The impact of hack fake rumors on Optimism user behavior

In this dashboard, we seek to understand how much a false rumor can affect the behavior of users. For this purpose, we have conducted our case study on the Optimism User Behavior.

Description of work & Method

Methodology

The analyzes performed in this dashboard are based on the data available in the Flipside database. The Three most used tables in this database are:

FROM optimism.core.fact_hourly_token_prices

optimism.core.fact_event_logs

optimism.core.fact_transactions

The following code is used to determine the OP Swap

EVENT_INPUTS:tokenIn='0x4200000000000000000000000000000000000042'

To better understand the effects of this rumor, We have based our analysis on three time frames:

“Before hack fake rumors”

“A few daysAfter hack fake rumors(1 Week)”

“After hack fake rumors”

Overview on concepts

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.

Synthetix, a derivatives liquidity protocol, is the largest protocol on Optimism, with a total value locked (TVL) of $125 million. Uniswap, a decentralized exchange (DEX), is the second most popular protocol on the chain. As of this writing, there are 35 protocols on Optimism with at least $1,000 locked into their smart contracts.

Source:

hack fake rumors on Optimism

The native token for Ethereum layer 2 blockchain Optimism briefly crashed in price on Wednesday after Twitter-based rumors spread that its multisignature wallet had been hacked.

Optimism’s core team insists there was no hack. Still, the OP token fell 10% in a matter of minutes at 5:15 p.m. ET, according to data from CoinMarketCap, before rebounding.

On messaging platform Discord, the team clarified that the fund movements were preplanned Coinbase Custody-related transfers to investor wallets. The value of the funds transferred is around $450 million, according to Etherscan data.

The hasty response has sent the token’s price movement in the opposite direction; it has since rebounded off its low of $1.27 to $1.34, or slightly below its pre-crash level.

In the aftermath of the flash crash Optimism said it “expected” some “confusion” around the unannounced fund transfer.

“We will announce large planned transfers ahead of time to avoid further confusion going forward,” it also said on Twitter.

Source:

https://www.coindesk.com/business/2022/08/17/optimism-token-flash-crashes-10-on-false-rumors-of-a-major-hack

part1: User and Transaction Analysis

Part1:Observation

In the first part of this analysis, we will first go to the users and we will examine the users from several aspects.

In the graph on the left, it can be seen that the number of users has decreased from ==20K to 12K== after the spread of the fake rumor.

But after a while, the trend increased again.

Regarding the number of new users, it can be seen that before the publication of the hacking rumor, the number of new users was around ==5,000 daily==, which has decreased to around ==1,200.== Despite the denial of the hacking rumor by Optimisim Team, we have observed a decreasing trend for a period of more than 10 days.

The next two metrics that we have examined to analyze user behavior are related to two important metrics, namely the ==number of transactions and their volume.== In spite of the fact that the considered period is about 2 and a half months before and after the hacking rumor, and we observe various increasing and decreasing trends, especially at the end of July, but it can be changed in the period after the hacking rumor is published. No attention has been paid to the number and volume of transactions.

Some time after the incident of the hacking rumor and its denial by the Optimisim team, the number of transactions has increased significantly, while the volume of transactions has not changed significantly.

The next metric checked goes back to ==FEE==, which the left graph shows that despite the high volatility, no significant change has been seen in the time period close to the rumor event and after. But from the middle of October 2022 onwards, the increasing trend of ّ==FEE== can be observed

Another important criterion that we have analyzed according to the available data refers to OP own price, which was announced many times in different news that it has decreased by a==bout 10%== after the news of the fake hacking rumor. Checking the price data shows that this trend of decreasing the price of this token had started before the news of the hack was published, ==and this decreasing trend has intensified with the announcement of the hacking rumor.==

part2:Swap and Swappers Analysis

Part2:Observation

In the second part of this analysis, we have investigated the amount of swap by users, which can be affected by the spread of false hacking rumors. The fact is that the publication of a news, even in a false form, can affect all financial markets. In this section, firstly, the number of swappers has been shown, which decreased significantly the day after the hacking rumor was published, but after the denial of the rumor by the Optimism team, it has returned to normal. Regarding the amount of swaps, just like the number of swappers, after the publication of the hacking rumor, there was a significant decrease at first (on August 18, 2022), but after the announcement of the denial of the hacking rumor, its positive trend has started.

In this section, we have analyzed the tokens swapped from OP to other tokens and also from other tokens to OP, for this purpose we have used the number of swaps and the volume of swaps over time. The most swapped token from OP is ==USDC==, followed by ==WETH== and ==BAL==. The things mentioned were in terms of the number of swaps. the same positions have not changed either before or after the hacking rumor event, and the same tokens have not changed in terms of position in terms of swap volume.

The publication of the hacking rumor has a slight effect on the amount of swap from ==OP to USDC== about 2 days after the publication, which may indicate the fear of some investors. In terms of the volume of swaps, after the hacking rumor event, the routine has not returned to the previous state, and we have seen a sharp decrease in swaps.

It is not possible to statistically show the ==causal relationship== between this sharp decrease in the volume of swaps and the hacking rumor because many other factors may be involved in this discussion.

In the last part, it has been checked that most tokens have been swapped to OP. As can be seen in terms of ==number of swaps==, the most tokens that have been swapped to OP They are in order: ==USDC==, ==WETH== and ==BAL==. These cases were the same in the previous part and they were no different from swap to OP from the aspect of swap from OP.

However, from the point of view of the ==volume of swaps==, the conditions are completely different, and the three tokens that had the largest volume of swap to OP are:

BEETS

LYRA

BAL

BEETS has a share of about ==90%== of the volume of swaps to OP

Conclusion

After the release of the news hack fake rumors on Optimism,

Optimism’s core team insists there was no hack. Still, the OP token fell 10% in a matter of minutes at 5:15 p.m. ET, according to data from CoinMarketCap, before rebounding.

In this analysis, we were looking for whether this rumor had an effect on users' behavior in addition to reducing the price of OP.

As seen, it had a ==short-term effect== on some metrics, such as the ==Volume and number of swaps==, the number of ==new users==, etc., but with the official denial from the Optimism team, the trend returned to its previous state to a large extent. It is important to mention that in most parameters, especially in the volume and number of swaps, we have had a decreasing trend after the date of the rumor, which cannot necessarily be attributed to the hacking rumor.

Analysis Details

Auther: ==Alirs==
Date of analysis:2 November

2022.
Contact: Discord ==Alirs#8782==
twitter: ==Alirs#8782==

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