On April 27, Optimism, the second-layer expansion network of Ethereum, officially announced that it will issue the token OP, announced the token economics and governance mechanism, and launched the Optimism Collective, a large-scale experiment in decentralized governance. According to the introduction, the initial total supply of OP tokens is 4,294,967,296, 19% of which are used for airdrops, and more than 260,000 addresses are eligible for airdrops.
Tokenomics
Optimism Collective's philosophy is that healthy public goods create a prosperous and valuable ecosystem. The economics of the ecosystem aim to create value for three groups:
Token Holders: Token holders gain value through the efficient redeployment of Sequencer revenue. Sequencer revenue is primarily used to fund public goods, thereby creating ecosystem value and driving demand for block space. Rights to block space are a sustainable revenue stream that drives OP’s economic model and grows alongside the network itself.
Contributors and builders: derive value directly from retroactive public goods funding and the markets they support. Builders benefit symbiotically, too: It’s best to build an ecosystem with well-funded tools, education, apps, and infrastructure.
Users and community members: Value comes from OP’s ongoing airdrops, project incentives supported by OP ecosystem funds, and benefits provided by public goods.
In summary, demand for OP block space generates revenue, revenue is allocated to public goods, and the value of public goods drives demand for block space.
In addition, OP holders will be able to vote on the distribution of project incentives, including removing an Optimism Foundation director from office and vetoing changes to the Optimism Foundation’s founding documents.
OP allocation mechanism
At the time of creation, the initial total supply of OP is 4,294,967,296, and the total supply of tokens will expand at a rate of 2% per year.
64% of the initial token supply (i.e. the total amount of OP not reserved for core contributors and investors) will be distributed to the community. Over time, these allocations will be managed by the Optimism Foundation as steward of the Optimism Collective.
In Year 1, 30% of the initial token supply will be made available to the Foundation for distribution. After the first year, token holders will vote on the foundation’s annual OP allocation budget. The Foundation hopes to seek the following annual grants:
Year 2: 15% of initial token supply
Year 3: 10% of initial token supply
Year 4: 4% of initial token supply
Optimism expects the total supply of unlocked OP tokens to be close to the chart below:
In terms of specific allocation, 25% of tokens are allocated to ecosystem funds, 20% of tokens are allocated to retroactive public product funding, 19% of tokens are allocated to user airdrops, and 19% of tokens are allocated to core contributors. 17% of tokens are allocated to investors.
User airdrop
The Optimism Foundation will distribute a portion of OP tokens to members of the Optimism and Ethereum communities in multiple installments. The first user airdrop will allocate 5% of the OP token supply, with an additional 14% of OP tokens being airdropped in the future.
Ecosystem Fund
The Ecosystem Fund is an incentive program designed to stimulate collective ecosystem development. Ecosystem funds will be used to directly fund communities and companies that drive the expansion of collective ecosystems (OPCO), including governance funds (5.4%), partner funds (5.4%), seed funds (5.4%) and unallocated (8.8% ).
The Ecosystem Fund is intended to be a launch mechanism that will be completely phased out once the OP in the fund is depleted. Optimism expects that the functions served by ecosystem funds will eventually be replaced by third-party investors such as private equity.
Retroactive public goods financing
Retroactive Public Goods Funding (RetroPGF) will initially be distributed by Citizens' House. RetroPGF rounds are expected to be conducted on a quarterly basis with the aim of ensuring that all OPCOs receive full, appropriate and reliable rewards based on their impact on the collective.
RetroPGF will be funded by several revenue streams: 20% of the initial OP token supply as the “RetroPGF Reserve”; Optimism network transaction fees and Sequencer revenue.
core contributor
Core contributor shares will be allocated to those who helped bring Optimism and Optimism Collective from concept to reality and will continue to pay for the development of the protocol. All tokens in this tranche will be subject to a lock-up period.
investor
Investors funded Optimism’s wild vision of the future. All tokens in this tranche will be subject to a lock-up period.
Airdrop mechanism
The Optimism Foundation’s Airdrop #1 rewards those who are early adopters and active users of projects in the Optimism ecosystem. At the same time, airdrops will also be available to select active Ethereum L1 participants who can help extend Ethereum’s innovation, culture, and values to Layer 2. A total of 264,079 addresses are eligible to claim OP in this initial airdrop.
Optimism has designed six criteria for airdrops, two of which are targeted at early and active Optimism users, and four targeting active contributions, positive-sum behavior, and actively participating users on L1 Ethereum. Each set is different, meaning addresses that meet multiple criteria can receive multiple allocations of tokens. Address snapshot taken on March 25, 2022 at 0:00 UTC. Allocations and criteria are broken down as follows:
Optimism User
Optimism attempts to identify users who are actively using applications on Optimism.
Optimism users: This group selects addresses that have used Optimism, including early adopters and new users, but narrows it down to groups that have used Optimism multiple times.
Criteria: Addresses bridged from L1 to Optimism during the early stages of mainnet (before June 23, 2021), or using Optimism for more than 1 day (at least 24 hours between first and last transaction) and transacting using the application (After June 23, 2021).
Active Optimism Users: This group selects the most active Optimism users who come back again and again to use apps in the Optimism ecosystem.
Criteria: The address is an "Optimism user" and has made at least 1 transaction with the Optimism application in four different weeks. This selects the top 20% of "Optimism users".
Ethereum L1 active contributor
These rules are designed to target behavior consistent with the values of Ethereum and Optimism, namely positive contributions, positive-sum behavior, and the expansion of decentralized applications to the world.
Governance Participants: Optimism believes that active and participatory governance is critical to scaling decentralized systems. Addresses that meet this criteria have actively chosen to contribute actively by participating in governance.
Criteria: The address has voted or authored at least one on-chain proposal, or at least two Snapshot (off-chain) proposals.
Optimism filters out “active DAOs” that have at least 5 proposals and received at least 5 votes.
On-chain governance contracts include: Governor Alpha and Bravo, Aave, Maker, Curve, Aragon, DAOHaus, DAOStack and forks.
Because Snapshot votes are off-chain, these votes are more susceptible to spam/farming practices and are often driven by voters with nominal voting rights. To mitigate this, Optimism filters Snapshot votes to users who are actively participating in each DAO.
In summary, Optimism’s OP token issuance and distribution mechanism not only aims to promote the sustainable development of the ecosystem, but also creates multiple values for users, contributors and investors. Through detailed token economics and governance mechanisms, Optimism creates a new experimental paradigm for decentralized governance.