, there would be widespread adoption. However, we are yet to see the real scalability after their mainnet is launched with the kind of decentralization that kills most platforms that were efficient in the early stages.

Their ambition is to allow building highly scalable DApps that are also user-friendly. The wallet is indeed a very well-designed piece of software focused on end User Experience (UX), which is rare in the crypto world.

Their whitepaper and blog posts outline numerous use cases but essentially it becomes Ethereum’s second layer that is scalable. If that turns true, a plethora of use cases opens up. However, it is too early to talk about these I feel. Currently, the focus should be on throughput and decentralization.

History of the project

Started in November 2017, almost about the time when Plasma was released, this project has survived the bear market and the team has managed to churn out a handful of DApps, create a thriving community, organize several hackathons, release their testnet, and be successful in becoming one of the Binance IEOs. This shows the overall focus of the team. Regular updates from the team are a big assurance that they are focused on the right things.

Miner and Validator incentivization

Currently, we do not know much about the model’s specifics. Keeping in line with general norms, block producers on the side chains get transaction rewards. The second layer’s validating nodes will get “a cut for putting the checkpoints (proofs) after going through the consensus (on this decentralized layer of checkpoints)”, as per their recent AMA.

Team

Matic team has Jaynti Kanani as the CEO, Sandeep Nailwal as COO and Anurag Arjun as their CPO. The team has prior experience with startups and are well respected in blockchain space as well. However, the team’s focus on adoption and developer support is outstanding. Their complete involvement with DApp developers and replies to developer queries on Medium will build trust with developers pretty soon. Once a few DApps are built and active on Matic, provided the throughput is significantly increased, it has the potential to become the platform of choice for developers.

What does get me excited is the board of advisors. Two, in particular, Esteban Ordano from Decentraland ($MANA) – one of the few projects in crypto that has real usage and a specific use case in a sunrise industry of Virtual Reality – and Pete Kim who is the head of Engineering for a wallet at Coinbase.

Matic network, Sandeep Nailwal presenting
Sandeep Nailwal from Matic

Roadmap

The roadmap has been designed really well and like most crypto projects, there are some delays, but the vision is really promising. Their focus is equal for the Core Network, DApps, Protocol integrations (like 0x protocol) and interoperability.

According to their COO, Sandeep Nailwal, the launch of their Alpha Mainnet and porting of user applications on their Mainnet are the most important milestones ahead of the team.

Partnerships

MakerDAO, Decentraland, and USDC are listed as partners on their website. While we do not know the nature of the partnership with Decentraland, they plan to integrate the platform with USDC and DAI, the stablecoin from MakerDAO.

Coinbase recently invested in Matic and that is a very positive sign. However, it doesn’t guarantee its success in the long term. That will need a real product with a techno-economic model that will work.

The unknowns

This is an early stage project and therefore becomes important to know the unknowns. PoS economics are still unknown. The throughput on a model with more validators is not known as yet. Currently, there are only 4 validators on the testnet and we know very well that a centralized system definitely doesn’t face throughput challenges.

One thing that I am wary about is that this project’s model has received no notice from any large Ethereum developers. So the tech solution is still to be validated by peers.

One big question that looms in my mind is whether a layer 2 solution like Matic will be needed after Ethereum upgrades to 2.0 by implementing their own layer 2 solutions? The question then is how Matic will differentiate itself from Ethereum Core developers’ scalability solutions. Truly speaking Matic is not competing with other projects but with Ethereum’s core developers themselves.

Conclusion

Throughout the research and interaction, I have grown to like the team. They are exceptionally committed, have a solution that seems great, have a clear goal and a passionate community following. I would keep a watch on Matic.

Talking about the price, I wouldn’t buy the token as of now. I feel a correction is due. Even if there is no correction pending, I would wait to see the bottom that it forms and then decide. Another thing I would watch out for is their delivery of the claims of high throughput on a truly decentralized network. Currently, all I can see are promises.

Currently, the trending idea is that this is a low-sat coin on Binance and hence investors are buying it. That logic is as flawed as saying buy Ethereum instead of Bitcoin because it is cheap.