Optimism’s [OP] future might not be all rainbows and unicorns; here’s why

• Optimism network growth declined in the past month, new users show less interest
• OP token prices were doing relatively well, but future growth is uncertain.

Layer 2 solutions have seen a lot of growth in their respective areas, but the competition within this sector has increased tremendously. With Arbitrum [ARB] set to launch its native token, there is a possibility that all the attention will be diverted from other L2 solutions, such as Optimism [OP].

Read Optimism’s [OP] Price Prediction 2023-2024

Optimism continues to strive

Despite the hype surrounding the launch of the ARB token, the number of unique addresses on the Optimism network has continued to rise.

✨?#Optimism unique users are exploding in parabolic way ?@optimismFND going super-chain is around the corner and nobody knows how high this can reach ? ?#Layer2 #L2 $OP $ETH pic.twitter.com/PrFCBMEeaD

— Optimism Hub (✨?_?✨) (@OptimismHub) March 20, 2023

This suggests that Optimism is still able to attract new users to the protocol, despite incentives like the Optimism Quests NFTs no longer being available to new users. It could be due to the users recognizing the advantages of the Optimism network over its competitors, such as its low fees and faster transactions.

However, gas usage on the network has fallen, indicating that despite the high number of users, the overall activity on the network has decreased.

Source: Dune Analytics

This has resulted in a decline in the overall fees collected on the protocol. The revenue generated by the protocol decreased by 32.7% in the last 24 hours, according to Token Terminal.

This drop in revenue could be a concern for the platform, especially as competition continues to rise.

Source: token terminal

State of the OP token

Even with the decline in activity and revenue generated, the OP token’s prices were doing relatively well. After the OP token dropped, its price fell by 80% in the next 18 days, but since then has recovered. It has surged by 154% in the last 3 months and was trading at $2.53 as of this writing.

Realistic or not, here’s OP’s market cap in BTC’s terms:

However, things may go south for OP holders in the future. Its network growth declined over the past month, indicating that new users were disinterested in the OP token.

OP’s velocity fell during this period as well, implying that the frequency with which OP was being traded has decreased.

Source: Santiment