While Polygon (MATIC -7.17%) is still down more than 25% for the year, there have been some signs recently that the crypto token is finally turning things around. For example, Polygon is now up 12% since Sept. 28  after plunging by nearly 67% from February to September. 

However, Polygon still has a long way to go before regaining the $1 mark. At its current price of about $0.56, Polygon would need to nearly double in value. The good news is that there are two catalysts that could push Polygon higher.

Growth in Polygon's ecosystem

Most notably, Polygon continues to build out its ecosystem, as measured in the number of users, developers, and partners. For example, in September, Google Cloud (the cloud computing unit of Alphabet) became a validator on the Polygon proof-of–stake network. In layperson's terms, this means that Google Cloud will help to secure the blockchain network and improve overall blockchain governance. The fact that Google Cloud has chosen to become an official validator on the network can be seen as a stamp of approval for Polygon.

At the same time, Polygon remains one of the top blockchains in terms of non-fungible token (NFT) sales volume. According to the latest CryptoSlam NFT data, Polygon still ranks as a top-five blockchain over the most recent 30-day period. Polygon also continues to rack up big client wins when it comes to NFT projects, with Lufthansa and Casio being two of the biggest brands to launch on the Polygon blockchain over the past 30 days.

Moreover, if you take a look at total value locked (TVL), which measures how much of a crypto token is "locked" on the blockchain, Polygon stands out as the No. 5 blockchain, with nearly $800 million in TVL. This metric can be interpreted as a proxy for overall trust in a blockchain, so Polygon is still holding its own despite recent price volatility. 

Transition to Polygon 2.0

While all of this growth in the ecosystem is fantastic, the one factor that could really unlock Polygon's value is the crypto's new strategy known as Polygon 2.0. Granted, skeptics might interpret this as just a slick new marketing concept for a crypto desperately trying to regain its former mojo. But if you dig a bit deeper into the latest improvement proposals for the Polygon blockchain, this strategy could lead to a comprehensive restructuring of Polygon's blockchain architecture. 

There's a lot to unpack here, but the most important change is that Polygon plans to move from primarily being a Layer-2 scaling solution the speeds up and enhances Ethereum (ETH -6.47%), to being a Layer-2 scaling solution for other blockchains as well. Secondly, Polygon plans to address some possible regulatory concerns related to crypto staking by creating an entirely new "staking layer" for the blockchain. And, finally, Polygon plans to double down on its world-class proprietary technology (known as ZK, for "zero-knowledge") as a way of rolling up and validating blockchain transactions. 

The combination of all three of these changes could set Polygon up for its next big wave of growth. I'm particularly intrigued by the potential to tap into the growth happening on other blockchains beyond just Ethereum. Given how crowded the Layer- 2 niche is becoming for Ethereum, this makes sense.

Is Polygon undervalued or not?

Of obvious concern is that even the formal announcement of Polygon 2.0 in mid-September did little to boost the price of the crypto. Sure, a 12% bump over the past few days is nice, but it's hardly proof that investors are starting to line up behind the new Polygon. Even at a higher price of $0.56, Polygon is still trading at more than 80% below its all-time high of $2.92.

Thus, the question to ask as an investor is whether the changes coming for Polygon are incremental in nature or represent something much bigger. If these revisions are merely incremental, then Polygon might linger under the $1 price threshold for some time. But if you believe that Polygon 2.0 represents a dramatic change to the growth outlook for Polygon, then now could be the time to scoop up an undervalued crypto at a bargain bin price.