Optimism Whales scoop OP tokens ahead of Ethereum Cancun upgrade

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.

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.

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
— Spot On Chain (@spotonchain) August 22, 2023

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.

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