Optimism signals spikes in interest, but multiple factors threaten growth. Bedrock upgrade proposal could revive declining interest in Optimism protocol.
Optimism’s token, OP, witnessed a surge in trading volume over the past few days. This spike in interest suggested that the Optimism protocol was gaining popularity. It was further highlighted by OP’s dominance 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 major development.
However, this dominance of OP will not last long as several factors could negatively affect the future of the Optimism protocol and its token.
How can an increase in trading volume affect the APR/APY on the supply side?
Three of the top five trading pairs by 30-day trading volume up @OptimismFND‘s @Uniswap Have V3 instance $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 decrease in L2 gas consumption. This drop in gas consumption could lead to lower activity on the Optimism network, negatively impacting the protocol.
Source: Dune analysis
Another factor that may affect the protocol is the end of the Optimism Quest NFT collection. The collection, a four-month incentive program, was successful in attracting many users to the Optimism protocol, but after it ended, the protocol struggled to attract new users.
This resulted in a decrease in the number of unique active users exchanging Optimism NFTs, which is a cause for concern.
Source: Dune analysis
The drop in users and activity on the Optimism network led to a drop in revenue generated by the protocol.
According to data from the token terminal, revenue generated by Optimism fell by 48.6% in the past 24 hours. This drop in revenue is a sign that the protocol’s growth could slow.
Impact on the token
It should be noted here that the network growth of the OP token took a hit after February 2. Holders of OPs planning to go long should consider this a major sign of concern.
In addition, the number of daily active addresses also decreased. This decrease in the token’s activity could indicate a bearish future for OP.
Source: Sentiment
However, there is still hope for the Optimism protocol. The recently proposed Bedrock upgrade could improve the protocol and attract new users. In this way we help to change public opinion in favor of the protocol.
If the Bedrock upgrade is successful, it could help the Optimism protocol bounce back from its bearish state.
This post What awaits the long-term holders of the Optimism token?
was published first on https://ambcrypto.com/whats-in-store-for-the-optimism-tokens-long-term-holders/
