OP Mainnet Archives

11th November 2023

A Whooping 56% Of OP Max Supply Not Assigned, What Does This Mean?

According to Token Unlocks, a platform that tracks upcoming unlocking events, 56% of all the OP token maximum supply is in the to-be-discussed (TBD) allocation, meaning the community is yet to vote and determine where these tokens will be assigned to in the coming weeks or months.

This news is a curious development, especially for OP Mainnet, the team behind one of the most popular Ethereum layer-2 scaling solutions, and OP token holders.

Billions Of OP Not Assigned

Token Unlocks notes that roughly 2.4 billion OP, representing 55% of the max supply, remains under the TBD allocation. So far, over 831 million OP, or slightly above 19% of the max supply, have been unlocked.

OP TBD allocation | Source: Token Unlocks

This revelation also comes when OP prices have been trending higher, breezing past crucial resistance levels. At spot rates, OP is changing hands above September and October highs, temporarily retesting October highs. The bull bar of November 10 anchors the current leg up since it was accompanied by relatively high trading volume.

Token Unlocks defines a TBD allocation as not assigned a release timing but will be subject to community voting. These tokens can be distributed for governance, Retroactive Public Goods Funding (RetroGPF), ecosystem funding, moved to advisers or partners, and much more.

RetroGPF is a funding mechanism that allows the protocol to support projects building solutions on its general-purpose layer-2 platform. Since it is retroactive, projects or developers don’t have to apply for funding in advance.

Usually, token unlocking releases coins initially locked or vested for a given time. Projects tend to employ this tactic to align the incentives of investors and that of the team. This also concurrently prevents early adopters from mass selling the coin, driving prices lower. Even so, since all specified unlocks are done publicly, transparency allows investors or traders to make informed decisions.

What Will Happen To OP Prices?

For the token’s Mainnet’s case, a big chunk of the max supply remains unassigned at spot rates, which is, as it is, supportive of prices. However, once these tokens are voted for, and the community decides the portion of the maximum supply that can, for instance, be distributed to advisers or used to fund ecosystem projects, then there is a tendency for prices to fall as the unlock date approaches.

OP Mainnet market share | Source: L2Beat

According to L2Beat, OP Mainnet is the second largest layer-2 scaling solution for Ethereum after Arbitrum One. OP Mainnet has a total value locked (TVL) of $3.39 billion, commanding a market share of 25%. Meanwhile, Base, a competitor backed by Coinbase, is third with a TVL of $600 million.

7th November 2023

Ethereum Layer-2 Booming: Will Gas Fees Drop Even In A Bull Market?

The adoption of Ethereum layer-2s is on the rise if Token Terminal data shared on November 6 is anything to go by. According to statistics from the blockchain analytics platform shared by Erik Smith, the Chief Investment Officer (CIO) of 401 Financial, the average active addresses over the past three months has exceeded 10 million, a nearly 2X expansion from early 2023.

Ethereum Layer-2s Finding More Adoption

Looking at the chart, Polygon, an Ethereum sidechain, remains the most popular. At the same time, Arbitrum and OP Mainnet, which are common layer-2s adopting the roll-up technology, are actively being used.

Even so, OP Mainnet’s share is gradually dropping. Base, a layer-2 backed by Coinbase, and StarkNet are also finding adoption, expanding their share over the past three months.

Popular Ethereum layer-2s| Source: Token Terminal via Erik Smith on X

In crypto, active addresses refer to the number of unique wallet addresses (sending and receiving) that have interacted with the blockchain, in this case, Ethereum, over a given period.

An uptick or contraction in the number of active addresses can be used to measure sentiment and the level of uptake. In bear markets, active addresses tend to drop, only rising when bulls flow in, pointing to a possible scramble for arising opportunities.

The recent uptrend coincides with the rapid expansion of leading crypto prices. Ethereum (ETH) prices are inching closer to the $1,870 resistance level, with a breakout above this line a potential trigger for a leg up that might see the coin retest $2,100 and even register new 2023 highs.

Usually, rising crypto prices tend to revive demand as the number of active addresses and, in some instances, the total value locked (TVL) in decentralized finance (DeFi), and more.

What Will Happen To Gas Fees?

Ethereum is the world’s most active smart contract platform, stretching its dominance mainly because of its first-mover advantage. The blockchain anchors more DeFi, non-fungible tokens (NFTs), and gaming activity. Deploying protocols, depending on their objectives, can either directly launch on the mainnet or layer-2s.

The mainnet is directly secured by validators, while layer-2 solutions depend on the mainnet for security but often re-route transactions off-chain. In this arrangement, more transactions can be processed cheaply and efficiently, relieving the mainnet.

Though the Ethereum base layer is secure, its peak transaction throughput remains relatively lower at around 15 TPS. This means during peak demand, gas fees tend to be higher, impacting user demand.

Still, Ethereum gas fees remain at a multi-year low at around 23 Gwei, according to trackers, as seen on the chart below. This is down from 240 Gwei recorded in February 2021 when crypto assets rapidly rose.

Ethereum gas fee trend| Source: YCharts

For now, whether gas fees will increase as the market recovers is yet to be seen. What’s evident is that as users opt for layer-2s, the mainnet will likely be relieved, keeping gas fee fluctuation low.

28th September 2023

Is The Ethereum Winter Over? L2 Exploding, ETH Futures ETF Launches

After sinking roughly 30% from 2023 highs, Ethereum appears to be bouncing off from the pits of the crypto winter. Looking at candlestick arrangements in the daily and weekly charts, the coin has primary support at around $1,500 and is firm, bouncing off with decent trading volume.

At spot rates, ETH is up approximately 3% following positive developments sparked by the increasing adoption of its layer-2 scaling solution and the recent news that VanEck, a player managing billions of assets, is preparing to launch an Ethereum derivatives product.

Ethereum Layer-2 Solutions Exploding

Taking to X on September 28, Alex Masmej, the founder of Showtime, believes that Ethereum’s layer-2 ecosystem has expanded to such an extent that it no “longer makes sense to build on other platforms.”

The development and deployment of Ethereum layer-2 solutions took center stage following network congestion, which forced gas fees to spike to record highs in the last bull run.

Developers have responded to the network co-founder Vitalik Buterin’s urging. The expert believes they are quickly constructing and deploying safe, universal platforms that have gained widespread popularity.

Layer-2 platforms bundle transactions off-chain before confirming them on-chain, allowing for faster and more cost-effective operations while benefiting from the security of Ethereum. As of September 28, there were over 827,000 validators whose job is to confirm transactions and ensure that the network is secure, thanks in part to their geographic distribution.

Ethereum validator count| Source: Beacon.in

Most layer-2 solutions use optimistic rollups, including Arbitrum, Base, and OP Mainnet. However, Masmej also said that once ZK rollups, which utilize zero-knowledge proofs to validate transactions without revealing sensitive data, are available, it will end the scalability trilemma, further boosting the capabilities of layer-2 solutions.

In the founder’s assessment, high throughput options, including Solana, will be a hedge. At the same time, Cosmos, which drives blockchain interoperability, will act as a long-term source of inspiration. Meanwhile, Ethereum will continue to flourish as Layer-2 options gain traction.

Rising TVL And ETH Complex Products Launching

According to l2Beat data, popular solutions like Arbitrum and Base, which offer faster and cheaper processing environments while remaining coupled with Ethereum and enjoying the pioneer network’s fast-move advantage, have larger total value locked (TVL). As of September 28, layer-2 platforms have a TVL of over $10.6 billion, more than Solana’s market cap, which stood at $8 billion, according to CoinMarketCap.

Layer-2 TVL| Source: L2Beat

Beyond layer-2 adoption, ETH is being catalyzed by the news that VanEck, a global asset manager, is preparing to introduce its Ethereum futures exchange-traded fund (ETF). Specifically, the VanEck Ethereum Strategy ETF (EFUT) will invest in ETH futures contracts provided by exchanges approved by the Commodity Futures Trading Commission (CFTC).

Like the Bitcoin Futures ETF product, which is already being offered, the Ethereum derivative product will allow institutions to gain exposure, boosting liquidity.

26th September 2023

NEAR Protocol’s Daily Active Addresses Spike, Will Prices Follow?

In the past month, there have been more daily active addresses on the NEAR Protocol than in Ethereum and its layer-2 protocols, including Arbitrum and OP Mainnet, Artemis data from September 25 reveals.

Artemis, an institutional data platform for digital assets, shows that the number of daily active addresses on NEAR Protocol has been consistently above the 400,000 level in September.

Daily Active Addresses On NEAR Protocol Surging

Looking closer at the data confirms that the number of daily active addresses on Ethereum, the pioneer smart contract platform that hosts most decentralized finance (DeFi) and non-fungible token (NFT) activity, has been dropping.

To illustrate, the number of daily active on Ethereum rose above 1 million in mid-September but has since more than halved to below 400,000. The same trend can be seen in Arbitrum, which dropped from around 200,000 in late June to 150,000 when writing on September 25.

Daily active addresses| Source: Artemis

During this time, NEAR Protocol’s daily active addresses have rapidly spiked from around 40,000 in late June to above 400,000, outperforming Ethereum in this metric. With rising daily active addresses, there has been a spike in daily transactions over the past month. According to trackers, the NEAR Protocol processes more transactions than Ethereum.

Daily transactions| Source: Artemis

Public ledgers like NEAR Protocol and Ethereum depend on a community of users who actively transact—moving value or running protocols—or validators- to secure the network. However, the number of daily active addresses can provide valuable insights into the level of adoption, user engagement, and the network’s overall health.

Besides user engagement, rising daily active addresses might also point to changing market sentiment, which could significantly impact prices.

Bears In Control As DEX Trading Volume Remains Relatively Stable

When writing, NEAR, the native token of the NEAR Protocol, is trading at around 2023 lows. Changing hands at $1.107, the coin is down 61% from 2023 highs and remains under pressure.

The candlestick arrangement in the daily chart points to consolidation and stability above the primary resistance level at $1. Bears have the upper hand if prices remain below $1.23, a critical resistance level marking the August 17 highs.

As evidence shows, the network activity and price action diverge. Although the transaction count also rose, the number of unique addresses interacting with NEAR Protocol decentralized exchanges has mostly been stable. Looking at the numbers, DEX volume on the platform is significantly lower than those registered in Ethereum and its popular layer-2 platforms.