It has been a strange year for Polygon (MATIC 3.12%). Despite routinely earning kudos as the premier scaling solution for Ethereum (ETH 0.36%) and generating buzz about its role after The Merge, Polygon just can't seem to get its price to move. Polygon is now trading for less than $1 and is down 65% in 2022. It seems that nothing Polygon has done for the past five months has caused its price to break the $1 mark.

But that could be changing quickly. In late summer, we started to hear more about Polygon's move into NFTs and Web3. Then, in September and October, we heard about Polygon's move into blockchain-backed customer loyalty programs, including a new program for Starbucks (SBUX 0.27%). This new move into blockchain-backed customer loyalty programs, powered by a technology known as "Supernets," could be the type of exciting game-changing strategy that finally moves the dial on the price of Polygon.

New blockchain-based customer loyalty programs

In mid-September, Polygon announced a new partnership with Starbucks featuring non-fungible tokens (NFTs) and Web3 experiences. Starbucks is overhauling its traditional customer loyalty program with the help of Polygon and rebranding it as Starbucks Odyssey. The goal, quite simply, is to turn coffee drinkers into NFT collectors. Customers enrolled in the new Starbucks rewards program will be able to earn, purchase and trade NFTs. With these NFTs, customers will then be able to unlock benefits and "immersive coffee experiences." All of this will be hosted on the Polygon blockchain.

Investor with laptop, phone, and coffee.

Image source: Getty Images.

While the new Starbucks Odyssey customer loyalty program has yet to launch (you can still sign up for the waitlist online), Polygon has been extending this concept to other companies. The latest partnership is with Nu Holdings (NU -2.88%), the Brazilian neobank backed by billionaire Warren Buffett. The new loyalty rewards program will feature a new crypto token called Nucoin that will reside on the Polygon blockchain. This program, scheduled to roll out in the first half of 2023, will be available to over 70 million Nubank users. While details of this program are still being explored, Nubank notes that a primary benefit will be discounts for users. Presumably, the more Nucoins you earn, the greater these discounts will be.

Supernets are a super idea

The big idea here is that Polygon is transitioning from stand-alone NFTs to NFT-based customer loyalty programs with the help of a new technology called Supernets. Polygon defines Supernets as an enterprise-level solution that removes the complexity of blockchain development for third parties. In layperson's terms, it means that any brand or company can easily create a blockchain that fits into the Polygon blockchain ecosystem. The Starbucks loyalty program, for example, is a "sidechain" that connects to the main Polygon blockchain. 

The size of this market opportunity could be massive because every customer-facing company has some sort of loyalty program. Customer retention is big business, especially during an economic downturn. It's easier and more profitable to hold onto your existing customers than to find new customers. Polygon now has a very strong value proposition for any CEO: Put your customer loyalty program on our blockchain, and you can boost your customer retention rate and acquire more customers. Even if you're skeptical of "coffee NFTs," you have to admit that getting a free digital asset every time you order a coffee from Starbucks is more compelling than getting a new stamp on a paper loyalty card.

Polygon is brand-friendly

While plenty of other blockchains likely have the technology to create similar types of programs in the future, Polygon particularly stands out for its relationships with some of the top brands in the world. Walt Disney (DIS -0.87%), for example, chose Polygon for its tech accelerator program earlier this year. Polygon has also launched NFT projects for the likes of Meta Platforms (META -2.42%) and Coca-Cola (KO -0.20%). Imagine what will happen if Polygon convinces similar types of companies to put their loyalty programs on its blockchain.

Is Polygon a buy?

Based on the above, Polygon is a strong buy, especially at its bargain-basement price of just $0.90. Some traders are already speculating that Polygon could double in price over the next 12 months based on a number of technical factors. When you factor in the creation of real-world customer loyalty programs for top brands around the world, that price prediction suddenly seems a lot more realistic.

Customer loyalty is a big market opportunity, and Polygon has apparently figured out how to put it on a blockchain. When you add that to Polygon's prowess as the top Layer 2 scaling solution for Ethereum, you have a powerful combination of technology and market opportunity. While there is always risk in investing in any crypto, it seems like Polygon has a solid floor and a very clear strategy for how blockchain can power the future of business.