Optimism, a layer 2 rollup on Ethereum, recently announced its native $OP token on April 26th, 2022. There was a flurry of activity around the announcement. Many users tried apps on Optimism either in hopes of receiving an airdrop or simply exploring the scaling technology.
One of the beneficiaries of this excitement has been Uniswap, the leading decentralized exchange in the Ethereum ecosystem. In this blog post, we will take a look at activity in the two weeks before and after the announcement to see how the news impacted usage of Uniswap on Optimism (roughly the time activity picked up).
Let’s put some numbers to the amount of daily activity over the four weeks. Initially we found that 1.2k addresses were performing 32.5k swaps on $78.6M of volume per day. Underneath these numbers though, there was a large share coming from Perpetual Protocol v2, Curie, which routes its swaps through Uniswap. Curie accounted for 75% of swaps, and the notional exchanged accounts for 88% of the dollar volume.
We want to look at usage of the Uniswap app and the virtual USD being swapped complicates our ability to make a like for like comparison, so we will be excluding the perpetual swaps for the rest of this analysis. When excluding this traffic, we find 1.2k addresses performed 8k daily swaps (7 per trader) on $10M ($1.2k per swap) of volume per day.
The number of addresses making swaps was already rising two weeks before the announcement, up 97% week of week on April 14th. Addresses then experienced a massive 527% spike to 2,967 on April 20th, about a week before the announcement. The run up ahead of the announcement was likely due to rumors of the airdrop coming. The number of addresses making swaps has come down from its highs, but is still up 122% two weeks after the announcement compared to two weeks before.
One of the most encouraging metrics to see is share of first time addresses trading on Uniswap. The share of new addresses reached 75% on April 24th, from a low of 31% two weeks prior. There was also a spike in first time transactions, which means the address had not done any other transaction on Optimism. This metric had a similar pattern to it, spiking at 55% up from 20%. This exposure was not sustainable and fell all the way back down to 26% and 8%, respectively, but the newly acquired addresses should hopefully continue to use Uniswap into the future. Note, we only included data from OVM 2.0 which goes back to November of last year.
Unlike addresses, which saw a single spike followed by a steady tapering to a new higher average, the USD volume being swapped has been more erratic. There was a similar spike on April 20th, but then subsequent spikes on April 26th, May 5th, and May 9th. The average volume per swap similarly sawtooths.
Uniswap had as high as 82% share of the DEX market by USD volume two weeks prior to the announcement. In the week leading up to the announcement Zipswap, an Optimism native DEX, saw its share reach as high as 26%, but has since faded post announcement. Curve also gained traction in the week before the announcement, but has seen its share continue to climb to as high as 47%. This has eaten into Uniswap’s share which reached 37% two weeks after the announcement.
The top five trading pairs by USD volume held mostly steady throughout the period, with the top five accounting for 50-70% of volume. Analyzing the same trend but on number of swaps provides a similar picture, but the top five pairs account for 40-60%. The top five pairs under each metric shared four of the five names, with the exception being sUSD/DAI for volume and WETH/SNX for swaps.
The number of unique pools with swaps occurring by day did rise from 65 at the start up to 91 on April 20th, an increase of 40%. This suggests that the announcement did lead to some dispersion of activity across pools. Given our findings above though, the top five pairs retained their dominance which suggests that the dispersion happened across the smaller pools.
The number of swaps by fee tier remained roughly even, suggesting that users were not pilling into lower fee pool just to trade cheaply.
One concern was that traders would be swapping back and forth, creating fake swaps in an attempt to mine the airdrop. We did indeed find that pre-announcement roughly 15% of addresses swapped both directions in a token pair, but has been cut in half to 7% post announcement. This suggests that while some traders are in fact trading both ways for legitimate reasons, the earlier trades may have been partially inflated by this type of behavior.
There wasn’t a clear rush to add liquidity before or after the announcement (see dashboard for daily totals). Surprisingly, in the days leading up to the announcement Lyra, one of the first Optimism native projects, experienced sizable outflows, when addresses may have wanted to continue to LP for the chance of outsized airdrop rewards. Some of the other top pools by net flows were other Optimism native projects like ZipSwap. Overall, the behavior suggests that swapping and not LPing was the primary method for new engagement around the announcement.
While from a dollar flows perspective there wasn’t a clear rush to add liquidity, when looking at simply the number of daily depositors and the share that were first time, there was a rosier picture in the lead up to the announcement. There was a very similar trend to traders, in that there was a massive spike on April 20th and then a settling to a new higher average. The share of first time LPers also spiked to 65%, up from 30% a week before.
For the full dashboard visit: Uniswap Activity Dashboard.