Question:

Is there a relationship between OP price and trade volume?

Overview of essay:

This analysis contains the following parts:

• DEX analysis on Optimism
  • swap count
  • Unique swappers
  • Volume
  • Average swap volume
• OP price and swap activity
• Token analysis
  • tokens swapped to and from OP
  • Popular OP pairs

Methodology:

Optimism is a Layer 2 Optimistic Rollup network designed to utilize the strong security guarantees of Ethereum while reducing its cost and latency. The native token of Optimism is $OP.

The data provided by Flipside has been used to handle this analysis.

• Swap activity:

  optimism.velodrome.ez_swaps union optimism.sushi.ez_swaps

• OP price:

  from optimism.core.fact_hourly_token_prices where SYMBOL='OP'

• Swap pairs:

  CONCAT(SYMBOL_IN,' / ',SYMBOL_OUT) as swap_pairs

Part 1: DEX analysis

Part 2: OP price and swap activity

Findings:

• About ==95%== of swaps executed on ==Velodrome== and only 5% of them done on Sushiswap.
• The average swap volume on Velodrome is over ==916 USD== and larger than Sushiswap.
• The highest swap volume on Velodrome happened on July 29 with over ==94 million USD== by about ==72k unique swaps==.
• The largest average swap volume in USD on Velodrome occurred on July 2 with 2345.
• August 16== was the busiest day on Velodrome and ==7752 unique swappers== made swaps on that date.
• The newcomers on Velodrome maximize on ==June 2== as a launch date of Velodrome on Optimism.

Part 3: OP price by token analysis

Findings:

Now lets talk about the impacts of swap activity on OP price.

• The correlation between OP price and swap volume on Optimism demonstrated on this first chart and as can be seen these are correlated in many ways.
• The peak and deep points of average swap volume on Optimism and OP price both have same dates, approximately.
• For example, on July 29 the swap volume reached 94 million USD and the OP price has been spiked in that time period to 1.756 USD.
• The correlation between OP price and swap count reveals that the swap count of 71.18k swaps has the OP price of 1.598 USD.

Findings:

The important part of this analysis belongs to the tokens used to swap for OP or swapped from OP to other tokens.

• The USDC, WETH and VELO are the most popular tokens swapped for OP tokens. The same order and tokens are the most popular destinations for swap from OP.
• In the volume aspect, the USDC dominated the swaps related to the OP.
• As expected, the OP/USDC is the most popular swap pair on Optimism with over 44% of swaps.
• The volume of swaps to OP token has strong correlation with OP price as can be seen. The trend of increasing in swap volume has been followed the OP price in general.

References and useful links:

• OP token
• Optimism DEXs: Velodrome and Sushiswap

Author:

Credited by MZG

Discord handle: m.zamani#0361

Twitter handle: @GargariZamani