Arbitrum outperforms Optimism in this key area; can OP stay true to its name?

• Optimism’s TVL and revenue declined, though the gas fees used on the platform increased.
• The velocity and network growth of Optimism plummeted.

According to a tweet on 1 January, it was observed that Arbitrum managed to out-compete other L2s, such as Polygon and Optimism in terms of TVL. However, Optimism still managed to dominate the L2 space in other areas.

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? THE TVL BETWEEN TOP LAYER 2 ON ETHEREUM ?

By overcoming #Polygon and #Optimism, @arbitrum has naturally risen to the top 1 Layer 2 in TVL through 2022.

Do you think @arbitrum will become the new home of DeFi. (?,?)? Let's comment below ?#Arbitrum #DeFi pic.twitter.com/AAtP0g8e2V

— Arbitrum Space (?,?) (@Arbitrum_Space) January 1, 2023

Moreover, according to DeFi Llama, Optimism’s TVL declined from $540 million to $500 million in the last 30 days. This decline in TVL affected Optimism’s revenue as well, which fell by 3.3% in the same period, as per data from Token Terminal.

Gas me up, Scottie

Even though Optimism’s TVL and revenue continued to decline, it was able to outperform other L2s in terms of gas usage, according to Dune Analytics. The Layer 2 solution was even able to outpace Arbitrum in this regard. 

Source: Dune Analytics

One reason for the growing gas usage on Ethereum [ETH] could be attributed to the fact that users were able to save a lot of ETH by using Optimism. 

As evidenced by the chart below, the amount of savings that users were making on their transactions by using Optimism continued to grow. At the time of writing, Optimism provided savings of up to 98.6% to its users.

Source: Dune Analytics

However, these developments did not aid Optimism’s on-chain activity. Over the last 30 days, Optimism’s velocity and network growth declined. This indicated that the number of times OP was being exchanged had reduced significantly.

The falling network growth, on the other hand, suggested that the number of new addresses transferring OP had fallen.

  How many OPs can you get for $1?

Optimism: State of the token 

Optimism would need to garner interest from new addresses to help prop up its price. However, that seemed unlikely, as Optimism’s development activity declined. This indicated that there would be fewer chances of new updates or upgrades that could attract new addresses.

Source: Santiment

At the time of writing, Optimism was being traded at $0.946. Its price had fallen by 8.87% over the last 30 days.

This caused a decline in Optimism’s market cap dominance during the same period. At press time, OP had captured 0.02% of the overall crypto market.

Source: Messari