Introduction

Since the launch of the $OP token at the end of May 2022, the token has seen some significant price swings. Firstly there was major selling pressure following the airdrop. However, in June and July 2022 the price stabilized at around $0.50. Then there was a major price impulse to about $2. Since then the price has been trending down.

In this dashboard, we’ll look at the relationship between the price of the $OP token and the total swap volume on Optimism. To estimate the total swap volume, we’ll use the volume of the biggest decentralized exchange on Optimism: Velodrome.

We’ll be examining this relationship using visual similarities, correlation and other metrics related to volume such as the distinct number of swappers and average swap size.

Methodology

• We calculate the daily average price of $OP using the optimism.core.fact_hourly_token_prices table. We then select the $OP token using token_address = ‘0x4200000000000000000000000000000000000042` and calculate the daily average of the hourly price data.
• As Velodrome is by far the largest DEX on Optimism, we’ll use Velodrome to estimate the total daily swap volume on Optimism. This was done using the optimism.velodrome.ez_swaps table. We take the sum of the amount_in_usd column and grouped by day.
• The distinct number of swappers is calculated using the same table. We use count(distinct(origin_from_address)) to calculate the number of unique swappers per day.
• The average swap size is again calculated using the same table. Now we use avg(amount_in_usd) to calculate the average swap size in USD.
• We calculate the correlation between the $OP price and daily volume using the corr() function.

Analysis

When looking at the graph, we can see there are clear visual similarities between the Velodrome volume and $OP price. Only in June, when the price decreased quickly, the volume did not decrease as well. To put a number on this relationship, the correlation metric was used, which was 0.68, which is a significant correlation.

Why is there such a high correlation between price and volume? Since $OP is such a new token, the price is mainly influenced by hype. In July 2022 there was clearly hype for Optimism as the price increased 4x. With hype comes new users that want to buy the token via the largest DEX like Velodrome. This leads to increased volume.

$OP Price vs average swap size

Analysis

When we look at the $OP price against the average swap size on Velodrome, we can see that there was a major spike at in the average swap size on the $OP launch. This is most likely due to large users selling their airdropped tokens.

After the first few days of the airdrop, the average swap size quickly decreased.

In July, when the price increased, we saw only a slight increase in average swap volume. This most likely means that most large players already sold their tokens at launch and that they did not trade the price increase in July, at least not via Velodrome.

$OP Price vs daily unique Velodrome swappers

Analysis

Finally, we’ll look at the $OP price vs the unique daily swappers on Velodrome.

We can see that again there was a spike in the first days after the airdrop launch, which most likely means that a lot of unique users were selling their airdropped tokens via Velodrome then.

However, looking at the graph we can see no clear correlation between price and the number of unique swappers. We can see that the number of unique daily swappers has increased since mid-September, but the price decreased during that time.

Key Findings

• There is a 0.69 correlation between the price of $OP and the swap volume on Velodrome, the largest DEX on Optimism.
• This significant correlation is likely due to the fact that price increase leads to increased attention, which in turn leads to more users using Velodrome and therefore higher volume.
• There seems to be a way smaller (visual) correlation between the $OP price and average swap size and number of unique swappers.