Optimism, a leading layer-2 network, has successfully attracted numerous clients and firms to deploy their own blockchains using its technology, known as the OP Stack.
To entice new networks to adopt the technology, Optimism has been offering substantial amounts of OP tokens in the form of grants. These tokens are intended to assist various projects in initiating their development on the OP Stack.
There is ongoing debate within the ecosystem regarding whether OP Stack has emerged as the frontrunner in the layer-2 race.
One notable trend in 2023 among the top layer-2 projects on Ethereum was the introduction of “blockchain in a box,” where teams encouraged developers to replicate their code to launch new layer 2 networks.
Currently, one project seems to be establishing itself as the dominant player. Financial transactions behind the scenes often play a crucial role in blockchain development.
Optimism has successfully onboarded a multitude of clients and firms to deploy their own blockchains using Optimism’s technology, the OP Stack, under open-source software licenses.
Optimism’s initial major client to emerge from the OP Stack was Coinbase’s Base. However, more projects have recently joined the ecosystem, with Uniswap, Sony, and Kraken all announcing plans to deploy new layer-2 networks using the OP Stack.
This development is pivotal in the evolution of the broader blockchain landscape, as layer-2 networks are essential for enabling faster and more cost-effective transactions within the Ethereum ecosystem. Ethereum, the second-largest blockchain after Bitcoin, serves as the leading smart-contracts network, supporting programs and applications, and serving as the primary platform for decentralized exchanges and lending platforms. Layer-2 blockchains function as auxiliary networks built on top of Ethereum, facilitating quick and low-cost transactions before settling on the base chain.
As part of the Optimism Foundation’s strategy to onboard new networks, they provide significant amounts of OP tokens in the form of grants. Officials within the Optimism ecosystem emphasize that these tokens are designed to support various projects in kickstarting their development on the OP Stack and contributing to Optimism’s Superchain.
Ultimately, the objective is to achieve critical mass, akin to the dominance of VHS over Betamax in the 1980s.
Kraken’s OP token grant
The partnership with Kraken included a substantial grant, comprising an allocation of 25 million OP tokens valued at approximately $42.5 million. Kraken’s network is named “Ink.”
Representatives from World, Uniswap, and Sony declined to comment on the quantity of tokens their projects received as part of their packages. However, according to Kraken’s Andrew Koller, the creator of Ink, other participants in the OP Stack also received significant token amounts.
Optimism Foundation officials state that they allow projects to disclose the grant amounts they receive.
In an industry that values transparency, the reluctance to disclose the token allocations to these chains raises questions about the extent to which these grants influenced the deals.
A spokesperson from the Optimism Foundation informed CoinDesk that the foundation has been transparent about its treasury, and the Kraken deal falls under their “partnerships fund,” which supports the initial development of the chain.
Optimism’s Treasury and Grant Breakdown
As of September 30, approximately 841 million OP tokens are allocated for funding, with nearly 480 million tokens already committed. This leaves around 361 million tokens remaining, equivalent to nearly $480 million at the current OP token price of $1.32.
Smaller projects building layer 2s on the OP Stack have also received tokens. Celo’s governance forum disclosed receiving up to 6.5 million OP tokens for building on the OP Stack, while the Bitcoin-focused BOB project shared that they were in negotiations for about 500,000 OP tokens.
The tokens designated for BOB come from a different grant pool called Retroactive Public Goods Funding (RPGF), distributed through Optimism’s DAO. The Grants Council, part of the DAO, is responsible for distributing these tokens in cycles.
As of September 30, nearly 860 million OP tokens are allocated under the RPGF bucket, which rewards on-chain impact across Optimism and the Superchain. Projects like Kraken’s Ink will also be eligible for RPGF funding.
Has Optimism emerged as the victor in the layer-2 race, and does its grant strategy play a role in this?
A spokesperson from the Optimism Foundation mentioned in an email to CoinDesk that grants are viewed as a means to support projects and developers. Allocations are earned by achieving growth milestones that benefit the entire community. Collaboration is essential for scaling the future of Ethereum, and successful teams within the Superchain benefit the entire Ethereum community.
Has OP Stack Won The Layer-2 Race?
Ryan Wyatt, chief growth officer at the Optimism Foundation, expressed to CoinDesk in an interview that the adoption of OP Stack as the preferred choice for scaling L2s is gaining momentum. Whether this constitutes a victory is still uncertain.
The price of the OP token has decreased by 65% this year, according to data from DigitalCoinPrice. This decline is less severe compared to other major layer-2 tokens such as Polygon’s MATIC (down 70% in 2024) and Arbitrum’s ARB (down 72%). Ethereum’s native cryptocurrency, ETH, has seen a 6% increase year-to-date.
Wyatt added, “It may be premature to conclude that launching an L2 will inevitably lead to choosing the OP Stack. However, if major institutions and companies enter this space and opt for an L2, the OP Stack could become the preferred choice.”
Competitors like Offchain Labs, the primary developer behind layer-2 Arbitrum, have pursued a different approach to attract users to build with their technology.
Steven Goldfeder, CEO of Offchain Labs, stated to CoinDesk, “Our strategy focuses on empowering real users and builders, developing real technology that supports various use cases. We prioritize on-chain success and metrics over announcements.”
Regarding Kraken’s decision to select OP Stack for Ink, Koller explained that their choice was driven by a desire to efficiently utilize engineering resources. Rather than focusing on security and protocol upgrades, they aimed to deliver a seamless user experience and onboard clients effectively.
“Our focus is on providing a superior user experience without the complexities of managing a blockchain. That’s why Optimism was the obvious choice,” Koller concluded.
Read more: Kraken Picked Optimism’s ‘Superchain’ After Getting a Pile of OP Tokens