Optimism: DEX volumes surge, is this the reason why?

• Optimism saw a surge in DEX volume.
• The price of OP remained unaffected, however, network growth declined.

Despite the Layer 2 sector getting competitive and crowded over the last year, Optimism [OP] has continued to show its resilience.

A sudden spike

In the last week, the Optimism DEX saw a massive 1,800% increase in weekly trading volume, reaching over $12 billion, breaking previous records, and even surpassing Ethereum [ETH].

However, it’s important to note that this surge was primarily influenced by a vulnerability attack on KyberSwap, involving a transaction volume of $11 billion. This incident contributed to the overall spike in trading activity on the Optimism DEX.

Despite the extraordinary growth, the circumstances behind this surge should be considered in understanding the full picture of the increased trading volume.

After that sudden spike, the DEX volumes on Optimism fell. However, the TVL on Optimism continued to grow at a steady rate. This suggested that despite the drop in DEX volumes, the growth of the network in the DeFi space continued to rise.

Source: Artemis

How has the price been affected?

The price of OP remained relatively stable despite these events. At press time OP was trading at $1.80660. In the last 24 hours, the token grew by 0.65%, but no significant changes were seen. The network growth around OP, however, fell.

The decline in this metric suggested that new addresses were starting to lose interest in OP. Moreover, the velocity around OP also fell. This showed that the number of times OP was traded had also declined.

This could mean that the addresses were holding onto their OP and the current holders were accumulating more tokens. However, only interest from old token holders may not be enough to pump up OP’s price further.

Source: Santiment

However, new governance proposals on Optimism could attract users to the protocol in the future.

In this proposal, xToken Terminal and Gamma Strategies teamed up for an OP token liquidity boost on Optimism’s Uniswap [UNI] V3. They seek 900,000 tokens for a 24-week plan, split among providers

The proposal advocates liquidity mining for a robust foundation, with tokens evenly distributed.

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In this context, liquidity mining means rewarding people who provide liquidity to the OP token on Uniswap V3. People who add their OP tokens to the trading pool get extra tokens as a reward.

This encourages more people to participate and keeps the trading pool healthy.