What Is The $OP Token? Understanding Optimism's Governance Token

The OP token from Optimism, a Layer 2 scaling solution for Ethereum, has lost its initial momentum after the first airdrop in May, but the token could be on a tortuous road given the prospect of additional airdrops over the next four years before it self-destructs and reinvents itself.

Optimism announced a new governance system on April 26, launching a token that creates an ongoing system of incentives for projects and users.

OP was first airdropped to the most loyal users of the Ethereum scaling solution who have used Optimism up to March 25 or donated to public goods funds on Gitcoin. Users of Ethereum bridges to Layer 1 and 2 solutions are also eligible for the airdrop.

The trading of the OP token began on May 31 when the token was listed on Binance and other major exchanges.

To understand what OP does, we need to dig deeper into the Optimism Collective governance system. The governance system comprises two Houses: the Token House and the Citizens’ House.

The Token House is established by Airdrop #1 of OP tokens where holders will be able to vote on protocol upgrades, and project incentives as a part of a Governance Fund. On the other hand, the Citizen House is "the vehicle which enables the distribution of power away from any centralized organization, to a human-centric, non-plutocratic mechanism."

"The primary responsibility of the Citizens’ House will be funding those public goods which have the most positive impact on the Optimism and Ethereum ecosystems. The first Citizens’ House experiment and its corresponding Citizenship NFT collection will be the next major milestone for the Collective," as per a blog.

The latter will be launched later in 2022 while the former is already live with the airdrop of OP tokens. The collective’s bicameral governance system will be improved with time and the Optimism Foundation will serve as a steward of the Collective, running governance experiments and bootstrapping the ecosystem. However, the foundation will eventually dissolve.

The OP Airdrop #1 is not the only one to take place. There will be a "whole season of airdrops" as well. The supply of the OP token is 2^32 (4,294,967,296) tokens which will unlock over the course of four years and the Ethereum Layer 2 solution has allocated 5% of the initial OP supply for Airdrop #1.

An important thing to note here is that the Optimism Collective will self-destruct and reconstruct itself repeatedly over the years. This has been done to ensure that the ecosystem is able to stand the test of time and lasts for decades to come.

The token jumped by 6% in the last 24 hours to $0.9 as of 12:10 am ET, as per CoinMarketCap. Following Airdrop #1 and listing on major exchanges, OP went to an all-time high of $4.57 but has since been sold off by investors. With additional airdrops coming in, it will be interesting to see if the price action will be able to reclaim $1.

According to the wallet data provided by EtherScan, the top 10 biggest addresses account for 87.6% of the supply. Interestingly, these addresses are smart contracts wherein OP tokens are locked.

Recently, as revealed by the official Twitter account of Optimism, attackers stole $15 million worth of OP tokens which the Layer 2 solution intended to send to a crypto market maker. However, the tokens fell into the wrong hands after the market maker, Wintermute, provided Optimism’s team with the wrong blockchain address.

However, taking into account the wallet data and the future plans for the OP token, it seems that creators want Optimism to last for decades to come.