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The price of Optimism (OP) fell sharply in early November, dropping from highs above $1.30 on November 6 to as low as $0.79 on November 9. In the weeks since, prices have been on the rise, with OP hit $1.19 on December 14. \n

Analyze the network and diagnose some of the possible reasons for the sudden drop, and slow climb, of OP price in recent weeks. Are there any notable trends in users, transactions, or any other metrics that could explain these events? Note any patterns or outliers you see.

Introduction

Optimism is a scaling solution for Ethereum's Layer 2 that is able to accommodate all of Ethereum's decentralized applications. Optimism was developed by the Ethereum Foundation (Dapps). Optimism simultaneously reduces the expenses that are connected with each individual transaction while simultaneously increasing the number of transactions that can be executed by Ethereum in a single second. To achieve this, computations are performed off-chain rather than on the Ethereum network, which is where they would normally be carried out if they were to be performed there.

The native token of Optimism is called OP, and there are a total of 4.294 billion in circulation. The Optimism Collective has a two-tiered governance structure made up of the Token House and the Citizens' House, and the OP token entitles its holders to vote in the affairs of both houses.

Method

In the current dashboard I used fact_token_prices_hourly tables on Flipsidecrypto’s database to find the average price of assessed tokens.

Then by use of optimism.core.fact tables calculated the OP token interactions since November, 2022.

Also, tracked the OP transfer state by optimism.core.ez_eth_transfers table over this time.

The optimism.core.dim_labels was used to identify the lable of contracts that OP interactors had interact with.

The area chart above shows the price chart of $ETH, which is the same as $OP in a bearish trend, reaching its high on September 11th at $1778.37, exactly the same as $OP, and on October 21st, its local uptrend begins, and looks It can, but it cannot reach it. This is ATH (highest time) as $OP.

Area chart above price chart of OP is shown which starts from August 25th until December 17th of 2022 and as we see its major trend is bearish which had is ceiling price on September 11th with $1.41, though there is local bullish trend starts since October 21th but it couldn’t surpass it’s price peek on September and major trend remains bearish.

In general, there is an increase in the number of transfers.

A rather strong jump in the number of transfers is observed on November 8-9, when the price of OP fell

The average number of transfers per 1 user has also increased significantly during these days. The number of unique users has been growing noticeably since mid-October.

Since November 10, there has been a very strong increase in the volume of transactions made, on December 14, there has been a sharp jump

Conclusion

It is quite noticeable how Optimism is constantly being improved and updated. I have highlighted a few news that could affect the rise in the price of OP.

So, for example, after the release of Pragmatism, the price of OP began to rise, then when the price decreases, we observe a high price of L1 gas, a sharp increase in the number of transactions and an increase in the percentage of failed transactions. Further, the price of OP began to rise. This could be influenced by the announcement of Retroactive Public Goods Funding, public rehearsal for the transition to the "next major update", which will be called Bedrock, and the fact that Coinbase allowed eligible users to send and receive ETH, DAI and WBTC on Optimism

Line chart above depicts price chart of OP with daily number of distinct transacting users on Optimism network which as we see its increasing unlike $OP price and maxes out on Oct 5th with 58.7K distinct users.

As we see number of transacting distinct users on some time periods like bullish trend of both between mid October and early November but for majority of time line there is not much correlation between two charts.