In the first quarter (Q1) of 2024, Layer 2 (L2) scaling solution Optimism witnessed a series of robust network metrics, leading to a surge in its native OP token by 9% on the back of this bullish momentum.
Positive Outlook for Increased Activity and Increasing Transaction Fees
Optimism's fully diluted market cap gained 1% to $15.7 billion, while its circulating market cap increased 11% to $3.7 billion on a quarter-over-quarter (QoQ) basis, according to a recent Messari analysis.
Despite the overall surge in the cryptocurrency market, which saw gains of 69% and 53% QoQ for Ethereum (ETH) and Bitcoin (BTC), respectively, OP's market cap fell from 26th to 39th place among all blockchain networks. OP is still among the top four rollups in the Ethereum ecosystem in terms of market valuation, nevertheless.
There was a notable increase in Optimism network activity that propelled this rise. In Q1 2024, there were 89,000 daily active addresses, up 23% QoQ, while daily transactions increased 39% to 470,000 within the same time frame.
A significant 78% QoQ increase in network revenue to $16 million was also witnessed, mostly due to increased activity and a 48% increase in the average transaction cost to $0.42. But in the second half of March, this average charge decreased dramatically since Ethereum Improvement Proposal (EIP) 4844 was put into effect, lowering the cost of L1 submissions by 99%.
Locked Value Increases 18% in Q1
Optimism's on-chain profit for the first quarter of 2024 rose 14% QoQ to $2 million in spite of the fee drop. Although the network's TVL position among all networks dropped to eleventh place, its Total Value Locked (TVL) increased by 18% to $1.2 billion.
In Optimism's Total Value Locked (TVL), the DeFi sector emerged as the dominant force, representing 86% of active addresses. Non-fungible token (NFT) applications and gaming followed closely behind, accounting for 6.9% and 6.7% respectively, according to Messari.
Leading protocols in TVL included Synthetix, with $307 million (+4% Quarter over Quarter [QoQ]), Aave with $270 million (+52% QoQ), and Velodrome with $171 million (+10% QoQ).
Optimism also witnessed significant growth in stablecoin market capitalization, reaching $809 million (+32% QoQ) by the end of Q1 2024. Circle's USDC stablecoin and Tether's USDT constituted the majority of this growth, with USDT experiencing a 64% QoQ surge to $512 million, representing 63% of the total stablecoin market cap on Optimism.
OP Rebounds With The Recovery of The Crypto Market
The network's native token, OP, did not see a price increase at the end of Q1 2024, despite Optimism's great performance across key criteria. Rather, OP fell in step with the rest of the market, reaching an annual low of $1.80 barely a month after reaching an all-time high of $4.84 in March.
But as the cryptocurrency market as a whole has experienced a rebound of positive momentum in recent days, OP has followed suit. The token, which is presently trading at $2.56, has had a 9% price gain over the last 24 hours and a 3% price increase over the previous week.
Despite the encouraging renewed bullish sentiment, OP still trades 46% below its all-time high and encounters significant resistance levels ahead, potentially before a retest of this milestone.
The first key resistance level stands at $2.65, with another hurdle at $2.90 that must be surpassed for the token to advance towards the $3.00 mark. Conversely, the $2.34 support level has proven to be crucial and should be closely monitored in case of any bearish resurgence.
May 2024, Cryptoniteuae