OP: Exploring Optimism's Governance Token

Photo - OP: Exploring Optimism's Governance Token
Optimism, a second-layer blockchain developed to enhance Ethereum's scalability, is managed by the Optimism Collective community, comprised of OP token holders. The community is divided into two branches: Token House and Citizens House, both of which play a critical role in making decisions about the project's direction.
Token House is a division of OP coin holders responsible for discussions and voting related to proposals for improving the blockchain. Optimism token holders can participate in surveys on their own or delegate their votes to another eligible participant. 

Topics that can be brought up for discussion by the community may include:

  • Allocation of grants to the Management Fund;
  • Upgrading the Optimism network;
  • Alteration of tokenomics;
  • Revocation of authority of high-ranking officials;
  • Allocation of funds for the treasury. 

The Citizens House is responsible for the decentralized management of financing for socially significant blockchain startups by utilizing DAOs, oracles, and smart contracts. 

OP tokenomics

The initial coin offering (ICO) for OP was held on May 31, 2022, during which approximately 200,000 addresses received 200 million OP tokens at a price of $3 per unit through an airdrop, which was provided for free. However, due to an ineffective token distribution strategy, the value of OP plummeted to $0.5 in the month following the listing. As of March 29, 2023, the price of the token has reached $1.64. 

At the time of writing, the OP token was ranked 78th on CoinMarketCap with a market capitalization of $548 million. The circulating supply is 335.3 million tokens, while the maximum amount of issued coins is limited to 4.2 billion OP.

The allocation of Optimism tokens is as follows:

  • 25% went to various ecosystem funds;
  • A 20% is reserved for financing social crypto startups launched on the Optimism blockchain;
  • 19% was allocated for retroactive airdrops to loyal users, of which 5% was spent on the first free token distribution;
  • Optimism Collective participants claimed 19%;
  • Investors got 17%. 
Infographic: Optimism token allocation. Source: optimism.io

Infographic: Optimism token allocation. Source: optimism.io

Tokens allocated for investors and major contributors are locked for sale for two years from the time of the token's ICO. 

A positive aspect of the token distribution is that investors are allocated 17% of the total token supply, while 25% is dedicated to the ecosystem fund. This indicates that Optimism is emphasizing the further growth of the project rather than profits for sponsors. 

What is Optimism L2 blockchain?

Optimism is one of the most popular Layer 2 blockchains for the Ethereum network, specifically belonging to the type of Layer 2 known as Optimistic Rollups. This solution is a separate blockchain that operates on top of the main network, offloading it and helping it to function smoothly.

Optimism aids in scaling Ethereum by performing all computations and transaction records on its own blockchain. However, data verification and security are managed by Layer 1.
Optimism website homepage

Optimism website homepage

The L2 blockchain ecosystem comprises decentralized applications like Synthetix (SNX), Uniswap (UNI), Velodrome (VELO), and 90 other protocols. The Total Value Locked (TVL) on the platform is worth $500 million.

The statistical data for Optimism in 2022:

  • Around 7,000 smart contracts were created;
  • 300,000 new addresses were added;
  • Transactions totaling $17.4 billion were made;
  • Revenue of $24.5 million was generated.

According to Dune Analytics, the leading Layer 2 blockchain for Ethereum processes 111,000 transactions within 24 hours, which are 63 times cheaper than on the Layer 1 chain. 

Founders and Partners of Optimism

The second-layer blockchain was developed in 2019 by Jinglan Wang, Karl Floersch, and Kevin Ho. Initially, Optimism was used to launch the decentralized Unipig exchange, which served as a test version of Uniswap. After confirming the effectiveness of Optimistic Rollups as a type of Layer 2, the team deployed another testnet in 2020. The mainnet was launched in early 2021. 

The Optimism Foundation, a non-profit organization, is responsible for advancing the development of the blockchain ecosystem. Its founders include Jinglan Wang, Ben Jones, Eva Beylin, and several others. The company's headquarters are located in New York City.

Paradigm is a close partner of Optimism and has participated in all funding rounds from 2020 to 2022. The project is also supported by major investment firms such as IDEO Colab Ventures, Andreessen Horowitz, and a16z.