Comparing Optimism’s User Behavior With Ethereum’s Users

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Overview

As Ethereum’s users grow day by day, certain capacity constraints have arisen. Due to this, “scaling solutions” have become necessary in order to reduce network costs. The primary goal of scalability is to increase transaction speed (fiercer finality), as well as transaction throughput (the number of transactions per second) without compromising security and decentralization. As a result, Ethereum’s layer 1 blockchain is oversubscribed and transactions are slow. Maintaining the health of the Ethereum network requires improving the network capacity in terms of speed and throughput. The Ethereum blockchain (ETH), the largest blockchain for smart contracts, has scaling issues. Thus, Ethereum becomes more expensive and slower as the number of users increases.

Since Ethereum’s scalability problems have emerged, a number of alternatives have emerged. They are also known as “Ethereum killers.”. Examples include Avalanche and Fantom. For Ethereum, layer 2 chains offer scalability in addition to the mainnet.

What is Optimism? How does it works ?

There are several scaling solutions for layer 2. One of them is optimism. Optimistic rollups use a technology that bundles large amounts of data into digestible chunks for easy consumption. Along with other layer 2s, such as Arbitrum, optimism is much cheaper to use than Ethereum.

Ethereum mainnet layer 2 is enhanced with an optimism chain. Whose data is published on mainnet for verification but transactions are conducted on optimism.

Optimism uses a technique called rollups, more specifically optimistic rollups.A rollup is simply a compilation of the data from several transactions into a single transaction on Ethereum mainnet (layer 1). They can be used for non-fungible token (NFT) mints, token swaps, etc.

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.

This technology is known as a rollup, and it relies on the principle that it is valid until it is proven false. Potentially invalid transactions can be challenged by providing a “fraud proof” and running the computations of the transactions with reference to state data during a certain time period. As a result of optimism, gas is reimbursed for running the fraud proof calculation.

Comparing User Behavior

We will examine the adoption of both blockchains in order to assess a blockchain’s adoption, and what metric is better than transactions per hour? The following chart shows the number of transactions performed per hour on Ethereum and Optimism. Since Ethereum offers support for a wide range of applications and amazing decentralization, it is no surprise that it has the highest number of transactions.

Active users are the next metric that we would like to present to you. Wallets that performed a transaction within a given hour are considered active users. Similar to the transactions chart above, Ethereum has more active wallets than Optimism. 

While it is impossible to find the location of a blockchain user, we can use heuristics and some guesses based on when the transaction is initiated to determine whether the blockchain user is from Western or Eastern countries. To conduct this analysis, we classified any transaction performed between 10th and 22nd hours of a day (GMT) as a transaction performed by a user residing in “Western Countries”. Based on the following side-by-side comparison, it can be seen that Ethereum & Optimism have similar distributions of transactions by Western and Eastern countries. The Western Timezone accounts for just over 53% of transactions.  

How do Ethereum & Optimism users compare when it comes to the number of transactions they perform? From both blockchains, let’s see how many transactions were performed by  a user in the past 9 days. Ninety-four percent of users in both blockchains have performed just one to ten transactions in the past nine days. Although Optimism has very low gas fees (more on this below), 94% of users on both blockchains perform similar numbers of transactions. This could be due to the general crypto winter mood. Since the recent meltdown, many retailers are scared or worse, financially burned, and are not interacting with blockchains.

The second category of users we notice in the charts below are those who have performed 11-100 transactions in the last 9 days. In comparison, 5% of Ethereum users performed 11-100 transactions and 6% of Optimism blockchain users performed 11-100 transactions. 

It can be concluded that there are no behavioral differences between Ethereum & Optimism users when we look at the whole set of transactions performed by a user in a broader context. However, let us take a deeper look at a single group of users and see if there are any differences between them and the others? In order to gain a better understanding of how users are using distributed exchanges on Ethereum and Optimism, let’s analyze what they are doing.

There is a noticeable difference between the behavior of DEX users on both networks. The number of swaps that an average Optimism user makes is several times greater than that of an Ethereum user. We can now take a closer look at one random day in 2022, June 19th, and compare the number of swaps that took place on both Ethereum and Optimism: 3 swaps on Ethereum and 16 swaps on Optimism. That is a 5x difference between the two. A key driver behind this is the lower gas fees on Optimism. This allows DEX users to execute several swaps in a day, while Ethereum users are restricted by high gas fees.

The gas fees on Optimism are lower than those on Ethereum. However, how much is the cost difference? The following chart shows the average transaction fees paid by Ethereum and Optimism users in ETH. On the graph, you can see that Optimism’s transaction fees are very low when compared to Ethereum. If you look at the comparison chart, you won’t even notice the transaction fees since they are so low!

The chart below shows how costly it is to perform a DEX swap on the Ethereum blockchain versus Optimism blockchain. Performing swaps on Ethereum is extremely expensive by several orders of magnitude. The cost of a DEX swap on a busy day like June 15th 2022 was 126 times higher than a normal day like June 25th 2022, when the cost was 16 times lower. In other words, Optimism is about 16-126 times cheaper depending on the Ethereum network’s traffic.

Optimism’s low gas fees also explain why swap transactions are on par with Ethereum. Based on the following chart, we can see the number of DEX swaps executed per day as well as the number of wallets that perform DEX swaps on Optimism are comparable to Ethereum. 

Uniswap’s TVL & Daily Volume on Optimism & Ethereum

The following chart shows the TVL of Uniswap DEX on Ethereum and Optimism blockchains. While Uniswap’s TVL on Ethereum is around 3+ billion USD, the TVL on Optimism is around 30 millions. We observe similar gap in daily TVL.

Out of the two blockchains, Ethereum contributes the most (98.51%) to the total Volume (USD). In terms of total volume, the lowest total volume (usd) is 257.84M (Optimism), and the highest total volume (usd) is 17.06B (Ethereum). 

Observations

  •  The above analysis shows that even though the transaction fees on Ethereum are higher, there are more hourly transactions that are done with Ethereum only over the past 9 days. As compared with Optimism, Ethereum has almost ten times more transactions.
  • According to a comparison of Ethereum vs Optimism hourly active users over the past 9 days, Optimism has 193.68K active users, while Ethereum has 4.55M active users. Thus, Ethereum is used by the majority of active users. 
  • We can see on both layers and both timezones that EThereum and Otimism transactions are performing in almost equal percentages on both layers and both timezones.
  • According to the Eastern and Western time zones Transactions performed by users of both the Ethereum and Otimism blockchain, almost 90% of all transactions are categorized as ‘1-10 Transactions’. As a result, the majority of transactions on these two blockchains are performed by users with fewer than 10 transactions. 
  • When we compare the number of swaps performed by Ethereum vs Optimism users, we notice the average number of swaps performed by Optimism users is greater than Ethereum Swap users.
  • As we compare the average transaction fees in ETH for both blockchains, optimism shows much less change than Ethereum. Almost nothing. We can also say that due to the volatility of the crypto market, the average transaction fees on the Ethereum blockchain have changed considerably.
  • Based on the traffic on Ethereum network, we can see that Optimism is about 16-126 times less expensive than Ethereum DEX when comparing its swapping fees to Ethereum DEX. 
  • Although there is a big difference in average swapping fees between Ethereum and Optimism, there is not much difference in the number of DEX swaps.
  •  As we compare the number of users performing DEX swaps on both the blockchains, we can observe an increasing trend for Optimism.
  • While Uniswap’s TVL on Ethereum is around 3+ billion USD, the TVL on Optimism is around 30 millions. We observe similar gap in daily TVL. TVL shows an increasing trend.

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