- Optimism’s large wallet investors, are accumulating OP tokens across exchanges.
- An address associated with a crypto VC accumulated $5.71 million in OP tokens on Binance over the past 24 hours.
- Ethereum’s upcoming Cancun upgrade is likely driving large wallet investors to Layer 2 projects like Optimism.
Optimism is one of the largest Ethereum Layer 2 scaling solutions. Whales or large wallet investors in the ecosystem are accumulating OP, the native governance token of the project since the last week of May 2023.
The rising accumulation trend supports a bullish thesis for OP closer to Ethereum’s Cancun upgrade. The new update is focused on reducing cost and boosting revenue for Layer 2 scaling solutions like Optimism and its competitor Arbitrum.
Also read: Shibarium “almost ready” to reopen after initial network-related woes
Optimism Whale accumulation trend continues, fuels bullish narrative for OP
Based on data from crypto intelligence tracker Santiment, between May 25 and August 23, 113 million OP tokens were accumulated by the whales. These large wallet investors hold between 100,000 and 10 million OP tokens and scooped up nearly $180 million worth of Optimism tokens in the given timeframe.
As seen in the Santiment chart below, a key on-chain metric, the daily active addresses on Optimism have climbed this week. This metric doubled from 12,228 to 24,029 between August 20 and 21. This uptick indicative of higher volume of investors actively interested OP tokens at the current price levels, supporting a bullish thesis for the Layer 2 token.
%20[09.24.24,%2023%20Aug,%202023]-638283637411107320.png)
OP supply distribution and DAA
An on-chain indicator, SpotOnChain, identified a wallet address that likely belongs to crypto VC, Amber Group. This address scooped up 3.73 million OP tokens from Binance, at an average price of $1.53. The VC accumulated $5.71 million OP tokens within a 24 hour period.
Address 0x011 (likely Amber Group) accumulated 3.73M $OP from #Binance at $1.53 on avg ($5.71M) over the past 24hrs.
— Spot On Chain (@spotonchain) August 22, 2023
The VC probably accumulated $OP for the upcoming #Cancun Upgrade, which is expected to benefit Arbitrum & Optimism vastly.
Current holding: 8.14M $OP ($12.5M)… pic.twitter.com/731zHYBs03
According to on-chain analysts at Santiment, the upcoming Ethereum Cancun upgrade is the driver of the accumulation trend in OP token. The Group’s current holding is 8.14 million OP tokens, worth $12.7 million.
How the Ethereum Cancun upgrade could boost revenue for Optimism
The Ethereum Cancun upgrade is set to go live by the end of 2023. The upgrade is also known as Cancun-Deneb or Dencun, and comprises a series of improvements in Ethereum’s execution and consensus layers. Read more about the upgrade here.
The upgrade consists of Ethereum Improvement Proposals (EIPs), including EIP-4844 (proto-danksharding) focused on boosting scalability, security and usability of the ETH chain for users. Check this post for more information.
Find out more about EIP-4844 and why it is a game changing upgrade to Ethereum here.
It marks a key milestone for addressing scalability, gas efficiency and security; challenges that are currently faced by Layer 2 projects like Optimism and Arbitrum.
Ethereum Cancun-Deneb could reduce the cost of transactions and in turn increase protocol revenues for Optimism. An exact date has not yet been announced. The upgrade is expected to occur before the end of 2023.
Ethereum development FAQs
What is the next big Ethereum software update?
After the Merge, the Ethereum community is looking at the Sharding upgrade next, which has been slated for sometime later in the year. The development can be summarized in four words, “scalability through more efficient data storage.” The software update will increase the capacity of the blockchain, widening the amount of data that can be stored or accessed. At the same time, all services running atop the Ethereum blockchain will enjoy significantly reduced transaction fees.
What is the difference between hard fork and soft fork?
A fork is the splitting of a blockchain after developers agree and proceed to implement upgrades. The decision comes after these developers reach a consensus for a software upgrade. The ensuing part will see one part continue with the status as is, while the other one will proceed with new features combined with the former ones. A hard fork basically entails permanent divergence of a new side chain from the original one, while a soft fork is doing the same, only difference being that it is temporary.
What is EIP-4844?
EIP-4844 is an improvement proposal for the Ethereum network. The upgrade promises reduced gas fees, which is a valuable offering considering the high transaction cost that continues to daunt crypto players. It has been a long-standing concern for the Ethereum network. The proposal is also referred to as “proto-Danksharding,” with an unmatched ability to increase the speed of transactions on the Ethereum blockchain. At the same time, it helps to reduce the transaction cost as everything becomes decentralized.
What is gas in the context of Ethereum?
Gas token is a new, innovative Ethereum contract where users can tokenize gas on the Ethereum network. This means they can store gas when it is cheap and start to deploy the gas once the market has shifted to the north. The use of Gas token helps to subsidize high gas prices on transactions, meaning investors can do everything from arbitraging decentralized exchanges to buying into initial coin offerings (ICOs) early.
Like this article? Help us with some feedback by answering this survey:
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Celebrity meme coins controversy continues amid Pump.fun revenue dominance
Pump.fun outperformed the Ethereum blockchain on Tuesday after raking in $1.99 million. Following this achievement, a meme coin based on actress Sydney Sweeney was the subject of controversy after its developers dumped their bags on investors.
PEPE's on-chain metrics indicate potential rally after weeks of silence
PEPE has struggled to see any significant price move after reaching an all-time high in May. Increased adoption rate and low MVRV ratio indicate a bullish run may be on the horizon. A single PEPE outflow from Binance worth $14.7 million gives credence to signs of bullish expectation.
Ethereum has failed to overcome key resistance despite bullish sentiment surrounding ETH ETF
Ethereum (ETH) is down more than 1.4% on Tuesday following another ETH sale from the Ethereum Foundation. Meanwhile, crypto exchange Gemini's recent report reveals that ETH ETF could see about $5 billion in net inflows within six months of launch.
Crypto community blasts Polkadot following report of treasury spending
Polkadot reports $87 million of treasury spending during H1. Crypto community members expressed harsh feelings toward the DOT team's high spending. DOT is up more than 2% in the past 24 hours but risks correction following the report.
Bitcoin: BTC price correction could end in July, according to seasonal data
Bitcoin (BTC) price appears poised for a decline this week, influenced by slight outflows in US spot ETFs, selling activity among BTC miners, and a combined transfer of 4,690.28 BTC to centralized exchanges by the US and German governments.