Layer 2 (L2) Scaling Solution Optimism saw a number of mighty network metrics in Q1 (Q1) 2024, with its native OP token up 9% on this bullish momentum.
Optimism predicts more activity and rising transaction fees
According to a recent Messari reportOptimism’s market capitalization increased 11% quarter-over-quarter (QoQ) to $3.7 billion, while Optimism’s fully diluted market capitalization increased 1% to $15.7 billion.
Despite the broader one cryptocurrency market rally, while Bitcoin (BTC) and Ethereum (ETH) gained 69% and 53% quarter-over-quarter, respectively, OP’s market cap ranking dropped from 26th to 39th among all blockchain networks. However, in the Ethereum ecosystem, OP remains one of the four largest collective holdings in terms of market capitalization.
The driving force behind this growth was a significant raise in the activity of the Optimism network. The number of daily dynamic addresses reached 89,000 in the first quarter of 2024, up 23% quarter-over-quarter, while the number of daily transactions increased by 39% over the same period to 470,000. These indicators approached, but not they achieved it to the end all-time highs in the third quarter of 2023
Network revenue also saw a significant raise of 78% quarter-over-quarter to $16 million, driven by increased activity and a 48% raise in average transaction fee to $0.42. However, this average fee dropped significantly in the second half of March due to the implementation of Ethereum Improvement Proposal (EIP) 4844, which reduced L1 folding costs by 99%.
Total value locked increased 18% in the first quarter
Despite the fee reduction, Optimism’s online profit for the first quarter of 2024 increased by 14% quarter on quarter to USD 2 million. The network’s Total Value Locked (TVL) also rose 18% to $1.2 billion, although its TVL ranking among all networks dropped to 11th place.
In Optimism’s TVL, DeFi sector dominated, accounting for 86% of dynamic addresses. According to Messari, apps and games using non-fungible tokens (NFTs) were followed by 6.9% and 6.7%, respectively.
Leading TVL protocols include Synthetix ($307M, +4% QoQ), Aave ($270M, +52% QoQ) and Velodrome ($171M, +10% QoQ) .).
Optimism’s stablecoin market capitalization also increased significantly, reaching $809 million (+32% q-o-q) at the end of Q1 2024. Most of this amount was accounted for by Circle’s USDC and USDT Tether stablecoins, with USDT seeing growth by 64% q/q to USD 512 million, or 63% of the total stablecoin market capitalization on Optimism.
OP is bouncing back as the cryptocurrency market recovers
Despite Optimism’s mighty performance on key metrics in Q1 2024, the network’s native token, OP, did not see corresponding price growth at the end of Q1. Instead, OP went with the broader one downward trend in the markethitting a yearly low of $1.80 just a month after hitting an all-time high of $4.84 in March.
However, OP followed suit as the entire cryptocurrency market has seen a resurgence of bullish momentum over the past few days. The token has seen a 9% price raise in the last 24 hours and a 3% raise in the last week, currently trading at $2.56.
What’s more, CoinGecko data shows a 19% raise in OP trading volume over the last 48 hours, reaching $290 million.
When is it renewed bullish sentiment is encouraging, OP is still trading 46% below its all-time high and is facing a significant level of resistance shortly before a potential retest of this milestone.
The first key resistance is at $2.65, then $2.90 and must be overcome before the token can move towards the $3.00 level. On the other hand, the support level at $2.34 has proven to be crucial and should be closely monitored in case of another bearish rebound.
Featured image from Shutterstock, chart from TradingView.com
