Declining active users and transactions on Optimism may affect its future success. High costs and lack of interest in the native token can contribute to the decline in active users.

Based on data from Token Terminal, Optimism’s [OP] market cap continued to grow despite a drop in daily active users. This discrepancy may be a concern for the layer 2 solution, as the decline in active users may negatively impact its usage and adoption.

Source: Token Terminal

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Optimism no longer ‘affordable’

Along with the decline in active users, the number of transactions on the Tier 2 solution dropped from 230,000 to 186,000 over the past week, according to Dune Analytics. This can be attributed to the higher transaction costs on Optimism, compared to other layer 2 solutions such as Arbitrum.

However, the high cost may be a reason why active addresses are no longer Optimism. This can lead to a decrease in trading volume and overall usage of the protocol.

Source: Dune analysis

This also affected Optimism’s sales, which fell during this period. Based on information from Token Terminal, the total revenue generated by Optimism is down 70.3% over the past week.

However, despite these factors, Total Value Locked (TVL) continued to grow. According to DefiLlama, Optimism’s TVL grew from 588.6 million to 641.98 million last week.

Source: Defi Lama

Time for pessimism?

However, while Optimism’s TVL increased, interest in OP continued to decline. In addition, the trading volume decreased from 563 million to 263 million.

Read Optimism [OP] Price forecast 2023-2024

The speed of the OP token also decreased, meaning that the frequency with which OP was transferred between addresses decreased. This could suggest that the token holders were not actively trading OP.

Source: Sentiment

The declining activity on the Optimism protocol coupled with declining interest in the token could negatively impact the protocol and OP holders in the long run. At the time of writing, the price of OP was $2.02. It is down 10.60% in the past 24 hours, according to CoinMarketCap.

This post Does Optimism’s Rising Market Cap Mask These Troubling Signs?

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