EVM - 6. Continued Growth?

    Analyzing Polygon, Arbitrum, and Optimism growth metrics.

    Introduction

    One thing Polygon, Arbitrum, and Optimism all have in common is the fact that they were all launched to provide a better user interface and scalability compared to the mother mainnet. Polygon employed the sidechain approach while Arbitrum and Optimism used the Optimistic roll-up approach. We'll be looking at various growth metrics across Polygon, Arbitrum, and Optimism to identify trends and how they are likely to affect the chains going forward in 2023.

    Definitions

    Metrics to be analyzed are defined below:

    • Daily Active Users (DAUs): These are the number of users making at least a single transaction every day.
    • Daily Transaction Count: Total number of transactions initiated daily (this includes failed transactions too).
    • Transactions Per Second (TPS): The number of transactions executed every second.
    • ETH Volume: The amount of ETH transferred over time.
    • Token Transfer Activity: The number of transactions involving the transfer of ERC20 tokens from one user to another.

    Method

    The following growth metrics; daily active users, daily transaction count, transactions per second, ETH volume, and token transfer activity shall be analyzed over the past 90 days.

    Daily Active Users

    These are the number of users that perform at least a single transaction every single day. This is usually used as a measure of how active the chains are. When used in comparison to others, it can be used to imply the measure of adoption.

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    Polygon's daily active users have seen a sustained amount of >200 thousand daily since November 2022. On January 6th, 2023, the number of active users peaked at 638 thousand in the last 90 days. Polygon gets about 360,000 daily active users on average.

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    Arbitrums' daily active users have seen a sustained amount of >40 thousand daily since November 2022. On December 15th, of 2022, the number of active users peaked at 77 thousand in the last 90 days. Arbitrum gets about 54,000 daily active users on average.

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    Daily Transaction Count

    These are the total number of transactions that are performed every single day. This is a metric that is used to measure activity and interest within a network.

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    At the time of this writing Polygon's daily transaction count has not fallen below the 2 million mark in the past 90 days. It peaked at 3.673 million on November 9th, 2022. Polygon averages about 2.5 million in daily transactions.

    Optimism's daily active users have seen a sustained amount of >40 thousand daily since November 2022. On December 21st, of 2022, the number of active users peaked at 111 thousand in the last 90 days. Optimism gets about 46,000 daily active users on average.

    Combining the daily active users of Polygon, Arbitrum, and Optimism all in one chart gives us the line chart above. We can notice a zig-zag pattern that moves in a plateau manner. Polygon is way ahead in terms of numbers while Arbitrum and Optimism keep battling it out.

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    At the time of this writing, Arbitrum's daily transaction count has not fallen below the 200 thousand mark in the past 90 days. It peaked at 800 thousand on November 8th, 2022. Arbitrum averages about 500,000 in daily transactions.

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    At the time of this writing, Optimism's daily transaction count has not fallen below the 200 thousand mark in the past 90 days until mid-January 2023. It peaked at 800 thousand on January 12th, 2022. Optimism averages about 400,000 in daily transactions.

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    Transactions Per Second (TPS)

    The number of transactions processed per second. This is a measure of network speed and scalability

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    Over the past 90 days, Polygon recorded an average of 76 transactions per second, Arbitrum recorded 7.12 transactions per second, and optimism recorded an average of 72.45 transactions per second. While TPS for Arbitrum and Polygon change over time, that of Optimism seems to remain constant.

    ETH Volume

    The amount of ETH volume transferred between accounts. WETH was used to calculate for Polygon, while bridged ETH was used to calculate for Arbitrum and Polygon.

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    Arbitrum is the leading chain among the three followed by Optimism and Polygon. ETH transfers fell off a cliff in December 2022 which may have been a result of smart money spot buying ETH before the price run in early January 2023.

    Token Transfer Activity

    This metric takes a look at the transfer of ERC20 tokens across user accounts. We can get an idea of adoption on these chains.

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    Token transfer activity across Polygon, Arbitrum, and Optimism has not changed much as the pattern shows a zig-zagged plateau. In total, Polygon leads the trio in total transaction count, followed by Optimism, and Arbitrum.

    Conclusion

    Looking at metrics like active users, transactions, volume, and TPS, we can conclude that growth is not slowing down across Polygon, and Arbitrum in general. For Optimism, transaction activity has fallen off a cliff but a plateau is possible for the foreseeable future. Like every kind of activity is a decentralized network of independent actors, the metrics analyzed move in a zig-zag pattern but by zooming out you can see a smooth plateau. We conclude this analytical piece by saying that Ethereum layer 2 networks like Polygon, Arbitrum, and Optimism will be able to maintain its current growth rate for the rest of 2023 as the market looks to be bouncing back.