Layer 2 (L2) scaling solution Optimism reported a number of strong network metrics in the first quarter (Q1) of 2024, with its native OP token rising 9% on the back of this bullish momentum.
Optimism sees increased activity and rising transaction fees
According to a recent Messari reportOptimism's circulating market capitalization increased 11% quarter-on-quarter (QoQ) to $3.7 billion, while its fully diluted market capitalization increased 1% to $15.7 billion.
Despite the widest crypto market rally, with bitcoin (btc) and ethereum (eth) gaining 69% and 53% QoQ, respectively, OP's market cap ranking fell from 26th to 39th among all blockchain networks. However, within the ethereum ecosystem, OP remains one of the top four accumulators by market cap.
Driving this growth was a significant increase in activity on the Optimism network. Daily active addresses reached 89,000 in the first quarter of 2024, a 23% quarter-on-quarter increase, while daily transactions increased 39% to 470,000 during the same period. These metrics came close to, but did not quite meet, their goals. all-time highs in the third quarter of 2023.
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Network revenue also saw a substantial 78% quarter-on-quarter increase to $16 million, driven by increased activity and a 48% increase in the average transaction fee to $0.42. However, this average rate dropped significantly in the second half of March due to the implementation of ethereum Improvement Proposal (EIP) 4844, which reduced L1 shipping costs by 99%.
Total value locked increases 18% in the first quarter
Despite the rate reduction, Optimism's on-chain profits for the first quarter of 2024 increased 14% quarter-over-quarter to $2 million. The network's total value locked (TVL) also grew 18% to $1.2 billion, although its TVL ranking among all networks fell to 11th place.
Within the Optimism TVL, the DeFi Sector dominated, representing 86% of active addresses. According to Messari, non-fungible token (nft) apps and gaming followed with 6.9% and 6.7%, respectively.
Leading TVL protocols included Synthetix ($307 million, +4% QoQ), Aave ($270 million, +52% QoQ), and Velodrome ($171 million, +10% QoQ).
The market capitalization of Optimism's stablecoin also grew significantly, reaching $809 million (+32% QoQ) at the end of Q1 2024. Circle's USDC stablecoin and Tether's USDT accounted for the majority of this, and USDT saw a 64% quarter-on-quarter increase to $512 million, or 63% of the total stablecoin market capitalization about optimism.
OP Recovers Along with crypto Market Resurgence
Despite Optimism's strong performance across key metrics in Q1 2024, the network's native token, OP, did not see a corresponding price increase at the end of Q1. Instead, OP followed the broader approach bearish market trendhitting a yearly low of $1.80 just a month after hitting an all-time high of $4.84 in March.
However, OP has followed suit as the overall cryptocurrency market has seen a resurgence of bullish momentum in recent days. In the last 24 hours, the token recorded a 9% price increase and a 3% increase in the last week, currently trading at $2.56.
Additionally, CoinGecko data shows a 19% increase in OP trading volume in the last 48 hours, reaching $290 million.
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While this renewed bullish sentiment Encouragingly, OP is still trading 46% below its all-time high and facing significant resistance levels shortly before a potential retest of this milestone.
The first key resistance is at $2.65, followed by $2.90, which needs to be broken before the token can advance towards the $3.00 level. On the contrary, the $2.34 support level has proven to be crucial and should be closely monitored in case of any bearish resurgence.
Featured image from Shutterstock, chart from TradingView.com
