- Optimism token interest spikes, but multiple factors threaten growth.
- Bedrock upgrade proposal may revive declining interest in Optimism protocol.
Optimism‘s token, OP, witnessed a surge in its trading volume over the last few days. This spike in interest suggested that the Optimism protocol was gaining popularity. It was further highlighted by the dominance of OP in Uniswap trading pairs.
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According to data from Messari, three of the top five trading pairs on Uniswap V3 include OP as one of the trading pairs, which is a significant development.
However, this dominance of OP may not last for long, as several factors could negatively impact the future of the Optimism protocol and its token.
How can increases in trading volume affect supply-side APR/APY?
Three out of the top five trading pairs by 30-day Trading Volume on @OptimismFND‘s @Uniswap V3 instance have $OP token in their pair.🧵 pic.twitter.com/TMrDZUSjxf
— Messari (@MessariCrypto) February 4, 2023
More than meets the eye
One of these factors is the decline in L2 gas usage. This decline in gas usage could lead to lower activity on the Optimism network, which would negatively impact the protocol.
Source: Dune Analytics
Another factor that could impact the protocol is the end of the Optimism Quest NFT collection. The collection, which was a four-month incentive program, managed to attract a lot of users to the Optimism protocol, but after it ended, the protocol had a difficult time attracting new users.
This resulted in a decline in the number of unique active users exchanging Optimism NFTs, which is a cause for concern.
Source: Dune Analytics
The decline in the number of users and activity on the Optimism network led to a decline in the revenue generated by the protocol.
According to the token terminal’s data, the revenue generated by Optimism fell by 48.6% in the last 24 hours. This decline in revenue is a sign that the growth of the protocol could slow down.
Impact on the token
It should be noted here that the network growth of the OP token took a hit after 2 February. OP holders planning to go long should take this as a major sign of concern.
Moreover, the number of daily active addresses also decreased. This decline in the activity of the token could suggest a bearish future for OP ahead.
Source: Santiment
However, there is still hope for the Optimism protocol. The recently proposed Bedrock upgrade could improve the protocol and attract new users. Thus, helping to change public opinion in favor of the protocol.
If the Bedrock upgrade is successful, it could help the Optimism protocol to bounce back from its bearish condition.