Question:

Visualize transaction fees on Polygon since July 1, 2022.

Compare these to fees on Ethereum over the same time period - are they correlated? Do they diverge significantly at any points? Provide analysis as to why you think this might be.

Overview:

Polygon, formerly known as Matic Network, is a protocol and framework for building and connecting blockchain networks compatible with Ethereum. This protocol tries to solve some of Ethereum's major limitations, including its throughput, poor user experience, and lack of community governance, using a new on-chain solution. Polygon project gained a lot of popularity after its bridge enabled smooth interoperability with Ethereum. The scaling protocol has been scaling the Ethereum network by turning it into a multi-chain. Polygon also helped lower the Ethereum gas fee, which made it popular in the crypto industry.

In this essay the transactions fees on Polygon have been illustrated in daily and hourly basis to evaluate the performance of Polygon network. Additionally, the transactions fees on Polygon have been compared to the transaction fees on Ethereum blockchain to reveal the interdependency between them.

Its important to notice that, the transactions fees on Polygon network paid in MATIC and the currency for transaction fees on Ethereum is ETH. So, to make a good comparison among them we should transform both fees in USD, accordingly.

The transactions fee on both networks strongly depended on the demand or transactions size. The average fee per transactions has been utilized to find out the exact correlation among networks.

Approach:

• Transaction fee on Polygon

  avg(TX_FEE) as average_fee,

  sum(TX_FEE) as total_fee

  from polygon.core.fact_transaction

• Price o MATIC

  avg(price) as price_matic

  from ethereum.core.fact_hourly_token_prices where SYMBOL='MATIC'

• Transaction fee on Ethereum

  avg(TX_FEE) as average_fee,

  sum(TX_FEE) as total_fee

  ethereum.core.fact_transactions

• Price of ETH

  avg(price) as price_matic

  from ethereum.core.fact_hourly_token_prices where SYMBOL='WETH'

• Time period

  BLOCK_TIMESTAMP>='2022-07-01' -- Daily and hourly estimation since July 1st, 2022

The average and total daily fee on Polygon network display on these bar graphs. Both of the graphs included the fee in MATIC and USD. The transactions fee in MATIC affected by count of transactions (usage of network).

The transactions fee in USD affected by both network usage and price of MATIC toke.

According to the average fee graph, the average fee per transaction was high on July 1st and 4th respectively and its correlated with the demand on network.

The total daily transactions fees on Polygon demonstrate the highest count of transactions occurred on July 1st and 4th. Also, the USD value of transactions fees on Polygon on July 1st was 32.68k USD and its the highest value.

Key findings:

To understand the interdependency between transactions fees on Polygon and Ethereum, three graphs have been utilized. The summary of key findings has been listed below:

1. The definition of correlation is based on the following the same pattern by hourly transaction fee. For example, the enhancement in transactions fees on Polygon

   should coincide with the increase of transactions feed on Ethereum to said they are correlated together.

2. By the use of line-graphs, we could look at the gradient of charts on hourly basis and if gradient of both charts follows same trend then they are correlated on that hour.

3. The first diverge point is 15:00 ,July 1st and shown that the average transactions fee on Ethereum increased but on Polygon it reduced.

4. The second point is 00:00 July 4th and that hour followed the same trend as previous diverge point and transactions fee on Ethereum increased but the average fee on Polygon decreased.

5. One of the powerful tools to analyze the interdependency is the Scatter plot. The strong correlation on that plot shown by the distribution in a straight line.

6. As demonstrated in Scatter plot, the biggest diverge occurred on 18:00 July 7th when the average fee of transactions on Ethereum reached 10.97 USD and the average fee per transaction for Polygon dropped to 0.009 USD.

The transactions fee of networks depends on the amount of network usage and congestion caused by transactions. Therefore, the difference between the transactions fees on Polygon and Ethereum networks happened when the application of the two networks did not follow the same pattern.