The Optimism (OP) token is the native governance token of one of the most significant scaling solutions on the Ethereum network. It is also the first token to adopt Rollup technology. The OP token has been performing extremely well recently, rising as much as 227% since the beginning of 2023. This number is particularly eye-catching against the backdrop of Ethereum’s 135% rise. Currently, the total market value of Optimism token OP reaches $13 billion, which is comparable to Solana.
Before we dive into the Optimism project, let’s clarify what exactly Optimism and OP tokens are and their role in the crypto world.
What is Optimism?
Optimism is a Layer 2 scaling solution for Ethereum designed to reduce the load on the Ethereum network. It is designed to be an Optimism Rollup chain equivalent to the Ethereum Virtual Machine (EVM). One of the main features of Optimism is the reduced transaction costs on Ethereum applications. This is accomplished by moving transactions from one blockchain to another, significantly reducing miner fees and increasing throughput. At the same time, it provides an opportunity for Ethereum developers to take advantage of all the tools available on Ethereum without making too many changes.
How the Optimism (OP) coin works - Rollup
Optimism works based on a technology called Rollup. Rollup is a layer 2 scaling technology that stores hashes of contract states on-chain along with transaction calls and parameters and records them as call data. The actual transaction calculation occurs off-chain. Rollup performs transaction operations on the Ethereum blockchain but publishes transaction data on Layer 1 (the Ethereum main chain). Since transaction information is recorded on the Ethereum blockchain, Rollup can leverage the same security provided by Layer 1 while achieving high performance by batching off-chain transactions onto the chain. The security of Rollup relies on the accuracy of the on-chain contract verification state transition.
Optimism takes an optimistic approach by introducing an Optimistic Virtual Machine (OVM) to handle any differences from the Ethereum Virtual Machine (EVM). OVM is an EVM-compatible execution environment that can be used at Layer 2. It allows the execution of deterministic smart contracts between Layer 1 and Layer 2 to ensure functional consistency.
What is OP Coin?
As for the OP token, it is the native governance token of the Optimism platform and will be officially released on June 1, 2022. OP tokens are mainly used to participate in the governance of the Optimism protocol and determine the development direction and changes of the platform. On June 1, 2022, Optimism conducted an airdrop of OP tokens, sending free tokens to 249,000 eligible addresses to reward early users and other participants in the Ethereum ecosystem, including DAO voters, multi-sig and Ethereum cross-chain bridge users. Users can confirm whether they are eligible to participate in the airdrop by connecting their MetaMask wallet to the official website.
Optimism Coin OP Exchange Rate Introduction
The total supply of OP tokens and the token distribution plan are as follows: - The initial token supply is 4,294,967,296 OP tokens, with an annual inflation rate of 2%. In year 1, 30% of the initial token supply will be provided to the foundation for distribution, and after the first year, token holders will vote to determine the foundation’s annual OP distribution budget.
Optimism aims to create value for three types of supporters: 1. Token holders: gain value by effectively redeploying sequencer revenue. 2. Contributors and Builders: Gain value from retroactive public goods funding. 3. Users and community members: Gain value from ongoing airdrops and project incentives.
In short, demand for OP block space generates revenue that is allocated to public goods, thereby driving more demand for block space.
OP’s token distribution is as follows:
Ecosystem funds (25%): divided into governance funds (5.4%), partner funds (5.4%), seed funds (5.4%) and unallocated funds (8.8%).
Retroactive public goods funding (20%)
User airdrop (19%): divided into 5% for the first airdrop and unannounced subsequent airdrops.
Core Contributors (19%): People who helped bring Optimism Collective from concept to reality.
Investors (17%)
What is OP Stack?
In today's blockchain field, many projects are pursuing a modular strategy. Modularity means separating different functions of the blockchain, such as executing transactions, accounting and synchronizing the ledger, and handing them over to different participants rather than being completed by a single entity. This modular approach makes the blockchain more composable, and different components can be customized and replaced according to the needs of the project, thus improving the flexibility and scalability of the blockchain.
OP Stack is an important concept in Optimism. It represents part of the OP modular blockchain and is a key step in putting modular theory into practice.
Optimism divides the blockchain into three main layers: consensus layer, execution layer and settlement layer. The goal of OP Stack is to decouple these different levels of functionality and bring them together in the form of an API software stack. This greatly simplifies the process of building modular blockchains, allowing developers to more easily select, replace and integrate different components to create custom blockchain solutions based on their project needs. The emergence of OP Stack will help promote innovation in the blockchain field and promote the development and cooperation of more projects.
Execution layer
The execution layer is responsible for actually executing transactions. For example, if A transfers 2 ETH to B, the execution layer will subtract 2 ETH from A's balance and add 2 ETH to B's balance. As a Rollup solution for Ethereum, Optimism aims to execute transactions instead of Ethereum and only return the execution results. Ethereum trusts the results returned by the OP in an optimistic manner, while leaving a challenge period to prevent malicious behavior.
settlement layer
The task of the settlement layer is to verify the correctness of transactions. If the verification is correct, a state root is generated and confirmed.
Consensus layer
The consensus layer is used to ensure that all ledgers of the blockchain are consistent. It is responsible for synchronizing the ledgers of all parties to ensure they are in agreement. The consensus layer also includes a data availability (DA) layer, which stores data on the blockchain in order to verify transactions and calculation processes.
How will OP Stack change the OP ecosystem?
First, OP Stack will bring a more open and modular OP ecosystem. It is no longer limited to the concept of "projects on the OP chain", but explores the concept of the "OP universe". As OP Stack matures, Optimism will be very close to the implementation of Cosmos, building the OP universe with OP as the core.
"One-click chaining" will become a feature of OP, and L2 and L3 based on OP standardization will usher in explosive growth. Appchain can carry out "blockchain Lego"-style innovation on this basis, combining various featured virtual machines (VMs) and technologies to achieve unlimited innovation and possibilities.
In addition, individual modular blockchains built on OP Stack can achieve interoperability in the OP universe. Different chains can easily communicate with each other using a shared messaging format. This will promote collaboration and integration between different chains, bringing greater flexibility and scalability to the entire OP ecosystem. The introduction of OP Stack will bring significant changes to the future development of the OP ecosystem.
Optimism Ecosystem
Velodrome
TVL leads: Velodrome is the largest TVL (Total Value Locked) dApp in the Optimism ecosystem, with a total value of US$178 million. It leads all DEX projects, even surpassing the second place Curve by orders of magnitude.
Airdrop rewards: Velodrome conducted an airdrop of OP tokens to users who pledged veVELO in July 2022, attracting more users.
High rate of return: veVELO holders can receive an annualized rate of return of up to 52%, motivating users to lock veVELO and participate in liquidity provision.
Synthetix
OG DeFi Protocol: Synthetix is one of the early DeFi protocols on Ethereum and one of the first to migrate to Optimism Layer 2. The protocol allows users to create and trade synthetic assets and provides an efficient trading experience and low transaction fees.
Through these introductions, we can see the importance and potential of Optimism and its native token OP in the crypto world. With the continuous advancement of technology and the expansion of the ecosystem, Optimism is expected to become the leader in Ethereum expansion solutions in the future.