Optimism emerges as a contender in Layer-2 space: can it overtake Polygon?

• Optimism sees growing ERC-20 transactions, which could flip Polygon’s dominance in L2 space.
• Even so, Polygon maintains user market share dominance.

Layer 2 solutions in the crypto market have been showing improvements despite the market seeing turbulence.

One of the L2 solutions that have shown great promise is Optimism. According to Dune Analytics, transactions on Optimism grew substantially over the past few days.

One of the key areas of growth has been the number of ERC-20 transactions on the platform. ERC-20 is a standard for creating tokens on the Ethereum blockchain and it’s a widely used standard in the crypto industry.

The growth in ERC-20 transactions on Optimism means that more users are turning to the platform as a way to reduce fees on their transactions.

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

A possible flip

This growth in transactions on Optimism could also be a sign that it’s starting to flip Polygon’s dominance in the L2 space.

At the time of writing, Optimism’s transactions were at the 1.7 billion mark whereas Polygon’s transaction count was at around 2.4 billion.

Although Polygon is still ahead, the gap between these two values has been reducing over time, which could be a sign that Optimism is catching up.

Source: Dune Analytics

However, in terms of user market share, Polygon still displayed dominance as it occupied 67.9% of the overall market share. This indicated that although Optimism’s transactions were growing, it was not yet attracting as many users as Polygon.

Additionally, Ethereum saved by users by opting for Optimism also decreased. This could impact the number of users on the Optimism protocol. As users could opt for other Layer 2 solutions that offer better scalability or lower fees.

Source: Dune Analytics

However, Optimism’s Quests NFTs could attract more users to the protocol. The daily users and NFTs minted on Optimism have seen an increase, as NFTs are becoming increasingly popular in the crypto market.

The token has spoken

However, Optimism’s token did not garner the same interest from the crypto market

OP, in fact, witnessed a decline in network growth. This is indicated by the number of times OP was transferred for the first time among new addresses.

Is your portfolio green? Check out the Optimism Profit Calculator

Additionally, the token’s activity also fell. This was showcased by the declining daily active addresses for the token and the token’s falling velocity. A declining velocity implied that the frequency with which OP was being exchanged among addresses decreased.

Source: Santiment

In conclusion, Optimism‘s growth in ERC-20 transactions and NFTs could be a sign that it’s starting to flip Polygon’s dominance in the L2 space. However, it still has a long way to go before it can claim to be the leading L2 solution in the market.