Introduction

What is Optimism?

Optimism is a layer 2 chain, meaning it functions on top of Ethereum mainnet (layer 1). Transactions take place on Optimism, but the data about transactions get posted to mainnet where they are validated. It’s like driving in a less crowded side street while benefiting from the security of a highway. Optimism is the second-largest Ethereum layer 2 with a total of $313 million locked into its smart contracts, as of this writing, according to Defi Llama. Arbitrum comes first with $1.32 billion.

Optimism uses a technology called rollups, specifically Optimistic rollups.

They’re called rollups because they roll up (or bundle) the data about hundreds of transactions – non-fungible token (NFT) mints, token swaps … any transaction! – into a single transaction on Ethereum mainnet (layer 1). When so many transactions are rolled up into a single transaction, the blockchain transaction, or "gas," fee required to pay comes down to only one transaction, conveniently distributed across everyone involved.

And they’re called Optimistic rollups because transactions are assumed to be valid until they are proven false, or in other words, innocent until proven guilty. There’s a time window during which potentially invalid transactions can be challenged by submitting a “fraud proof” and running the transactions’ computations with reference to available state data.

Key takeaways

• On ethereum, around 99.6% is made using ETH/WETH and 99.7% in optimism.
• Optimism NFT sales are primarily lower cost and lower in numbers.
• for the 99th percentile, the difference is huge almost 30x indicating that NFTs on ethereum are very expensive especially the super popular ones.
• NFTs ranging from 0 to 0.01 ETH make up only 35 % in the ethereum ecosystem, they make up close to 3/4th or 75% of sales in optimism ecosystem.
• 0 to 0.01 ETH bracket NFTs make up about 75 % of the transactions, they account for a meager 11% of the volume.
• The NFT sales have ballooned since the launch of optimism quest NFTs which launched in the last week of September. Since the launch of quest NFTs, the share of 0.01 to 0.1 ETH NFTs has also increased.
• Most notable however is the effect of optimism explorer NFTs. It not only increased the share of 0.01 to 0.1 ETH , but it has also sustained it since it’s launch 5 weeks back. Commendable
• the growth ratio of most expensive sales on Optimism is kinda overtaking Ethereum over time and this shows the faster growth of this ecosystem in this terms.
• Hence , we can expect the highest a floor price of NFT on optimism to hover around 55 ETH on average.

Twitter thread with details :

Important parameters

Analysis

Observation

• NFT sales on ethereum and optimism are predominately made using ETH or it’s wrapped version WETH.
• ==On ethereum, around 99.6% is made using ETH/WETH and 99.7% in optimism.== For this reason, we analyse the NFT purchasing behavior for ETH/WETH only. Readers can also choose USD using the drop-down provided.

Currency used

Sale anaylsis

• The graph on the right clearly shows the difference between NFT sales in optimism and ethereum.
• The sales are highly skewed on ethereum but lesser skewed in optimism.
• The total number of NFT sales on ethereum and the the highest price easily outnumbers that of optimism.
• ==Optimism NFT sales are primarily lower cost and lower in numbers.==

Percentile comparison

Here we look at the percentiles (sale amount) of NFTs across optimism and ethereum. The aim here is to understand the difference between the spread of NFT sale price among the chains. In other words, what is the 90th percentile of sale in ethereum and optimism and is the trend any different from the 99th percentile across the 2 chains. Note : the y-axis is in log scale, hence even minute differences are actually huge differences.

From the graph, we can see that

• up until the 99th percentile, the value of NFT sale on ethereum is close to (or less than) 10x of that as optimism. However, ==for the 99th percentile, the difference is huge almost 30x indicating that NFTs on ethereum are very expensive especially the super popular ones.==

Distribution of sales

Observation

• While ==NFTs ranging from 0 to 0.01 ETH make up only 35 % in the ethereum ecosystem, they make up close to 3/4th or 75% of sales in optimism ecosystem.== And that is huge.
• The share of NFTs ranging from 0.01 to 0.1 ETH make up close to 1/4th in optimism while they make up almost half in ethereum.
• Based on this we can clearly say that ==NFTs sold on optimism are much cheaper than on ethereum== ( which is sometimes known as the expensive NFT chain).

Trend of sales

Are there any trends in the sales ? AKA, were there any days that seem to show extreme values for 1 bracket ? or has it been constant since the last 3 months.

Ethereum

• NFTs ranging from 0.01 to 0.1 ETH have consistently made up half the sales in the last 3 months.

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• The total number of NFTs sold has been consistently hovering around 60 +- 10k except for the slight drop in the second week of October which has since recovered to previous levels.

Optimism

• From the graph, it is clear that on almost all days, the sales have been dominated by projects in the range of 0 to 0.01 ETH.

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• Bingo, something we were looking for !!. T==he NFT sales have ballooned since the launch of optimism quest NFTs which launched in the last week of September. Since the launch of quest NFTs, the share of 0.01 to 0.1 ETH NFTs has also increased.==

Share of brackets in sales over time

New projects tend to usually change the dynamics of the eco-system. Given below are graphs of normalized sales along with a table that provided the top sold NFT, their respective bracket (based on average price) and the first mint date (aka, launch of project). Through this, one can identify what effect new projects have on the price dynamics on the ecosystem.

Notable mentions :

1. The share of 0.1 to 1 ETH NFTs increased post August 29,2022, the launch of cryptosimeji.
2. 8leins briefly increased the share of 0.1-1 ETH on it’s debut on August 8 2022.
3. ==Most notable however is the effect of optimism explorer NFTs. It not only increased the share of 0.01 to 0.1 ETH , but it has also sustained it since it’s launch 5 weeks back. Commendable==

Analysis of buyers

Analysis of projects

We now look at the buyer profiles on both chains. In other words, how many number of buyers are there in each bracket.

Observation

• Most of the buyers in ethereum buy projects in the range of 0.01 to 0.1 ETH while in optimism buyers usually buy projects that have an average price of 0 to 0.01 ETH.
• ==The “flip” happens in the 0.1 to 1 ETH bracket. The percentage of buyers in the 0 to 0.1 ETH bracket are more for optimism than ethereum, however after the 0.1 Eth threshold, the percentage of buyers increase in ethereum.==

We now look at the profiles of projects on both chains. In other words, how many number of projects are there in each bracket.

Observation

• ==Most of the projects in ethereum have an average price in the range of 0.01 to 0.1 ETH while in optimism projects in ethereum have an average price have an average price of 0 to 0.01 ETH.==
• The “flip” happens in the 0.1 to 1 ETH bracket. The percentage of projects in the 0 to 0.1 ETH bracket are more for optimism than ethereum, however after the 0.1 Eth threshold, the percentage of projects increase in ethereum.

Top projects

We first look at the top projects in each chain.

==terraform and meebits have the highest volume in the last 3 months and on average lie between 10-100 ETH,== while the rest ( more loot, dreadfulz) have an average of 100+ ETh. Geez, that’s costly.

However in optimism, ==Early optimists has the highest volume and sells for a modest 0.01 to 0.1 ETH.==

On the bottom chart and as a proof to the previous description, we can see (especially during recent weeks) that ==the growth ratio of most expensive sales on Optimism is kinda overtaking Ethereum over time and this shows the faster growth of this ecosystem in this terms.==

Ratio

To answer this question , “Do you think that there is a limit to how high a floor for a NFT collection on Optimism can reach compared to on Ethereum?”. We need to look at how different the high (maximum) price is compared to median on ethereum to that in optimism. Looking at this, one can guess how high the price can go.

Is this a good predictor ? Untested.

Was this fun to derive ?. Yes.

Does it give us an estimate floor ?. Hell yeah.

To remove outliers, we use the 95th percentile. And now we look at one metric in specific. How much is the 95th percentile (of sale price) greater than the median sale price in each chain. Using this metric, we can estimate how much more the sale price can raise in optimism chain. We find that the 95th percentile is 14 times greater than median in optimism while it is 22 times greater in ethereum. Hence, we can say that a good estimate to

                                             how much nft sale in optimism can raise is = max price in optimism today \* (ratio of ethereum) / (ratio of optimism)

                                                                                                                                = 34.7569 \* 22.73 / 14.16

                                                                                                                                = 55.7926

==Hence , we can expect the highest a floor price of NFT on optimism to hover around 55 ETH on average.==

Volume of shares

Alright, but where does the volume come from ? Does the 0-0.01 ETH bracket bring in more volume or is it the 10+ETH NFTs that brings in volume

Observation

• Around 65 % of the volume on ethereum comes from NFT sales that have an average price of 10+ ETH

• Surprsingly, the bracket 0.1 to 1 ETH brings the highest volume in optimism ecosystem, though they only make up 2% of the sales.

• While the ==0 to 0.01 ETH bracket NFTs make up about 75 % of the transactions, they account for a meager 11% of the volume.== Eh, dismissive.

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Reference

Shoutout to Ali3ns’s dashboard for the last part on cummulative growth of expensive NFTs comparison.

Methodology

The dashboard is divided into 6 sections:

1. Currency usage
2. Sales and percentile analysis
3. Distribution of Sales
4. Trend of sales
5. Analysis of buyers and projects
6. Growth of NFTs

Note : In the analysis, we only consider sales made using WETH or ETH as currency as

1. that is the predominant currency and accounts for 99 percentage of the transactions. More in report.

2. A common currency between ethereum and optimism

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Shout out to Ali3ns’s dashboard for the last part on cumulative growth of expensive NFTs comparison.

Glossary

1. Bracket → the sales are classified into 5 baskets.

   when price between 0 and 0.01 then ' 0 - 0.01 ETH'

   when price between 0.01 and 0.1 then ' 0.01 - 0.1 ETH'

   when price between 0.1 and 1 then ' 0.1 - 1 ETH'

   when price between 1 and 10 then ' 1 - 10 ETH'

   when price >10 then '10+ ETH'

2. Floor price → the amount at which the NFT was sold and not at what it was listed.

Parameter used

All the analysis made and comments provided are considering the last 3 months and the currency used is ETH unless stated.

Conclusion

• On ethereum, around 99.6% is made using ETH/WETH and 99.7% in optimism.
• Optimism NFT sales are primarily lower cost and lower in numbers.
• for the 99th percentile, the difference is huge almost 30x indicating that NFTs on ethereum are very expensive especially the super popular ones.
• NFTs ranging from 0 to 0.01 ETH make up only 35 % in the ethereum ecosystem, they make up close to 3/4th or 75% of sales in optimism ecosystem.
• 0 to 0.01 ETH bracket NFTs make up about 75 % of the transactions, they account for a meager 11% of the volume.
• The NFT sales have ballooned since the launch of optimism quest NFTs which launched in the last week of September. Since the launch of quest NFTs, the share of 0.01 to 0.1 ETH NFTs has also increased.
• Most notable however is the effect of optimism explorer NFTs. It not only increased the share of 0.01 to 0.1 ETH , but it has also sustained it since it’s launch 5 weeks back. Commendable
• the growth ratio of most expensive sales on Optimism is kinda overtaking Ethereum over time and this shows the faster growth of this ecosystem in this terms.
• Hence , we can expect the highest a floor price of NFT on optimism to hover around 55 ETH on average.