Introduction To Optimism and ETH-OP Bridge

Optimism was developed by Ethereum's core devs, and it's a fast, stable, and scalable L2 blockchain. Created as a lightweight addition to the original Ethereum code.

Layer 2 (L2) protocols, often known as optimistic rollups, aim to increase Ethereum's base layer's throughput. Transactions are processed off-chain, reducing the load on the main Ethereum chain and allowing for significantly faster processing times.

By design, Optimism allows users to communicate between smart contracts on both Optimism and Ethereum using any message they like. This enables the exchange of assets, like as ERC20 tokens, between the two networks. There is a direction-specific difference in the precise method by which this communication takes place.

Optimism makes advantage of this feature in the Standard bridge to facilitate the deposit and withdrawal of Ethereum assets (ERC20 tokens and ETH) from and to the Optimism platform.

ETH Transfers on ETH<->OP Bridge

• One thing is evident that ETH-OP bridge is mostly used for inflow of ETH to Optimism. The number of transactions and unique addresses using the bridge for inflow is much higher than outflow.

• The ratio of transactions to unique users for inflow is <2 and for outflow is >5. This means that the few users who are using the bridge to withdraw ETH from Optimism are doing so in large volumes according to the USD volume bridged and average USD volume bridged.

• USD volume bridged is also higher for inflow than outflow by 6x. The lower gas fees on Optimism compared to Ethereum is the main reason for this. It can also be explained by the fact that the number of unique addresses using the bridge for inflow is much higher than outflow.

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Overtime Analysis of ETH Transfers on ETH<->OP Bridge

• From June 2022 to 25th of July 2022 USD volume bridged between the two networks was going hand in hand with each other. But from 25th of July 2022 to Oct 2022 the USD volume bridged for inflow experience 3 large spikes. The contribution of these spikes to the total USD volume bridged is >300$M.

• Looking closer to the charts, we can see that during the spikes the number of users and transactions stayed relatively much lower. This means that the spikes were caused by a few large transactions.

• Over the past few weeks the number of transactions and unique addresses using the bridge for inflow is going up in a linear trend while the USD volume bridged is going doesn't reflect this. This means that small portfolio holders are using the bridge to bridge ETH to Optimism. And they're average USD volume bridged is not that high.

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Overtime Analysis of Stable Coin Transfers on ETH<->OP Bridge (Inflow vs Outflow)

• DAI has been on an uptrend over the past few weeks in terms of usage for outflow transactions.
• USDC has been the dominant stable coin used for both inflow and outflow transactions. It is closely contested by DAI for outflow transactions specially since the beginning of Sep 2022.
• On 1st two weeks of Aug 2022, There was a large inflow of DAI to Optimism. This was followed by a large outflow of DAI from Optimism a month later on 1st week of Sep 2022.
• In the past few weeks there is an increase in the volume of outflow transactions for all the stable coins. This can also be seen from the uprising trend in the average USD volume bridged for outflow transactions which is surpassing $0.5M for USDC and USDT.
• The average USD volume bridge for inflow transactions is also going up for all the stable coins but is relative small. This shows that small portfolio holders are using the bridge to bridge stable coins to Optimism.
• Note that the USD volume into Optimism is oscillating around $30M over the past few weeks and is still much higher than the USD volume out of Optimism. But there's forming trend of increasing outflow transactions.

• Users bridging stable coins into Optimism are mostly using USDC and DAI and they are rising in number since July 2022. The average number of users using the bridge for stable coins inflow is >100 overall.

• Users bridging stable coins out of Optimism are mostly using USDC and are in the order of 10-30 on average across all the stable coins.

• Considering that the number of users using the bridge for stable coins inflow is much higher than outflow, but the average USD volume bridged for inflow is rising slowly, it can be concluded that large portfolio holders are moving from Optimism to Ethereum recently.

Conclusion

• Overall we can see that bridging activity was slow up until late Sep 2022. But since then the number of transactions and unique addresses using the bridge for inflow and outflow has been increasing.
• The growth in the bridging activity has not been reflected in the USD volume bridged.
• Across all the stable coins, USDC is the most used stable coin on the bridge. And the number of users using the bridge for stable coins inflow is much higher than outflow.
• The average USD volume bridged for inflow transactions is also going up for all the stable coins but is relative small. This shows that small portfolio holders are using the bridge to bridge stable coins to Optimism.
• The average USD volume bridge for outflow transactions is also going up with a steeper slope for USDC, USDT, and DAI. This shows that large portfolio holders are moving from Optimism to Ethereum recently.
• DAI is slowly gaining traction on the bridge. It is the most used stable coin for outflow transactions and the average USD volume bridged for outflow transactions is the highest for DAI.

Stable Coin Transfers on ETH<->OP Bridge

Our initial analysis included USDT, USDC, DAI. But after noticing the issue with DAI transfers we decided to add TUSD. After finding the contract address for DAI, it was added to our analysis.

• USDC and DAI are the front-runners in terms of number of transactions, unique addresses, and USD volume using the bridge. USDT and TUSD are following them.

• As expected most of the transactions are inflow to Optimism. From the number of transactions and unique addresses using the bridge for inflow, we can see that USDC is the most used stable coin on the bridge. And its volume of $550M, is almost 2x the sum of the other stable coins.

• DAI users are equal to USDT users. But the USD volume bridged for DAI is 2x the USD volume bridged for USDT and the average USD volume bridged for DAI is the highest for inflow and 2nd highest for outflow transfers. It shows that large portfolio users prefer DAI over USDT when bridging to Optimism.

• TUSD is the least used stable coin on the bridge.

Methodology

In the first section of the dashboard we analyze the ETH transfers to and from Optimism. We use the ethereum.core.ez_eth_transfers table and two contracts addresses to identify the ETH transfers to and from Optimism. To bridge from ETH to OP 0x99c9fc46f92e8a1c0dec1b1747d010903e884be1 is used and to bridge from OP to ETH 0x25ace71c97b33cc4729cf772ae268934f7ab5fa1 is used. Point of reference for Inflow and Outflow terminology is Optimism as follows:

• Inflow: ETH -> OP
• Outflow: OP -> ETH

The second section of the dashboard is about the stable coin transfers on ETH<->OP bridge. We use the ethereum.core.ez_token_transfers table and the same contracts as above with one exception. We noticed that DAI transfers are not using the same contract as ETH transfers after March 2022. After a bit of research we found that due to some issues with the bridge, DAI transfers are now using the 0x10E6593CDda8c58a1d0f14C5164B376352a55f2F for ETH->OP and 0x467194771dAe2967Aef3ECbEDD3Bf9a310C76C65 for OP->ETH. You can find this information on Optimism-DAI-Bridge

Bridging is analyzed using the following metrics:

1. Number of transactions
2. Number of unique addresses using the bridge
3. USD volume bridged
4. Average USD volume bridged
5. Overtime Analysis

Default start date of our analysis is 2022-06-01 and default overtime interval is on weekly basis. These can be changed from the dashboard.

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