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Optimism (OP) is Starting to Rumble with 300% More Daily Transactions. What is Going on?

Published June 28, 2023 4:34 PM
Teuta Franjkovic
Published June 28, 2023 4:34 PM
Key Takeaways
  • Number of transactions jumped mostly regarding huge sell-off due to incoming token unlock
  • However, the number of transactions has been rising by 67% following the June 6 “Bedrock” upgrade
  • Co-labs with Worldcoin and Coinbase have also instilled investors’ confidence

Optimism has emerged as a game-changer in the Ethereum ecosystem in the constantly changing realm of blockchain technology and cryptocurrencies, and now its number of transactions seems to be skyrocketing. Optimism has swiftly acquired popularity among consumers and developers due to its speedier transaction speeds and lower prices.

According to the on-chain monitoring company IntoTheBlock, Optimism transactions have increased significantly over the past month.

300% Transaction Increase

As per the tweet, daily volumes on the Optimism network have increased from lows of just under 10,700 to just under 40,000. This is an increase of around 300%.

The Optimism network has seen a rise in transactions, according to Nansen, a blockchain analytics company. On June 26, it was stated that the number of transactions on the Optimism network jumped by 67% following the June 6 “Bedrock” upgrade. Before the update, there were fewer than 300,000 transactions per day on the network; by the middle of June, this number had increased to around 550,000. It has increased by almost 67%. Notably, the cost of gas has dropped by around 50% to about $50,000.

The June 6th “Bedrock” upgrade had a key role in spurring the recent increase in transaction activity on the Optimism network. It concentrates on shortening deposit times, lowering Layer 1 expenses, and adding more security measures. These upgrades are a part of Optimism’s larger strategy to use its OP Stack software to build a “Superchain” of scalable Web3 networks.

The significant increase in transactions on Optimism after the “Bedrock” upgrade is encouraging for the Layer 2 blockchain’s future.

It shows rising trust in Optimism’s capacity to solve Ethereum’s scalability problems and draw more programmers and users to the network. Optimism is promoting itself as an appealing choice for people seeking scalability and affordability in the DeFi sector thanks to decreased gas prices and increased transaction speeds.

Because early-stage investors are sitting on big gains, and because of the recent $OP unlock history, there is a good probability that this Optimism unlock is putting strong sell pressure on the native OP currency. At the time of writing, the price stood at $1.25, down by 5.56%.

A Sell-Off Because Incoming Token Unlock?

The recent surge in transactions has not yet had a favorable effect on the OP price. The native token of the Optimism blockchain, OP, had decreased by about 7% to $1.25 as of the time of writing. OP has experienced lower highs and lower lows since reaching highs of $3.28 in February, indicating a decline in value.

Its falls were further assisted by the bearish death cross formation that had developed on the OP daily chart. The OP price dropped in late May and has remained below its daily moving averages ever since.

The dynamics of the cryptocurrency market and the supply of particular cryptocurrencies could be significantly impacted by token unlocks. Some early investors, pre-seed round participants, team members, and developers are unable to resell their shares on the open market after a project’s tokens are issued. They are locked for a specific period of time.

Holders can, however, sell their tokens on the open market once they have been unlocked. Due to heightened selling pressure, the price of these tokens may occasionally decline.

A certain number of assets that had been restricted or outlawed from circulation in the cryptocurrency market are released through token unlocks. Token unlocking typically has a significant impact on price volatility, trading volume, market liquidity, and overall market dynamics.

To protect the stability of the cryptocurrency price and prevent potential large sell-offs, tokens are typically locked.

The oversupply of cryptocurrencies might cause the price to decline when it overwhelms the market. The impact on the price, however, might occasionally be fairly positive if the project is solid and has great community support because additional investors will be attracted.

In the case of OP, it is obvious that token unlock  is spreading unease among investors.

Investors and core contributors will be given access to the cliff optimism unlock on June 30. A total of 24.16 million OP tokens, or 0.56% of the supply, will be made available. The core distributors will receive about 0.30% of the tokens, while investors will receive 0.27%. These tokens are worth more than $862 million at the current exchange rate. Over the previous week, the price of OP plunged  by 9.16%.

Worldcoin, Coinbase Collaborations With Optimism Instill Confidence

Sam Altman’s cryptocurrency startup Worldcoin, which debuted its World App in May of this year, announced in May that it was switching from Polygon to the Optimism ecosystem.

According to Worldcoin , its involvement with the optimism ecosystem dates back to December 2020, when it first began working on Hubble, an optimistic rollup that was initially initiated by the Ethereum Foundation’s Privacy and Scaling Explorations team. Hubble was initially used to launch the World App beta.

The network then switched to Polygon’s proof-of-stake system because “Optimism and Arbitrum were too expensive given the project’s scale.”

Through its Layer 2 network named Base, Coinbase also has been contributing to Optimism’s Superchain idea. The Superchain has said to combine the Optimism Mainnet and other chains into a single network of OP Chains (i.e., chains inside the Superchain) and represent a significant step toward delivering scalable and decentralized computing to the world.