A Quick Study on Optimism
Optimism is a fast, stable, and scalable L2 blockchain built by Ethereum developers, for Ethereum developers.
Optimism was referred to me by a few people, so I decided to dedicate some research to it. Date of writing is June 1st 2022, the total token supply of OP is 4,294,967,296. The current circulating supply is 1,318,490,188 (30% of the total token supply). Trading around $1.20.
General Description
Optimism is a low-cost & lightning-fast Ethereum L2 blockchain. Open source, secure, permissionless, and decentralized. Optimism addresses the practical needs of developers and users. Aims to create a smart contract platform that enables low-cost and near-instantaneous transactions. The Optimism Collective is a new model of digital democratic governance optimized to drive rapid and sustained growth of a decentralized ecosystem.
What is L2 you might ask?
Its a term to describe a specific set of ETH solutions. Basically a separate chain that extends ERC20. Optimism is exactly that, an extension. OPTIMISM is based on the idea that healthy public goods create a thriving and valuable ecosystem.
Value is created through this ecosystem to:
Tokenholders through the productive re-deployment of sequencer revenue. Sequencer revenue is primarily directed to fund public goods, which creates ecosystem value and drives demand for blockspace.
Contributors and builders directly from retroactive public goods funding and the markets it enables. Builders also benefit symbiotically: it’s better to build in an ecosystem with well-funded tools, education, apps, and infrastructure.
Users and community members from ongoing airdrops of $OP, from project incentives
$OP is the native token. Use cases:
Governance: $OP tokenholders are part of a bicameral system where tokenholders form a body to vote on certain governance matters.
Rewards Ecosystem: $OP tokens are airdropped to users and protocols which supported the Optimism ecosystem, and will be distributed through the $OP Governance Fund to future projects building on Optimism.
So.. Reading these usecases there’s two main thoughts:
Optimism serves as a rewards ecosystem, so holders and OP users receive airdrops which is counterproductive for the price. I personally would say it’s correct.
Since OP is an L2 of Ethereum, ETH still is the main coin used when trading on OP chain. So what really is OP selling point next to counter productive reward airdrops and governance?
First of all, Optimism is one of the biggest scaling solutions for Ethereum with over $300 million in TVL. It is home to 35 protocols, the biggest being Synthetix (SNX), a derivatives exchange, Uniswap (UNI), a DEX, and Velodrome (VELO), an AMM.
VELO AMM innovative technology:
Second of all, technology. There has been much talk about tech rollups in the bear market. It is a scalability technology that encapsulates a large number of Ethereum operations and synthesizes them into a single operation which is then stored in the blockchain. In this way, optimism can take the protocol of operations and reduce them to just one, increasing the scalability of the network while maintaining security. developers can replicate Ethereum dApps and release them on the Optimism network for use. Since Optimism and Ethereum are compatible at the code level and necessary, such a migration is almost transparent, which makes the work of the developers easier and at the same time makes it easier for users to access.
Of course Optimism is not the only Layer 2 of ETH, but Optmism (in contrast to Arbitrum for example) already has a token and takes advantage of its rollups tech. Optimism is currently also the fastest scalability solution with a TPS in the 30s. $OP has overperformed, which are additionally proven by the numbers of the TVL.
Tokenomics and Allocations
Ecosystem Fund: The Ecosystem Fund is a proactive program meant to stimulate development in the Collective ecosystem by providing funding to projects and communities
Retroactive Public Goods Funding: RetroPGF is the Optimism Collective’s primary mechanism to adequately and reliably reward public goods for the impact they provide.
User airdrops: A series of airdrops to reward users for specific helpful behaviors, beginning with Airdrop
Core contributors: The people who’ve been working tirelessly to bring the Optimism Collective into existence
Sugar xaddies: Investors
The allocation dedicated to the Ecosystem Fund is to be further split into the following categories:
Governance Fund (5.4%)
Partner Fund (5.4%)
Seed Fund (5.4%)
Unallocated (8.8%)
Read it more in detail here: Click The Link
So closing thoughts on my personal opinion on Optimism, and feel free to disagree:
Personally Optimism is not in my wallet holdings right now. Of course, it’s logical to say that with the growth of Ethereum, the growth of layer 2 follow, and Optimism as a layer 2 chain has potential to grow immensely as well as projects situated on there. And I agree. The token $OP itself might be mid / long term hold (especially since marketcap values around 250 million), but I don’t see the token grow over $10 in the next 5 years as its token utilities specifically are not as ground breaking as other altcoins.
Hope this post was helpful regarding understanding of the optimism project and its token $OP!