Should You Invest in Optimism (OP)? 2024 Charts, Statistics, Analysis

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Key highlights:

• The Tier 2 market is highly competitive, with Optimism losing market share to new entrants such as Arbitrum, Base, Blast, and Scroll.
• Optimism has seen notable growth in market cap and daily active users (DAUs) over the past year, but still lags behind competitors Polygon and Arbitrum.
• Optimism has undergone a rebrand and is now on a mission to move beyond its original layer 2 solution to build a “superchain” comprised of multiple layer 2 networks.

Optimism was born out of the Plasma Group, a group of researchers who set out to solve one of Ethereum’s biggest challenges: scalability.

Inspired by the brilliant minds of Ethereum co-founder Vitalik Buterin and Bitcoin’s Lightning Network creator Joseph Poon, the Plasma Group has embarked on a journey to build the Plasma Chain, a promising solution that has the potential to revolutionize the transaction speed of the Ethereum network.

The team soon discovered that Plasma was a powerful force that was not easy to harness, so they regrouped and set their sights on new horizons. An optimistic rollup.

Here’s the rebranded Optimism team that transitioned from nonprofit to for-profit and raised $3.5 million in new funding: Optimistic They can make Ethereum faster and cheaper.

Optimism was positioned to be the pioneer of the Optimistic rollup protocol, and the crypto community was eagerly waiting. But surprisingly, Optimism’s launch date was delayed, allowing its competitor Arbitrum to steal the spotlight and enter the market.

Despite this, the Optimism team kept moving forward. Soon after, they secured an impressive $25 million in funding, led by the renowned Andreessen Horowitz through their a16z crypto venture arm.

Almost three months after the dramatic launch of Arbitrum, Optimism has finally released its mainnet to the world. This launch marks a new era of efficient and low-cost transactions for the Ethereum ecosystem.

This groundbreaking technology has gained immense popularity as top decentralized applications like Uniswap, Compound, and Aave have begun to embrace it, thus completing Optimism’s journey from a research project to a game changer in the Ethereum space.

In May 2022, Optimism conducted its first airdrop, distributing OP tokens to early users and contributors. The chain was second only to Arbitrum in terms of TVL for most of its lifespan, but has now been surpassed by other L2 solutions such as Base, Blast, and Scroll.

Core Basic Data

Daily Active Users (DAU): Optimism currently has around 90K DAU, up from around 60K a year ago. This represents a significant 50% increase over that period. However, despite this growth, Optimism’s daily active users are relatively small compared to its competitors. For example, Polygon boasts 1.4M DAU, while Arbitrum has 476K DAU.

Fees and Profits: Optimism generates revenue primarily through transaction fees paid on the OP Mainnet. These fees are collected by the network’s sequencers, who order transactions and batch them before submitting them to the Ethereum Mainnet. Optimism’s fees are significantly lower than those on Ethereum’s Mainnet, and are therefore considered reasonable and sustainable.

Market capitalization: At the time of writing, OP has a market cap of $1.55 billion. This is up 70% from a year ago. However, OP still lags behind its competitors MATIC ($4.15 billion) and ARB ($1.89 billion).

Market Analysis

The problem it solves: Optimism works as a layer 2 solution to solve Ethereum’s scalability issues. It uses rollup technology to execute off-chain transactions, easing the load on Ethereum, allowing users to enjoy the security benefits of Ethereum while reducing transaction fees.

customer: Optimism is an Ethereum scaling solution, so it primarily targets Ethereum users who want cheaper and safer transactions within the ecosystem. The general trend in the cryptocurrency market is that it is predominantly male, often skewed towards young and college-educated individuals.

Value creation: Users who adopt Optimism will get the same experience as on Ethereum, but faster and at a lower cost.

Market structure: The Layer 2 space is expanding with new projects and technologies emerging, but Arbitrum has established itself as a leader in the space, and as of this writing, is significantly ahead of Optimism in terms of TVL.

Market size: The potential market size for Layer 2 solutions is significant, with investment firm VanEck predicting a $1 trillion valuation by 2030. The firm sees Layer 2 solutions as likely to play a large role in the widespread adoption of Ethereum, and stand to benefit from it.

Regulatory Risk: As one of the leading scaling solutions, Optimism is vulnerable to regulatory review. It also operates within the Ethereum ecosystem, making it vulnerable to regulation.

Our analysts rated OP 3.2 out of 5 in their market analysis. Download the full scorecard here.

Competitive Advantage

Technology/Blockchain Platform: Optimism is built on Ethereum Layer 2, and the OP token is an industry standard ERC-20.

Lead time advantage: Since Arbitrum was released first, Optimism does not enjoy a lead time advantage with respect to optimistic rollups.

Contacts and Network: Optimism’s network appears to be well-developed. In 2023, they appointed Ryan Watts, an experienced former president of Polygon Labs, as Chief Growth Officer.

Our analysts rated OP 3.7 out of 5 for competitive advantage. Download the full scorecard here.

Management Team

Entrepreneur Team: Optimism has an experienced team of members who have been in the industry for many years, including founders Jinglan Wang and Karl Floersch, who have worked on projects such as Ethereum and ConsenSys.

Industrial/Technical Experience: The team at Optimism has been in the industry for over 5 years and has built one of the largest scaling solutions for Ethereum, so you can be sure they have the necessary industry experience.

verity: Optimism has so far remained clean and free of major controversy.

Our analysts rated OP 4 out of 5 for management. Download the full scorecard here.

Token Mechanism

Token required: OP is essential as it is a project launched to help decentralize protocol governance.

Added value: OP functions the same as other governance tokens and does not add any new type of value.

Decentralization: Optimism is governed by the Optimism Foundation, but is structured to facilitate decentralized governance through the project community, allowing the community to propose, discuss, and vote on changes.

Token Supply: OP’s total initial supply is 4.2 billion tokens, with an annual inflation rate of 2%.

public exchange: OP is listed on major exchanges such as Binance, Coinbase, and Kucoin.

Best Award: Optimism has been operating continuously since its mainnet launch in 2021.

Our analysts rated OP 3.7 out of 5 for token mechanics. Download the full scorecard here.

User Adoption

Technical difficulties: Optimism attracts users by offering significantly lower fees compared to Ethereum, allowing users to enjoy the “Ethereum experience” at a lower cost while enjoying the security benefits of Ethereum.

Halo effect: Optimism is backed by big investors like Andreessen Horowitz and Paradigm, who have raised a total of over $178 million in funding for the project.

buzz: Optimism generates a lot of buzz on social media and boasts an above-average following. 689k followers On Twitter, they have 164,000 members (although they lag behind competitors like Arbitrum), and on their Discord server, they have 164,000 members.

Our analysts rated OP 3.6 out of 5. Download the full scorecard here.

Potential Risks

team: Optimism’s team risk is low. The members have over 5 years of industry experience and have grown the project into one of the best layer 2 solutions on Ethereum. Also, we have not seen any major controversies that would call into question their integrity.

Financial: Optimism has raised over $178 million (the remaining amount is unknown). Also, 25% of the OP tokens are allocated to platform maintenance and ecosystem expansion. If these tokens are not diversified, there is some risk.

regulation: As of this writing, Optimism has not had any contact with the SEC, but given its size and popularity, it is likely that it will still face scrutiny from regulators.

Smart contract: Optimism’s smart contracts have been audited by reputable security firms such as Trail of Bits, ConsenSys Diligence, and OpenZeppelin. The project also maintains an active bug bounty program that offers rewards of up to $2 million for reporting vulnerabilities.

traction: Optimism has a decent following both off-chain and on-chain, with over 690k followers on Twitter and 82k DAU on the network. However, compared to its competitors, Optimism’s numbers are relatively low, with Arbitrum and Base significantly ahead.

Behavioral: Some investors see Optimism as a project with a strong vision and technology, and potentially as one of the most promising scaling solutions for Ethereum.

Our analysts rated OP a risk score of 2.2 out of 5 (lower is better in this section). Download the risk score chart here.

Investor’s Points

The bull incident: Optimism has demonstrated a solid growth trajectory and continues to attract users and developers thanks to its efficient scaling solution for Ethereum. In the past year, DAU has increased by 50% and market cap by 80%, demonstrating increased engagement and market confidence. Optimism has also demonstrated its commitment to maintaining its position as a key player in Ethereum scaling by providing infrastructure used by projects like Base beyond simple layer 2 solutions.

Bear Case: However, Optimism still faces some challenges. The Layer 2 space is highly competitive, with projects like Arbitrum, Base, Scroll and new entrants gaining significant market share and outpacing Optimism in TVL and user engagement. Optimism needs to adapt to the competitive environment and close the significant gap between itself and these competitors.

Overall, our analysts rated OP 3.7 out of 5 based on its future growth potential and the fierce competition in the sector that could hinder its progress. Download the full scorecard here.

This analysis is intended to help you become a more informed investor. It is not financial advice. The future may not be the same as the past. All investments involve risk. See our investment approach for ways to manage risk through diversification. Never invest more than you can afford to lose, and treat losses as learning.