Will Optimism’s [OP] upgrades be enough to sustain the L2 race? Analyzing…

• Optimism’s TVL lagged behind Arbitrum despite upgrades to protocol.
• Synthetix adoption drove transaction growth on Optimism, but daily active address suggested a decline in overall activity.

Despite Optimism [OP] having the first mover advantage in the Layer 2 solutions space, newer solutions such as Arbitrum have outperformed the former in terms of Total Value Locked (TVL).

Source: Messari

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

With a TVL of $1.2 billion and a market share of 63%, Arbitrum led the L2 space at press time. However, Optimism had a TVL of $630 million and a market share of 33% in the same period. Despite this, Optimism Labs was making major upgrades to the network in order to stay competitive in the L2 race.

(Bed)Rock and Roll

One of the most significant upgrades that Optimism Labs has made is the launch of Bedrock. This upgrade aimed to make Optimism the cheapest optimistic rollup on Ethereum. With the Ethereum Improvement Proposal (EIP) 4844, transaction fees on L2s were expected to decrease even further.

Additionally, Bedrock reduces deposit times on Optimism from 10 minutes to 2.5 minutes, improving the onboarding experience for new users. This could potentially attract more users to the Optimism network and help increase its TVL.

Despite the lower TVL, Optimism still has a growing number of transactions on its network. One reason for this could be the presence of Synthetix on the Optimism network.

Synthetix was one of the earliest projects to commit to building on Optimism, and its popularity has grown significantly in recent months. The total trades on Synthetix have increased six times over the past three months, with seven-day average trades going from 1k to 7.4k.

Source: Delphi Digital

NFT and Token holders show Optimism

Besides its growing number of transactions, Optimism was also showing improvements in the NFT space. The daily active users and mints on the network were growing, indicating an increasing interest in NFTs on the Optimism network. Furthermore, Optimism’s market cap dominance rose as well, but volatility declined significantly.

Source: Santiment

Is your portfolio green? Check out the Optimism Profit Calculator

However, despite these improvements, there are some signs that activity on the Optimism network may be declining. The daily active addresses and velocity on the network suggested a decline in activity. The overall market sentiment towards Optimism also seemed to be mixed, with some traders remaining bullish on the protocol while others remained skeptical.

Source: Santiment

At press time, the price of OP was $1.70, and it had increased by 0.93% in the last 24 hours. Despite the new upgrades and improvements, it remains to be seen if Optimism could be able to catch up to its competitors in the L2 race.