Optimism- Network healt: As guided by stables, NFTs, and delegation patterns
This dashboard will take a look at various statistics and measures of the Optimism network to determine where the network is heading. The 2 main components measured will be NFTs and stablecoin activities.
What is a Layer 2?
Layer 2 in cryptocurrency is a type of technology that allows transactions to take place on a second layer of the blockchain, outside of the main chain. By operating on a second layer, Layer 2 solutions enable faster, cheaper, and more scalable transactions than can be achieved on the main blockchain. It is also possible to build more complex applications and smart contracts on a Layer 2 solution than on the main blockchain, as the Layer 2 chain can better handle the extra load. Layer 2 solutions are becoming increasingly popular as a way to improve the performance of Ethereum-based apps and other blockchain networks. Layer 2 solutions typically involve a network of nodes that are responsible for processing transactions and validating blocks, with the main blockchain providing a record of the transactions. Layer 2 solutions are becoming increasingly important as the cryptocurrency industry continues to grow and become mainstream.
What is Optimism?
Optimism Chain is a blockchain protocol designed to facilitate the creation and deployment of decentralized applications with improved scalability and low transaction costs. The protocol is based on a layer-2 scaling solution which uses optimistic rollups to reduce on-chain transactions while still providing the same level of security and decentralization as the Ethereum mainnet. Optimism Chain also provides a new type of virtual machine called the Optimism Virtual Machine which is optimized for both transaction throughput and cost efficiency. Additionally, the protocol supports the development of a wide range of dApps and smart contracts, enabling developers to create secure and reliable applications with greater scalability and cost efficiency than traditional Ethereum-based protocols.
What is Ethereum?
Ethereum is a blockchain-based, open-source platform that uses cryptocurrency and provides decentralized computing services. It enables users to create and run applications without the need for a middleman. Ethereum also provides a platform for developers to create their own decentralized applications and smart contracts. These applications are secured by cryptography and can be used to perform tasks such as transferring money, tracking ownership and executing contracts. Ethereum has the potential to revolutionize the way we transact and manage data and could even replace traditional banking systems.
What are stablecoins?
Stablecoins are a type of cryptocurrency designed to minimize volatility, providing users with a more stable store of value. They are typically pegged 1:1 to a fiat currency such as the US Dollar or Euro, or linked to a basket of real-world assets such as gold or commodities. Stablecoins are designed to provide a reliable and easy way to transfer value between parties without facing the price swings associated with other cryptocurrencies. This makes them attractive for businesses, merchants, and individual users who want to transact with a cryptocurrency that is far less volatile than Bitcoin or other altcoins.
What are NFTs?
NFTs (Non-Fungible Tokens) are a type of cryptocurrency token that are unique and non-interchangeable, meaning that each NFT is one-of-a-kind. Unlike other tokens, NFTs cannot be exchanged for other tokens and are used to represent digital assets such as artwork, music, videos and other digital collectibles. Each NFT is stored on the blockchain and represents a digital asset with a unique set of characteristics, providing the user with proof of ownership. NFTs are becoming increasingly popular and are being used to create digital marketplaces where people can buy and sell digital goods.
How does Delegation work on Optimism?
Delegation on Optimism works by allowing users to transfer the voting power of their tokens to another user. This process is known as staking and it allows users to delegate their tokens to any other user on the network. This allows the delegator to earn rewards for the tokens they have delegated, while still maintaining ownership of the tokens. The rewards come from the fees generated from transactions on the network and are split between the delegator and the delegatee. Delegation also allows users to vote on proposals on the Optimism platform, allowing them to participate in the governance of the network even if they don't have enough tokens to vote directly. This process makes the Optimism network more democratic and allows users to have a say in the decisions that affect the network.
Methodology
This dashboard will cover various summary statistics, such as transaciton counts, transaciton amounts, means, medians, and modes of information ranging from NFT sales, to delegation patterns, to user activity while interacting with stablecoins. The code used was designed to give the user information that is both useful, and easily interpretable. Enjoy!
Conclusions
The recent volatility in the Optimism network’s volume this year has been quite remarkable, with the high demand for the network peaking in January, but then slowing down in the following months. This can be seen as a sign that the network is maturing and stabilizing, as the enthusiasm and speculation from the early stages of the network has been replaced by more steady usage. This could be because users are now more comfortable with the network, and are using it for more long-term activities.
Looking ahead to the rest of 2023, this trend of increasing stability is likely to continue, as users become more comfortable with the network and the technology behind it. This could mean that the network will become more reliable and secure, allowing for more complex and powerful decentralized applications to be built on top of it. It could also mean that the network will become more efficient and cost-effective, as users become more familiar with the technology and are able to make more informed decisions about their transactions.
For 2024 and beyond, the network will likely continue to become more stable, with increasing user confidence and more reliable transactions. There could also be more growth in the number of users and transactions, as the network matures and more people become aware of its capabilities. It is also likely that more applications will be built on top of the network, allowing for even more powerful and complex decentralized applications to be created.
The mean transaction amounts on the Optimism network are significantly larger than the median transaction amounts. This could be because the network is still relatively new and there are still a large number of high-value transactions being made. As the network matures and more users become aware of its capabilities, the high-value transactions will likely become more spread out and the mean transaction amounts will begin to resemble the median transaction amounts more closely.
The mean NFT sale prices are significantly larger than the median NFT sale prices. This is likely due to the fact that the NFT market is still relatively new and there are still a small number of large sales taking place. As the market matures and more users become aware of its capabilities, the large sales will become more spread out and the mean sale prices will begin to resemble the median sale prices more closely.
When the average delegation amount is consistently significantly smaller than the median delegation amount, it could be a sign that the network is becoming more efficient and cost-effective. As users become more familiar with the technology and are able to make more informed decisions about their transactions, they are likely to become more efficient with their delegation amounts. This could mean that the network is becoming more secure and reliable, as users are able to delegate their resources more effectively and efficiently.
