ChainIDE#35 What signal does THE Op issue send out?

[子小艺]

Recently, Optimism announced a retrospective token airdrop for active users and community members. The project has generated great interest in the community as it promises to bring much-needed scalability to the Ethereum ecosystem. It is currently TVL's second largest Rollup extension and is probably the largest Rollup by market cap at the time of token release.

Optimism was launched in June 2019 and TestNet was released in October 2019. Alpha mainnet wasn't launched until January 2021, and Ethereum Virtual machines weren't launched until October 2021. An open mainnet was launched in December 2021.

Optimism is an extended solution to the Ethereum blockchain, and while Optimism ultimately publishes data to Ethereum, it performs ethereum-based off-chain transactions. In this way, Optimism achieves significant transaction efficiency and security at the same time. Optimism is the advantage of avoiding main network gas costs and transaction congestion while enjoying main network quality and safety. In addition to fast and inexpensive transactions, Optimism is currently the only L2 offering full Ethereum virtual Machine (EVM) equivalency.

As a result, Optimism was the first L2 to fully conform to the Ethereum protocol specification. This EVM equivalence reduces the need for compilers, and Optimism allows DeFi and NFT projects to deploy to Optimism with one click, and then still use all the good Ethereum L1 tools, such as Hardhat, Vyper, and others.

The main drivers of Optimism are as follows:

1. EVM equivalence
Optimism goes beyond simple EVM compatibility to EVM equivalence. On evM-compliant chains, developers still need to modify their Web3 applications to use a different architecture. Also, the tools built for Ethereum over time may not work for other EVM-compatible chains. EVM equivalence on Optimism solves this problem by performing almost identically on the Ethereum main network, allowing one-click portability of applications and all tools to work. This approach will help Optimism grow the developer community faster and with fewer bugs than other extension solutions.

2. Ecosystems encourage innovation
Optimism was very cautious about its airdrop plans; Only 5% of the promised 14% airdrops have been confirmed. With more airdrops promised in the future, users are motivated to be active on the platform.

Retrospective public Good Funding (RPGF) also provides long-term incentives for developers to contribute to Optimism. Optimism also recently announced a "Stimipack" that dedicates 5.4% of the token supply to developer incentives. The ecosystem incentivized to create another flywheel. The greater the market value of Optimism at the time of release, the more money is available for incentives, potentially leading to more user and developer activity. However, as any part of the flywheel slows down, there is also a negative feedback loop.

The OP token is a new type of governance token. The token holder does not have sole governance over the agreement; They share with designated citizens. This governance process and structure is based on its charter of work and will evolve according to the requirements of the agreement. The working charter also gives token holders some control over the Optimism Foundation's board of Directors, including the ability to remove directors and veto changes to Foundation documents if they reduce their rights. While not in absolute control, token holders do have sufficient control over the protocol and can fairly claim the sequencer profits to themselves.

The total supply of OP at the time of release was 4,294,967,296, with an annual inflation rate of 2%. In our model, we assume that all tokens held in the vault have been distributed. While the document does not explicitly state this, annual inflation may move in the RPGF direction and generate at least as much value for the agreement as its market price. So we can ignore inflation in our calculations.

Discuss

1. Do you think other L2 projects will follow?
2. What do you think is the value of OP token you value most?

Further Reading

1. Optimism start guide
2. industry science | L2 war has begun, parsing Optimism valuation models
3. What Is Optimism? Using Rollups to Help Scale Ethereum

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Welcome to our discussion

[remington]

@子小艺

Thank you for the useful comment.