OP (OP) Tokenomika

The Optimism (OP) token is an ERC-20 equivalent token that serves as both a governance token and an incentive token for the Optimism Collective, a bicameral governance system designed to reward public goods and foster a sustainable future for the Ethereum ecosystem. The token exists solely on OP Mainnet and began circulating on May 31, 2022, with an initial total supply of approximately 4.29 billion OP tokens.

Issuance Mechanism

The initial total supply of OP tokens was set at approximately 4.29 billion at genesis.

Inflation and Future Issuance

The token supply is designed to inflate at a rate determined and approved by the Optimism Collective's governance process. This mechanism allows the community to adjust the inflation rate to meet the needs of the ecosystem over time.

Allocation Mechanism

The initial supply of OP tokens was distributed across five major categories, heavily prioritizing community and ecosystem growth.

Breakdown of the Ecosystem Fund

The 25% Ecosystem Fund is further divided into four subcategories:

• Governance Fund (5.40% / ~231.93 million OP): Distributed to projects to proactively incentivize future growth.
• Partner Fund (5.40% / ~231.93 million OP): Strategically distributed by the Optimism Foundation to grow the ecosystem.
• Seed Fund (5.40% / ~231.93 million OP): Allocated to fund early-stage projects focused on building Optimism.
• Reserves (Unallocated) (8.80% / ~377.96 million OP): Reserved for future programs or operational services, determined by the Optimism Collective or Foundation.

Usage and Incentive Mechanism

The OP token is central to the Optimism Collective's economic model, which is structured around a self-reinforcing "Retro Funding Flywheel."

1. Governance

OP tokens grant holders the ability to participate in the Token House, one of the two houses of the Optimism Collective's bicameral governance system. Tokenholders can delegate their OP to themselves or to another delegate to vote on critical proposals, including:

• Governance Fund budgets
• Network upgrades
• Inflation adjustments
• Treasury appropriations
• Grant clawbacks
• Council elections and dissolutions

2. Ecosystem Incentives and Public Goods Funding

The core economic philosophy is that demand for OP blockspace generates revenue (via sequencer fees), and this revenue is then directed to fund public goods, which in turn drives more demand for blockspace, creating a sustainable loop.

• Retroactive Public Goods Funding (RetroPGF): This mechanism, governed by the Citizens’ House, rewards community members and projects for the value they have already provided to the ecosystem. This is a key component of the flywheel, ensuring that value accrues to contributors and builders.
• Airdrops: A significant portion of the supply (19%) is reserved for airdrops to reward users and community members for valuable contributions.
• Governance Fund: This fund provides ongoing, proactive incentives to projects and communities to foster growth.

3. Revenue Accrual and Decentralization

The Optimism Collective's treasury, which is planned to be managed by a future Treasury Council, includes all of the Optimism Foundation’s sequencer profits and a portion of each OP Chain’s revenue or profit (the greater of 2.50% of total revenue or 15.00% of net profit). This revenue is intended to be productively re-deployed into the ecosystem, primarily through public goods funding.

Locking Mechanism and Unlocking Schedule

The initial token allocations for Core Contributors (19%) and Sugar Xaddies (Investors) (17%) were subject to a lockup period.

Locking Details

• Initial Lockup: The allocation for Core Contributors and Investors was locked for one year after the OP token began circulating on May 31, 2022.
• Vesting: Following the initial one-year lockup, the tokens for these groups are subject to linear vesting.

Unlocking Timeframe

The overall unlocking schedule for the initial token supply is structured to occur progressively over a four-year period.

• User Airdrops: The tokens allocated for user airdrops are unlocked relatively early in the schedule, primarily between Year 0 and Year 1, and remain constant thereafter.
• Vested Allocations: The allocations for Core Contributors and Investors unlock steadily over the four-year period.
• Community Allocations: The tokens for the Ecosystem Fund and RetroPGF are unlocked progressively, representing the largest cumulative share of the unlocked supply by the end of Year 4.

By the end of the four-year period, the entire initial supply is expected to be fully unlocked and distributed across all categories.

Note: Specific, detailed data regarding the precise token unlock schedule (e.g., monthly or quarterly release amounts) was not available.