- ARB and operating profit suffered price adjustments along with a decrease in trading volume.
- Network growth indicates less interest from new users.
The two most prominent networks in the layer 2 sector, Arbitrum (ARB) and Optimism (OP), have struggled to see similar growth in price terms compared to the rest of the cryptocurrency sector.
can’t see green
As ARB and operating profit hovered around $2.02 and $3.95, respectively, trading volume also decreased significantly to 42% for ARB and 28% for operating profit.
Looking at the network growth of these tokens, we see declines that indicate a potential lack of interest from new users, with the potential for declining price fluctuations deepening.
This decline in network growth could cast a shadow over the near-term outlook for both ARB and OP.
Velocity, a key indicator of how often tokens move, told a different story. ARB decreased speed while OP increased.
Source: Santiment
Activity slows down
In terms of the overall health of both ecosystems, both networks appear to be having a difficult time.
Comparing the overall activity levels of the networks revealed a mixed bag. Both ARB and OP saw a decline in daily active addresses and daily transactions.
However, Arbitrum maintained relatively high activity compared to Optimism.
The decreasing number of these baseline metrics has raised questions about the current participation and usefulness of these layer 2 networks.
Source: Artemis
The state of the network in terms of Decentralized Finance (DeFi) and Total Value Locked (TVL) was both positive and negative at the time of press.
Despite recent adjustments, both Arbitrum and Optimism have seen a surge in TVL, demonstrating continued interest from existing users.
However, the decline in daily activity and new addresses may signal caution about the continued growth of these networks.
Realistic or not, ARB’s market cap in BTC terms is:
It is important to understand the pivotal role TVL and activities play in the Layer 2 sector. A decrease in TVL can affect the overall health of the network and potentially lead to a loss of investor confidence.
Likewise, decreased activity may indicate difficulties attracting and retaining users, which are essential to the long-term success of these layer 2 solutions.
Source: Artemis