EVM - 6. Continued Growth?

    As noted in a recent piece in Cointelegraph, “Ethereum layer-2 networks, such as Polygon, Arbitrum, and Optimism, have gone through an explosive growth phase over the past couple of months, a trend that is set to continue in 2023.” Specifically, there’s been a notable increase in the amount of daily active users, volume traded, and more. Will this growth continue into the new year? Or will L2 growth stagnate as 2023 continues to progress?

    Introduction

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    What is Polygon? (MATIC)

    Polygon, formerly known as the Matic Network, is a scaling solution that aims to provide multiple tools to improve the speed and reduce the cost and complexities of transactions on blockchain networks. \n At the center of Polygon’s vision is Ethereum, a platform that is home to a range of decentralized applications, ones where you can join virtual worlds, play games, buy art, and participate in a range of financial services. However, this much activity on its blockchain has rendered Ethereum almost unusable, as the cost of transmission is rising and traffic is becoming clogged.

    Enter Polygon. In a nutshell, Polygon bills itself as a layer-2 network, meaning it acts as an add-on layer to Ethereum that does not seek to change the original blockchain layer. Like its geometric namesake, Polygon has many sides, shapes, and uses and promises a simpler framework for building interconnected networks.

    Polygon wants to help Ethereum expand in size, security, efficiency, and usefulness and seeks to spur developers to bring enticing products to market all the quicker. 

    After the rebranding, Polygon retained its MATIC cryptocurrency, the digital coin underpinning the network. MATIC is used as the unit of payment and settlement between participants who interact within the network. 

    What is Optimism?

    Optimism is a layer 2 chain, meaning it functions on top of Ethereum mainnet (layer 1). Transactions take place on Optimism, but the data about transactions get posted to mainnet where they are validated. It’s like driving in a less crowded side street while benefiting from the security of a highway.

    Optimism is the second-largest Ethereum layer 2 with a total of $313 million locked into its smart contracts, as of this writing, according to Defi Llama. Arbitrum comes first with $1.32 billion.

    Synthetix, a derivatives liquidity protocol, is the largest protocol on Optimism, with a total value locked (TVL) of $125 million. Uniswap, a decentralized exchange (DEX), is the second most popular protocol on the chain. As of this writing, there are 35 protocols on Optimism with at least $1,000 locked into their smart contracts.

    What Is Arbitrum?

    Arbitrum is a layer 2 solution designed to improve the capabilities of Ethereum smart contracts — boosting their speed and scalability, while adding in additional privacy features to boot.

    The platform is designed to allow developers to easily run unmodified Ethereum Virtual Machine (EVM) contracts and Ethereum transactions on a second layer, while still benefiting from Ethereum's excellent layer 1 security.

    It’s built to address some of the shortcomings of current Ethereum-based smart contracts — such as poor efficiency and high execution costs — which have damaged the Ethereum user experience and frequently make transacting an expensive task.

    Arbitrum uses a technique known as transaction rollups to record batches of submitted transactions on the Ethereum main chain, and execute them on a cheap, scalable layer 2 sidechain while leveraging Ethereum to ensure correct results. This process helps to offload most of the computational and storage burden Ethereum currently suffers from, while enabling new classes of powerful layer 2-based DApps.

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    Observation I

    The number of daily transactions is between 2 and 3 million and sometimes exceeds 3 million.

    It can be seen that with the beginning of 2023, the number of transactions has an upward trend in the first week and then continues with an almost constant trend.

    The number of daily active users also has an upward trend at the beginning of the new year, and on January 6, it reaches its highest value in the last 3 months, i.e. ~635k.

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    Observation III

    The number of daily transactions has had a mild and increasing trend until the beginning of 2023.

    With the beginning of 2023, the number of transactions suddenly decreases and reaches 583k on December 28, 2022 to 368k on January 1, 2023.

    After the beginning of 2023, there is an upward trend and it will reach 760.31k on January 12, 2023.

    On January 18th, the number of transactions suddenly drops sharply and reaches 223k, and this constant trend continues until February 2nd.

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    Observation II

    The value of the polygon network volume is given in the daily chart. It can be seen that during the last 3 months, the highest amount of volume occurs in the second week of November 2022.

    November 11, 2022 has the highest amount of volume with almost 142 million Matic.

    After that, it goes through a downward trend and in the last week of 2022, this value will be very low.

    With the beginning of 2023, the daily volume starts to increase and reaches 59 million matic on January 14.

    The average daily volume on November 12, 2022 is equal to 49 matim, and this trend will be downward until 2023 and will start to grow in 2023 and will reach 20 matim on January 14.

    The daily transaction fee shows that it is more than 0.05 matic only on the 8th, 9th and 10th of November.

    Observation IV

    The daily volume on November 30, 2022, in the last three months, has the highest volume and is equal to 100K Ethereum, and then on December 2, 2022, it has the volume of 91K Ethereum. The daily volume cumulative chart shows that from November 25 to December 4, the growth slope of the daily volume cumulative chart has the highest value. After December 4th, it decreases and the daily volume is usually less than 20k Ethereum. The average daily volume per transaction has been on an upward trend since January 17, 2023, and reached 0.13 Ethereum on January 24.

    The average transaction fee on November 8, 2022 is 322 micro Ethereum, which is the highest amount in the last three months. The fee has an increasing trend since January 1 and reaches approximately 183 micro Ethereum on January 18 and February 1.

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    Observation V

    The number of daily transactions on November 8, 2022 is equal to 831k, which is the highest amount in the last 3 months.

    The trend of the number of daily transactions from November 2022 to the beginning of 2023 is a downward trend.

    With the beginning of 2023, the number of daily transactions will take an upward trend and will reach more than 600k transactions per day at the end of January.

    The cumulative graph of the number of transactions shows that the slope of the graph is decreasing until 2023 and then the slope is increasing.

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    Observation VI

    The amount of Ethereum daily volume is the highest on November 30, 2022, and its trend is downward until the beginning of 2023. After the beginning of 2023, the trend seems to be almost upward and it is prone to growth in the new year.

    According to the cumulative chart from January 1, the slope of volume growth is higher than a few weeks before the start of 2023. The chart shows the highest volume per transaction on November 30, 2022, which is 0.25 Ethereum.

    The lowest amount of volume per transaction occurs on December 24, 2022, which is equal to 0.02.

    The average daily fee fluctuates between 24 and 70 micro Ethereum.

    About

    > THE END. Thanks for reading. > > I shared this dashboard on my Twitter, Just Click! then you can share your insight with me :)

    > Discord ID: Elprognerd#8324

    Methodology

    In this dashboard, we will review the Ethereum layer-2 network, of which Polygon Arbitrum and Optimis are examples. We will check the number of users, the number of transactions and the volume of transactions in different charts in a period of 3 months.

    We will try to predict the growth of the network in 2023 by analyzing the data.

    Our goal is not to compare these three blockchains. So we separate the charts of all three for better analysis.

    We will use the following three tables for this analysis:

    1. polygon.core.fact_transactions
    2. optimism.core.fact_transactions
    3. arbitrum.core.fact_transactions

    Polygon (MATIC)

    Optimism

    After January 6, the trend is downward until the 15th of the month, and after that it continues with a slow upward trend.

    The number of new users, users who transacted with the network for the first time, can be seen in the daily chart.

    As can be seen, at the beginning of 2023, the slope of the cumulative graph becomes relatively lower and this indicates that the growth rate of new users has decreased.

    A few days before and after the new year, the number of new users reaches more than 120k per day, which has a downward trend as the days pass.

    The cumulative graph of the number of daily active users shows that we see an increase at the beginning of the year.

    The number of transactions per user is displayed on average over the last 3 months.

    The upward trend starts from January 6 and reaches 10 transactions for each user on January 14.

    On January 18th, the number of transactions suddenly drops sharply and reaches 223k, and this constant trend continues until February 2nd.

    The cumulative graph of the number of transactions shows that since January 17, the growth rate of the number of transactions has decreased greatly.

    The number of users reached 111k on December 21, which is the highest number in the last three months.

    With the beginning of 2023, the number of active users will increase and will reach 75k on January 13.

    As we saw, the number of transactions decreased on January 18, the number of users also decreases and fluctuates between 30k and 20k.

    The cumulative graph also shows that the number of users has grown significantly since December 20 until the beginning of 2023.

    From November to mid-December 2022, the number of new users has almost a repeating trend. From the middle of December to the end of 2022, the number of users will increase and on December 31, it will reach its highest value in the last three months, which is equal to 37k. The slope of the cumulative graph from December 20 to 31 is very high and this indicates a significant growth of new users. In 2023, from January 11, the downward trend in the number of new users will begin and the slope of the cumulative graph will decrease.


    The number of users fluctuates between 50k and 80k until the beginning of 2023.

    The overall trend is downward until the beginning of 2023.

    With the beginning of the new year, the trend will rise and it will reach 60k on January 30.

    The number of transactions per user is the highest on January 25 and is equal to 13 transactions.

    From November to mid-December 2022, the number of new users is almost zero. From mid-December to the end of 2022, the number of users will decrease and on January 1, 2023, it will reach its lowest value in the last three months, which is equal to 5073. After the beginning of the year, the number of new users increases until January 11 and then decreases.

    Arbitrum

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