Ethereum layer-2 blockchain network Optimism is set to unlock 9% of its native token’s total supply today. Concerns have been raised among token holders regarding its effect on the asset’s value.
OP Unlocks 9% of Supply
Optimism launched its native cryptocurrency, OP, via an airdrop on May 31st, 2022. The OP token has since held a circulating supply of 335.3 million tokens, while OP holders have seen around 6x profit in their investment into the cryptocurrency.
The protocol’s tokenomics entails that portions of the token’s total supply of 4.29 billion will be locked for a year (vesting period). Among those affected by the mechanism are the project’s core contributors and investors. After a year, they can access the tokens and decide whether to hold or sell the assets.
Unlocking 9% of the total supply puts over 386 million OP tokens (worth about $587 million) in the hands of investors and core contributors. Among these investors are a16z, Paradigm, and IDEO CoLab Ventures.
Why Are OP Holders Concerned?
While Optimism’s unlock mechanism has been no news since it was outlined in its tokenomics, holders of the token and other members of Crypto Twitter are worried that a massive selloff will consume the network. Such massive selloffs often trigger a drastic depreciation in the value of the OP token.
An analysis argues that the unlock will pull down the token’s price since the daily trading volume of OP tokens is minimal compared with the sizable impending unlock. The analysis also deduces that investors will likely dump the tokens as they receive them since they already have gains worth 6x of their investments. It adds that “the protocol is not ready to produce consistent revenue and profit yet.”
Meanwhile, the OP token has already begun reacting to the incoming token unlock. The asset currently trades at $1.53, representing about a 6% decrease over the past 24 hours.
