New data from DefiLlama reveals that Optimism’s total value locked (TVL) has surged by almost 300 percent in the past month.
The Ethereum scaling solution surpassed US$1 billion in TVL ahead of the blockchain’s transition from a proof-of-work to a proof-of-stake network:
DefiLlama data for Optimism’s TVL.
ETH Merge Optimal for Optimism
Optimism (OP) rose by more than 89 percent in the past week alone, reaching a high of US$2.22 on August 4 and noticeably outperforming most of the market.
The latest price action is likely based on developments surrounding the upcoming Ethereum layer-2 scaling protocol. The protocol will utilise rollups to speed up Ethereum’s transactions, thereby reducing its costs. This week’s value spike has followed an OP Labs announcement that flagged plans for a Bedrock upgrade set to arrive as early as Q4 2022:
Optimism Bedrock is coming soon™️, and when it does it will change the rollup game forever.
It will lay the protocol's foundation for years to come and serve as THE model for rollup architecture.
Experts believe the Merge upgrade could potentially scale the network to 100,000 transactions per second, with layer-2 solutions further enhancing such capacity. This would represent a massive upgrade from its current 30 transactions per second.
Other developments users can expect to see soon include a 20 percent cut in the cost of data submission to layer 1, support for several alternative proof systems, and an optimised code that will allow nodes to synch 50 times faster.
Two Sides to the Optimism Coin
Optimism has been busy this year on fronts good and bad. In April the company announced its new governance structure and began preparing for the release of its new token, $OP, to help power the changes. The new structure would see governance divided between two houses – the Citizens house and the Token house, to be established via the airdropping of new tokens to users.
However, June brought damages to Optimism in the form of an exploit. The roll-up solution lost US$15 million worth of its new OP tokens after Wintermute, its launch partner, transferred the tokens to the wrong wallet address. Luckily, a white hat attacker returned 17 million tokens (worth approximately US$11 million).
NFT market activity remains strong according to a Nansen report which has found that US$2.7 billion was spent on NFT minting in the first half of 2022 alone. This figure is the product of activity from more than 1 million unique wallet addresses:
1/ Market participants spent 963,227 $ETH (approximately $2.7b) on minting NFTs in the first half of 2022.
So what did the NFT projects do with the money they raised? 🤑
Industry-leading blockchain data and analytics platform Nansen found that most of these transactions occurred through OpenSea. Its report highlights a shift in crypto users’ priorities yet again, with NFT creators now choosing to retain and reinvest funds into the ecosystem, indicating they have become more mature and conscientious.
This latest report was built off the back of the past report, utilising similar parameters: projects that had primary sales revenue exceeding 20 ETH between January 1 and June 30, 2022:
GM anons. Here's the NFTs market roundup. Shoutout to @nansen_ai and @hildobby_ for the data below.
NFT weekly volumes in USD are still very low (down ~97% from the top) but seem to be bottoming out recently. pic.twitter.com/lbpG9ZMwLN
A total of 28,986 NFT collections were minted and sold on Ethereum during the first six months of 2022. Of these, Pixelmon-Generation 1, Genesis Box, World of Women Galaxy, Moonbirds and VeeFriends Series 2 accounted for 8.4 percent of overall minting.
To the best of Nansen’s knowledge, half (50.7 percent) of the funds raised by these creators stayed with NFT projects, while 45.7 percent circulated to non-entity wallets. It should be noted that Nansen does not have the capacity to track transactions to other counterparties.
Overall, in comparison to the previous report’s results, improvements in the utilisation and productivity of the NFT minting sector are clearly visible.
Nansen research analyst Louisa Chloe wrapped up the data:
Reflecting on the on-chain results of this study, we maintain our conclusion that the minting sector of the NFT market remains healthy with the rise in average mints per unique wallet address … on-chain evidence of NFT collections reinvesting primary sales revenue into NFT demonstrates that builders and creators within this marketplace are looking at the long-term impact of their projects and making decisions that will support that growth.
Louisa Choe, Nansen
Recent NFT Developments
Last month saw two exciting new announcements for the NFT sector within just two days. Firstly, OpenSea expressed its excitement about a “multi-chain future”, thanks to the introduction of the Solana launchpad. The platform will reportedly guide users through the process of pre-mint activity, and will permit list minting and post-mint and secondary sales. This means creators will be able to mint new projects from scratch with ease.
Meanwhile, Australia has its first NFT gallery. Situated at Baringa, near Caloundra on Queensland’s Sunshine Coast, the gallery aims to create a hub for digital artists and tech enthusiasts within the popular holiday region.
Optimism, a leading Ethereum layer 2 scaling solution, has unveiled its new governance structure and is preparing to release a token called OP to help power the change:
Possibly the biggest attempt at non-token-holder-centric DAO governance so far. Excited to see where this goes.
Optimism’s newly announced governance structure is to be split into two halves: the Citizens house and the Token house. The Citizens house will be governing the distribution of funding for retroactive public goods, whereas the Token house will focus on driving growth, protocol upgrades, and project incentives.
The new governance token, OP, will be the power behind the Token house. It will create incentives for users to contribute to governance, as much of the project’s decisions will be voter-based. This house will be established through a token airdrop to users.
Over 250k addresses are eligible via a carefully thought out set of criteria, proportionally rewarding addresses for healthy use of the ecosystem.
There is an overlap bonus for hitting 4 or more criteria.
This airdrop will not just be a one-time event, as users can expect a second drop in Q2. While awaiting an official date for the first airdrop, users can find eligibility information and an allocations link within the initial announcement.
Layer 2 and DAOs
Aside from Optimism, there is a wide range of projects working to continue the expansion of the DeFi ecosystem and resolve network performance issues. Crypto News Australia has compiled an informative list of projects worth watching.
Decentralised autonomous organisations (DAOs) are the blockchain-based version of companies that are native to the internet. There’s a lot to know about DAOs, not to mention a list of risks and benefits, but it doesn’t have to be complicated. Crypto News Australia has also published a handy guide to DAOs.
Ethereum is currently powering the future of global decentralised finance (known as “DeFi”) so it’s blockchain must be well equipped to scale and handle an influx of apps and users into the millions. Currently there are limitations with Ether blockchain with speed and high transaction fees, which has led to the emergence of Ethereum layer 2 projects that help resolve the network performance and enable continued expansion of the DeFi ecosystem.
What is Ethereum Layer 2?
A layer 2 project is a company and network of its own that operates on top of the Ethereum blockchain base layer (known as “layer 1”). Layer 2 projects (also known as “sidechains”) connect Decentralised applications (Dapps) to interact with aspects of the layer 1 blockchain to significantly speed up transactions, whilst making use of the base layer’s privacy and decentralised infrastructure.
Why use Layer 2 Projects?
The main Ethereum 1.0 blockchain currently has a low speed of around 7-15 transactions per second (TPS). Layer 2 solutions can achieve much faster speeds of up to 9,000 tps by handling most of the hard processing “off-chain” on their sidechains to increase efficiency.
There are an increasing amount of layer 2 projects and sidechains in circulation, each working to improve user experience for swapping coins and tokens, minting NFTs, reducing transaction GAS fees and increasing the speed of transactions.
We have compiled a list below of what we think are the best 10+ Ethereum layer-2 projects and sidechains worth knowing about.
1. Polygon
Polygon – a multichain ecosystem.
Polygon is a protocol and framework that allows projects to connect with Ethereum-compatible networks to enable ‘scalable-solutions’ for a multi-chain ecosystem.
Advertised as being for developers, by developers, Polygon has identified the challenges facing the Ethereum blockchain and presented its own solutions by offering instant and ‘zero-gas’ transactions with a Proof-of-stake (PoS) chain.
Polygon utilises the MATIC token, which helps to secure the network and to pay any transaction fees. Originally the project was called MATIC and was seen as a direct competitor to Ethereum, but in 2021 it rebranded to Polygon and now enhances the Ethereum ecosystem rather than directly competing with it.
Optimism is a community focused layer 2 framework that offers projects with lighting speed for a lower cost to transmit data to and from the layer 1 blockchain. Optimism is an optimistic rollup chain, which means a large batch of transactions are ‘rolled’ together and then condensed and processed on layer 1.
The Optimism ecosystem promotes hundreds of apps and integrations including DeFi, NFTs, Bridges and Portfolio trackers. There isn’t a native token for the Optimism project yet. The project current donates all the profits towards scaling the growth and sustainability of public goods.
3. Arbitrum
Arbitrum – build an app in five minutes.
Arbitrum is a layer 2 project built by Offchain Labs that provides Ethereum apps to scale at low cost whilst also providing software developer’s which simplified feature implementation of smart contracts. Arbitrum claims that you can build an Eth app in as little as five minutes.
Much like Optimism, the Arbitrum also doesn’t have a project token yet. That being said, the ecosystem is growing with hundreds of live applications including NFT marketplaces, Wallets, Bridges and On-Ramps making use of the quick start developer tools.
4. Starkware
StarkWare – facilitate all kinds of transactions.
Starkware is an Ethereum layer 2 project that provides scaling solutions for applications wanting to keep transaction fees low and fast executing.
The Starkware ecosystem includes a few different sub-projects which help provide permissionless decentralised ZK-Rollups that help facilitate the transactions that accompany AMM, spot trading, NFT minting and crypto trading. Big projects such as Sorare have integrated Starkware into their infrastructure to enable minting of Ethereum-based NFTs.
Starkware doesn’t have a native token yet.
5. Uniswap
Uniswap – apply for funding to build your app.
Uniswap is one of the leading the decentralised crypto trading protocol projects that supports thousands of DeFi applications including token swapping, staking, voting, liquidity providers and more.
You can use the Uniswap app to swap DeFi tokens directly on-chain through popular DeFi wallet providers on Ethereum, Polygon, Optimism and Arbitrum networks.
The native token for Uniswap is the UNI token, which you can use to save trading fee costs and stake in liquidity mining pools to earn yield. The UNI token also serves for decentralised governance of the project.
6. Loopring
Loopring – an automated execution system.
Loopring is a zkRollup Ethereum Layer 2 project that provide low-fees and high speed for trading, swapping and payments using ETH.
Loopring promotes an ‘automated execution system’ that allows users to trade cross-exchange and participate in cross-blockchain liquidity. Defined as ‘blockchain agnostic’, Loopring can integrate with any platform using smart contracts. You can use the Loopring BETA marketplace to create a Layer 2 wallet and trade DeFi tokens with ETH and USDT trading pairs.
The LRC token is native to Loopring and aids in these transactions.
7. OMG Network
OMG Network – Enya and Boba combine.
OMG Network (also known as “OMG Foundation”) provides Ethereum with a Layer 2 Optimistic Rollup solution that reduces gas fees and improves transaction throughput for smart contracts.
A new project launched by OMG is called Boba, which is extending Ethereum Virtual Machine (EVM) smart contract capabilities specifically for DeFi and NFTs projects running integrations on external servers such as AWS to help execute sophisticated algorithms that are not possible to run on-chain.
8. ZKSpace
ZKSpace – decreasing transaction latency and gas fees.
ZKSpace is a fairly new ZK-Rollup Ethereum Layer 2 protocol that offers near instant transactions without waiting for block confirmations.
The ZK project offers a layer 2 NFT protocol which provides NFT projects with cheaper NFT issuance, minting, airdrops and sales. 2022 should be an interesting year for ZKSpace, with lots of exciting developments scheduled, including ZKSea – an NFT Layer-2 marketplace.
The native token ZKS is used to save fees on the DeFi token swap L2 Wallet and also used to pay for minting NFTs on the L2 marketplace.
9. Skale
Skale – businesses can rent a sidechain.
Skale is an elastic blockchain network that focuses on high-performance, offering up to 1000x faster transaction speeds for your Ethereum Dapps.
Crypto projects have the option to rent a sidechain through Skale to increase transaction throughput making use of the Ethereum 2.0 validator nodes with the use of Sharding technology.
Projects can execute solidity smart contracts on Skale powered blockchains to enhances DeFi, games, NFTs and content streaming services.
SKL token is the native token of the Skale network, which aids in ecosystem cleaning, network development and upkeep, and reward validator nodes – the community keeping the network secure.
10. Gnosis Chain
Gnosis Chain – formerly xDai.
Gnosis Chain (formerly known as xDai) is a prediction market platform on the Ethereum network. Gnosis chain is providing its users with the chance to build their own prediction platform through the creation of a specific infrastructure layer.
Gnosis Chain also hosts free tournaments on the outcomes of their prediction platforms, and doing well with these can earn you GNO – the native token for the Gnosis Chain.
11. Bonus: Raiden Network
Raiden Network – compatible with all ERC20 tokens.
Raiden Network is an open source project that aims to help scale Ethereum payments by providing off-chain transfer of ERC20 tokens.
While this network is currently work in progress, Raiden is looking to avoid the ‘blockchain consensus bottleneck’ to facilitate ETH micropayments, similar to that of BTC lightning network.
Ethereum layer 2 projects will have a big say in the short adoption of Ethereum-based projects and also in the long-term success of Ethereum as a global settlement platform.
2022 brings the long anticipated Ethereum 2.0 upgrade which many believe will not make Layer 2 networks obsolete, but actually enhance them and increase adoption into the Ethereum ecosystem. Upgrades such as sharding will become available to Layer 2 projects enabling them to improve their services to Dapps and Layer 3 apps.
The massive social media and news forum Reddit has announced a partnership with the Ethereum Foundation for the creation of scalable blockchain-based applications. The collaboration represents Reddit’s first-ever blockchain partnership and further solidifies its growing commitment to the technology.
According to the announcement posted by Reddit admin u/jarins on the r/Cryptocurrency subreddit, blockchain technology will allow Reddit to provide decentralized applications to its users, helping them to “create, govern, and grow their own communities.”
“Through this partnership, we will be increasing our commitment to blockchain, accelerating scaling and resources for the Ethereum ecosystem, and bringing the value and independence of blockchain technology to millions of Redditors,” states the post.
Reddit initially collaborated with the Ethereum Foundation in June last year when it hosted an Ethereum “Scaling Bake-Off“. The event invited Ethereum-based scaling projects to put forward proposals for how they could help the r/Cryptocurrency community ‘scale’. The scaling in question involves bringing Reddit’s Community Points onto a blockchain-based network, with the eventual goal of scaling to fit all of Reddit’s 430 million monthly users. Unlike traditional, centralized computer networks, the decentralized nature of blockchain makes scaling a particularly troublesome task.
The new partnership will help to further this goal and bring a wealth of new features to the platform. Further to the new partnership, Reddit is already hiring backend engineers and blockchain developers to help build the network and its applications.
Reddit’s Ethereum-based Moon Tokens
Reddit has long been a vocal support of blockchain and cryptocurrencies, with its popular r/Cryptocurrency subreddit recently introducing ‘Moon’ token rewards on the platform. Moon (RCP) tokens are built on the Ethereum blockchain and are now the official cryptocurrency of the r/Cryptocurrency subreddit. Users are rewarded with tradeable Moon tokens when they receive ‘Karma’ for posting unique and insightful content on the subreddit.
Ethereum Price Action
The good news has helped to push the price of Ethereum (ETH) tokens up by a considerable amount in the past 24 hours, although the cryptocurrency remains slightly down over the past 7 days. It’s been a tough few weeks for cryptocurrencies after Bitcoin (BTC) suffered a rejection at $42,000 earlier this month. Along with most other coins, Bitcoin has been steadily dropping since, hitting a low of $29,300 last week.
Some altcoins have managed to weather the storm though, particularly in the Defi market. Defi Oracles network Chainlink (LINK) is up 10% in the past week, with Defi protocols Uniswap (UNI) and AAVE up by 60% and 48% respectively.
Australian Analyst Matt Harcourt of Apollo Capital, the country’s leading crypto-asset investment firm, recently spoke to DMARGE about crypto trends in 2021. While the discussion focused largely on Bitcoin (BTC), it’s Ethereum (ETH) that’s making headlines today after securing a new all-time high (ATH) above its previous record of AUD$1,850 (US$1,420).
Ethereum was one of the best-performing assets of 2020, gaining over 800% in value throughout the year. After starting the year at the extremely low price of AUD$166, ETH has steadily climbed to its new ATH, only suffering a brief dip during the early days of the COVID-19 outbreak.
In mid-2020, a thriving decentralized finance (DeFi) market emerged that was largely developed on Ethereum’s ERC20 protocol. Although DeFi had a somewhat bumpy start with several projects collapsing or exit-scamming, it nevertheless helped to boost Ethereum’s price and should continue to do so into 2021. 24-hour volume on the Ethereum network has also seen extreme growth this year, peaking at $140 billion on January 4.
Harcourt believes there is room for more growth going into 2021, citing a ‘broken’ financial system that will help boost interest in cryptocurrencies.
“…there is a ‘broken’ (I use that word loosely) financial system that will inevitably be replaced by the more open, fair and efficient system that is Bitcoin and blockchain technology (Ethereum, Decentralised Finance),” he told Australian news outlet DMARGE.
However, he noted that now may not be the best time to buy as prices are very high. “A good time to enter the market may come in 1, 2 or 3 months as I think Bitcoin will end 2021 at a higher price,” he said. It looks like he might be right, as other market indicators are suggesting a possible retrace from the current overbought level.
The supply of Bitcoin on exchanges is currently at the highest its been in nine months, suggesting traders are getting ready to sell. With Bitcoin already up by a massive 25 percent just in 2021 alone, buying power must surely start dissipating soon. Even the institutional interest that drove Bitcoin to new highs through late 2020 is beginning to wane, and retail investors appear to be diversifying into altcoins.
Over the past 24 hours, smaller-cap cryptocurrencies like AAVE, ATOM, and MIOTA have all enjoyed gains of between 7 to 12 percent. In the same period, Bitcoin has seen barely any change at all, suggesting that this record-breaking month-long rally that saw it double in price may finally be exhausted.
