Ethereum, which was once regarded as the undisputed king of smart contract blockchains, is facing an existential crisis. High gas fees and slow transactions have allowed newer performance-focused rivals such as Solana to attract users and capital away from the world’s second most valuable blockchain.
However, blockchain scaling solutions such as Optimism are now helping the Ethereum blockchain offer fast transactions at competitive prices to users. You might wonder, what is Optimism crypto, and why is it important? Our Optimism review below answers all this and more.
In short, Optimism is one of the pioneers of the layer two-focused (L2) scaling movement undertaken by Ethereum. The project has earned the reputation of producing reliable products such as the OP Mainnet L2 and an open-source rollup development kit called the OP Stack. But what we are most excited about is Optimism’s bold ambition to unite the fragmented Ethereum L2 ecosystem under a banner that it calls Superchain.
Optimism Crypto Review: Summary
In this article, we will explain what is all about. You will also learn about optimistic rollups such as the OP Mainnet and other key L2 concepts such as sequencers. For those interested in L2 interoperability, you will find details about Optimism’s Superchain initiative. Additionally, for crypto investors, we have also compiled important on-chain metrics and explained why the OP token has fared poorly in the market over the last 12 months.
Key Takeaways
- Scaling ETH: The OP Mainnet is a L2 blockchain built on top of Ethereum.
- OP Token Airdrop: OP token was airdropped to investors, contributors, community and selected Ethereum users in June 2022.
- Utility: The primary use case of the OP token is governance.
- Governance: OP token holders can propose changes to the inflation rate of the OP Token.
- Token Unlocks: The OP token has seen selling pressure over the years due to increase in supply, thanks to token unlocks.
Terms You Need to Know Before Understanding Optimism
Blockchain and cryptocurrency terminology can be difficult to grasp. To help you understand the Optimism Network better, we have compiled key terms that you will frequently come across in this article.
- Layer- 1 Blockchains: Layer one blockchains are base layer chains that execute and confirm transactions, while providing essential infrastructure to support an entire cryptocurrency ecosystem. Bitcoin and Ethereum are examples of L1 blockchains.
- Layer-2 blockchains: These are secondary networks that are built on top of a L1 chain. L2 chains help the underlying chain scale by conducting transactions off-chain.
- Rollups: Rollups are L2 chains that conduct transactions off-chain, then “roll” them up into batches before submitting transaction-related data to the underlying L1 chain. Optimism is a L2 chain and a rollup.
- Sequencer: Sequencers are nodes that execute L2 transactions, batch them, and post the transaction data to L1 blockchain.
What is Optimism Crypto? A Layer 2 Solution
Optimism, commonly known as OP Mainnet, is a L2 blockchain built on top of Ethereum. Optimism enables the underlying Ethereum L1 to support more transactions by allowing users to execute transaction on a secondary blockchain.
What you have to keep in mind is that many people refer to OP Mainnet simply as Optimism, but in reality, Optimism is the name of the organization behind its development. In addition to the OP Mainnet, the Optimism organization provides L2 building and interoperability solutions.
To understand the OP Mainnet better, let’s learn how a transaction is executed on the L2 blockchain. Imagine that you are using OP Mainnet to swap your ETH coins for USDC Stablecoins. This token swap will occur on the OP Mainnet which means that the changes in account balances and documentation of the transaction history will be be recorded on the OP Mainnet. Your transaction will only become final when the OP Mainnet submits the transaction data to the underlying Ethereum L1.
Now that you have read the gist of it, let’s breakdown the technical details of the L2 blockchain. OP Mainnet gets its name from its design as an “optimistic rollup,” which is a type of L2 scaling solution that assumes that all off-chain transactions are valid. Optimistic rollups, therefore, do not publish proofs of validity for transaction batches posted on the underlying L1 blockchain. Instead, they provide users with a challenge period during which anyone can challenge the validity of a L2 transaction.
The sequencer node is a key component of the OP Mainnet blockchain. Sequencers are special nodes in L2 chains that are responsible for executing transactions, batching them, and posting the transaction data to L1 blockchain. Whenever users conduct a transaction on OP Mainnet, they have to pay gas fees to the sequencer.
Learning how a sequencer carries out its function is arguably the best way to understand how the Optimism layer-2 solution works.
Here is the process followed by sequencer nodes in L2 chains like Optimism when executing and batching transactions.
- When users conduct transactions on the OP Mainnet, the sequencer node collects pending transactions and orders them in the sequence in which they are received. The sequencer then proceeds to organize them into batches. The maximum size of a transaction batch will depend on a predetermined limit which is set to optimize the cost of posting L2 transaction data to the underlying L1.
- Once a batch is formed, the sequencer uses compression techniques to reduce the data size which ultimately lowers the cost of posting the transaction data to the L1. Thereafter, the compressed transaction data is submitted to a sequencer-controlled smart contract on the L1 .
History of Optimism
Optimism originally launched as the Plasma Group in January 2019. The organization was created to push layer two (L2) scaling on Ethereum through solutions known as plasma chains. Plasma chains were similar to L2 rollups as they enabled faster and cheaper transactions via off-chain computation. However, plasma chains provided limited functionality as it could not run smart contracts and only supported basic token swaps and transfers.
In July 2019, Plasma Group introduced a virtual machine called the Optimistic Virtual Machine (OVM) for L2 protocols. For context, virtual machines are software that emulate the functionality of a physical computer. In January 2020, Plasma Group rebranded itself to the Optimism Public Benefit Corporation. Later that year, Optimism published details about its optimistic rollup. In a blog post, Optimism explained that its optimistic rollup resembles plasma chains but trades off scalability to enable smart contracts.
2020 marked a pivotal year for the company as Optimism open-sourced the Optimistic Virtual Machine in February to allow any developer to use and make changes to the L2 virtual machine. By September, the Optimism testnet was launched. Decentralized finance (DeFi) protocol Synthetix became the first protocol to test the newly launched L2 chain.
In January 2021, the Optimism L2 chain launched its mainnet via a “soft launch.” But it was not until December 2021 that the Optimism L2 chain was open for anyone to use and deploy smart contracts on. In between, Optimism launched an ecosystem funding program called Retroactive Public Goods Funding (RPGF) to distribute profits generated from L2 sequencing to fund public good projects.
2022 proved to be an exciting year for Optimism that saw the introduction of the Optimism Foundation, the Optimism Collective and the OP token.
The Optimism Foundation is a company incorporated in the Cayman Islands created to undertake governance experimentation and foresee growth of the Optimism ecosystem. Meanwhile, the Optimism Collective is a decentralized ecosystem built around Optimism equipped with a governance structure and a funding mechanism.
The highly anticipated airdrop of its OP token took place in June 2022. The OP tokens were airdropped to investors, contributors, community and selected Ethereum users. Over the years, Optimism has seen its Superchain vision come to life. At the time of writing, popular L2 chains such as Base, Unichain, Soneium and Zora were part of the Superchain collective.
According to data firm Tracxn, Optimism conducted two funding rounds: Series A funding worth $25 million in 2021 and Series B funding worth $150 million in 2022. a16z and Paradigm were lead investors in the funding rounds.
About the Optimism Crypto Team
The Optimism L2 project began as the Plasma Group in January 2019. In January 2020, Plasma Group rebranded to Optimism Public Benefit Corporation. Interestingly, the Optimism team actively collaborates with various developers, projects, and the community to advance Ethereum’s long-term vision of an open and accessible blockchain network.
Who is the Founder of the Optimism Layer-2 Project?
Jinglan Wang: Wang is the current CEO and executive director of the Optimism Foundation. Wang studied art and computer science at Wellesley College, but dropped out to start a company called Eximchain. Karl Floersch: Floersch is the current CEO of OP Labs. Before founding Optimism, Floersch contributed research to the Ethereum Foundation and worked as a blockchain engineer at ConsenSys. Kevin Ho: Ho is one of the co-founders of Optimism. He graduated from the University of Pennsylvania with a bachelor’s degree in computer science in 2018. Benjamin Jones: Jones is current chief scientist at Optimism and a director at the Optimism Foundation. He has a bachelor’s degree in physics and mathematics from the Northeastern University. Jones worked as a blockchain associate at an early-stage venture firm called Underscore VC before co-founding Plasma Group.
Aim of Optimism Scaling Solution
Optimism has two key goals: scaling Ethereum with the help of L2 solutions and enabling L2 interoperability. In the next section, we will explain how Optimism is working on these goals
What Problems Does Optimism Solve?
- Scaling Ethereum: As an L2 chain, the OP Mainnet enables users to bypass the slow block creation times and high gas fees on the Ethereum L1 chain. Optimistic rollups like the OP Mainnet execute transactions off-chain and batch them into groups before submitting the transaction data to the underlying L1. L2 transaction data is preserved on the L1 for anyone to check its validity. Furthermore, the batch-processing of transactions distributes L1 gas fees across several transactions.
- L2 interoperability: At the time of writing, there were about 60 L2 chains within the Ethereum ecosystem, data on L2Beat showed. The main problem with Ethereum’s rollup-centric scaling roadmap is that every new L2 that comes into the market exists in isolation from the rest of the ecosystem. This leads to fragmentation of liquidity and users. Optimism is trying to solve this problem by creating the Superchain, which is a collection of interoperable L2 chains built using the OP Stack.
Optimism Tokenomics
Tokenomics refers to the study of economic aspects such as supply, demand, incentives and burning mechanism of a cryptocurrency token. It is important to analyze the tokenomics of a cryptocurrency since it reveals risks and opportunities pertaining to the project.
OP Token Supply
The OP token debuted in June 2022 when it was first airdropped to 248,699 unique addresses consisting of OP Mainnet users, core contributors and investors.
The initial total supply of OP tokens was 4.294 billion tokens. The inflation of the OP token is set to 2% per year by default. OP token holders have the power to change OP inflation rate via governance voting.
At the time of writing, Optimism was the 54th largest token in the cryptocurrency market. And it fared well as compared to its competitors.
OP Token Distribution & Allocation
Here is how the OP tokens have been distributed:
Category
Allocation percentage of initial total supply
Description
Ecosystem fund
25%
Funding to ecosystem projects and communities
Retroactive Public Goods Funding (RetroPGF)
20%
Distribution of profits from L2 sequencing to public goods project.
User airdrops
19%
Airdrops to Optimism users
Core contributors
19%
Development team of Optimism and the Optimism Collective
Investors
17%
Early supporters of Optimism
OP’s Utility & Use Cases
Here are the use cases of the OP token:
- Governance: The primary use case of the OP token is governance. OP token holders can vote on network upgrades and improvement proposals on the OP Mainnet.
- Rewards and funding: OP tokens are airdropped to users and community members, and are used to fund ecosystem projects via the RPGF program.
Governance & Protocol Control
Optimism conducts decentralized governance via a bicameral governance system. The two governance houses are called Token House and the Citizens’ House.
The Token House is made up of OP token holders. Members are responsible for:
- Voting on allocation of the governance fund.
- Voting on all protocol and governor upgrade proposals.
- Proposing any changes to the inflation rate of the OP Token.
Meanwhile, the Citizens’ House is reputation-based, one-person-one vote-governance system. Members of the Citizens’ House are given non-transferrable NFTs (also known as soul-bound NFTs) to prove to membership. The key function of the Citizens’ House are:
- Voting on the allocation of Retroactive Public Goods Funding
- Vetoing protocol upgrade proposals made by the Token House.
How Does Optimism Work?
The OP Mainnet is an optimistic rollup that executes transactions on a L2 blockchain. The network bundles L2 transactions in batches before submitting it to the underlying Ethereum L1 for settlement and data availability. The OP Mainnet assumes that all L2 transactions are valid until proven wrong. To allow time to users to challenge fraudulent transactions, the OP Mainnet prevents users from bridging out their tokens from the L2 during a challenge period. During this time, anyone can challenge transactions that they think are invalid.
Architecture Behind Optimism Token
The OP token is a cryptocurrency that exists on the OP Mainnet. It is created using the Ethereum Request for Comment 20 (ERC-20) standard. The ERC-20 standard is used to created fungible cryptocurrencies. A token is said to be fungible if it is identical and interchangeable. For example, 1 OP token created in December 2023 is the same as another OP token created in January 2025.
Optimism Blockchain Structure
Optimism uses an open-source rollup development kit known as the OP Stack to create L2 chains like the OP Mainnet. Blockchains created using the OP Stack are designed in a way to be as similar to underlying Ethereum L1 as possible. Like Ethereum, the OP Stack has execution and consensus clients.
Any blockchain created using the OP Stack has a data availability (DA) layer, sequencing layer, execution layer and settlement layer:
OP Token’s Standout Features
In this section we talk about the features, on-chain metrics, pros and cons of the OP tokens. First, let’s talk about some standout features of Optimism L2:
- Low gas fees: The OP Mainnet is designed to offer users lower transaction fees compared to the underlying Ethereum L1 layer. According to Blockchair, the average gas fees on the OP Mainnet was $0.02 compared to $1.81 on Ethereum.
- Faster transactions: Transactions on L2 chains like the OP Mainnet are faster than those on the Ethereum L1. According to Blockchair, the average time between blocks on the OP Mainnet was 2 seconds compared to 12 seconds on Ethereum.
- Challenge period: The OP Mainnet offers users a time period, presently set at seven days, during which they can challenge the validity of transactions.
- Permissionless: The OP Mainnet is a public and permissionless blockchain, meaning that anyone can use it.
- OP Stack: The OP Stack is a key piece of blockchain development infrastructure within the Optimism ecosystem. It is an open-source L2 development kit that anyone can use to create an L2 chain.
- Superchain: Optimism promotes an interoperable ecosystem of L2 chain known as the Superchain. Any L2 chain created using the OP Stack can join the Superchain.
Benefits & Drawbacks of OP Crypto
Benefits Drawbacks
Optimism Analytics
Next, let’s analyze on-chain metrics such as circulating supply, maximum supply and number of OP holders. We will also go through social media statistics to gauge Optimism’s social sentiment. All this will help OP users, developers, and investors monitor the ecosystem’s growth and health in real time.
On-Chain Metrics
Based on data from CoinMarketCap and OP Mainnet Etherscan, here are some important on-chain and market metrics to consider.
Metrics
Stats
Max supply
4.29 billion tokens
Circulating supply
1.62 billion tokens
Market cap
$1.89 billion
Fully diluted value (FDV)
$5.02 billion
All-time high
$4.85 (March 6, 2024)
All-time low
$0.40005 (June 19, 2022)
Onchain holders
1.269 million
Token contract ID
0x4200000000000000000000000000000000000042
Total Value Locked (TVL)
$568.6 million
Whale holding
61.1% of circulating supply
Let’s discuss OP token’s whale holdings, addresses by holdings, and addresses by time held in detail below:
- Whale holdings of OP token: At the start of March 2025, 61.1% of total OP token in circulation was held by whales. A whale is an individual or entity that holds a large amount of a certain cryptocurrency. High concentration of a token’s supply within whale wallets is considered risky as whales have influence to cause price movements when they buy or sell large quantities of a cryptocurrency.
- Addresses by holdings: At the start of March 2025, 97.1% of OP token were held in wallets with total OP holding worth less than $1,000. 2.83% of OP’s supply was held in wallets with holdings worth between $1,000 and $100,000. The rest of OP token’s supply was held in wallets with holdings over $100,000. A key information to note is that a crypto user can choose to hold their OP token in more than one wallet.
- Addresses by time held: At the start of March 2025, 62.52% of OP’s circulating supply were held by long-term holders who held their assets for over a year. 32.56% of OP’s supply was held by wallet addresses who held their token for one to 12 months. Meanwhile, 4.92% was held with short-term-minded traders.
What Do Experts Think About Optimism?
Optimism has looked to differentiate itself from L2 rivals by providing users with a complete suite of blockchain tools ranging from the OP Mainnet, OP Stack to the Superchain initiative. Analyst like Messari’s Patryk Krasnicki point to these value-added features as to why Optimism is a leader in the Ethereum L2 sector.
In November 2024, Krasnicki, senior protocol research analyst at Messari said Optimism’s Superchain is winning the battle for the top Layer-2 ecosystem. Krasnicki added:
The analyst highlighted the OP Mainnet’s sequencer profits earned in the third quarter of 2024 by saying:
“OP Mainnet’s sequencer is raking it in. With an incredible profit margin of 20,944%, OP Mainnet’s sequencer took in a $2.9 million profit in Q3 2024. Transaction fees on OP Mainnet have fallen to near-zero since Optimism’s Ecotone upgrade went live in March, introducing EIP-4844 blobs for data availability. Layer-1 submission cost savings have been passed down to users, as the cumulative Layer-1 submission cost in Q3’24 was just $14k.”
Optimism vs. Arbitrum: Which is Better?
Optimism and Arbitrum are direct rivals and compete against each other for the lucrative pie of the Ethereum L2 market. Both Arbitrum and Optimism are regarded as the pioneer of the Ethereum L2 movement. However, it has to be said that Arbitrum launched its mainet in August 2021, more than a year before the OP Mainnet went fully public.
At the time of writing, DeFiLlama data showed Arbtirum boasted higher TVL than OP Mainnet. The former held a TVL of $2.622 billion while the latter held a TVL of $565.87 million. In terms of DEX volumes, Arbitrum’s 7-day total volume was more than eight times that of OP Mainnet’s 7-day total volume, as of late-February 2025.
Arbitrum’s ARB token has also continued to outshine Optimism’s OP token in terms of market valuation.
Is OP Token a Buy?
OP token has proved to be a risky investment over the past 12 months, given the kind of volatility it has experienced. In a on-year time period, the price of Optimism token has fallen 77% from about $1.9 to $0.43. At the time of writing, the OP token traded over 81% below its all-time high price.
Consistent token unlocks have deterred OP tokens from gaining positive price momentum. According to Token Unlocks, only 37.7% of OP token’s total supply was in circulation.
Between May 2023 to May 2026, a total 1.546 billion OP tokens allocated to contributors and investors will be unlocked, divided on a monthly basis, data on CryptoQuant showed.
How to Buy Optimism?
You can buy OP tokens on decentralized exchanges (DEX) such as Uniswap and Velodrome, and on centralized exchanges (CEX) such as Binance, OKX and eToro.
If you plan on using a DEX, you will need a Ethereum-compatible crypto wallet. You will also require some ETH on Optimism to pay for transaction fees and to exchange them for OP tokens. Once you have them ready, head on to Uniswap or Velodrome to trade your ETH for OP tokens.
If you plan on using a CEX, you will have to create an account. Once you complete KYC verification, you will need to deposit funds using your credit/debit card or internet banking. Once the funds are credited to your account, you can buy OP tokens.
To know which method will be more suitable, read our guide on how to buy Optimism tokens.
Best Optimism Wallets
As we explained earlier, you will need a crypto wallet if you plan on acquiring OP tokens on a DEX. Since there are loads of crypto wallets out there, we have prepared a small list of options that you can consider to use for managing OP tokens. In the list below, you will find wallets that prioritize user experience and security.
Some of the best crypto wallets to safely secure your OP tokens include:
How to Stake OP Tokens?
You cannot natively stake OP tokens like how you would with proof-of-stake cryptocurrencies such as Ether. However, there are indirect ways to deposit your OP tokens to earn passive yield on your depoists. Therefore, at the time of writing, OP staking is only possible via third-party decentralized finance (DeFi) protocols and centralized platforms such as Binance, OKX and KuCoin.
Here a simple way you can earn yield on your OP tokens via liquidity pools:
- Head to Uniswap’s official website.
- Log in using your crypto wallet.
- Tap on “Pool” on the home page.
- Search for pools on Optimism.
- You will find various liquidity pools to choose from. In our example, we will select the ETH/OP pool.
- To add liquidity to the ETH/OP pool you will have to deposit equal dollar value worth of ETH and OP. For example, if you deposit $100 worth of ETH, you will have to pair it with $100 worth of OP.
- Check the annual percentage rate (APR) on the selected pool. The ETH/OP pool is currently offering an APR of 0.3%.
- Confirm the transaction on your crypto wallet.
- You will begin earning yield on your OP tokens.
Optimism Crypto Future: What to Expect?
Ethereum’s focus to scale its blockchain using L2 chains such as OP Mainnet puts Optimism on a path of growth. Optimism has proved itself to launch a reliable product and is now on the path to make its L2 offerings more foolproof, secure and decentralized.
The most exciting development coming out of the Optimism ecosystem is the Superchain initiative which aims to solve the problem of liquidity fragmentation brought on by the plethora of L2 chains out there. Interestingly, popular chains such as Coinbase’s Base, Uniswap’s Unichain, Sony’s Soneium and Kraken’s Ink have agreed to join the Superchain.
Conclusion: What is Optimism Crypto?
Optimism is a innovative L2 scaling company. While the price performance of the OP token has disappointed crypto investors, the project’s lofty ambitions to spearhead Ethereum’s rollup-centric scaling roadmap and to solve L2 interoperability issues cannot be downplayed.
Looking forward, from a crypto investor’s standpoint, token unlocks remains the biggest impediment to OP token’s success in producing lucrative returns. As for the crypto-natives and the cypherpunks, they will be closely watching how Optimism evolves to decentralize its sequencing operation.
See Also: What is Algorand? A Beginner’s Guide to ALGO
Frequently Asked Questions
Why is Optimism important for Ethereum?
Who created Optimism?
Where can I buy Optimism crypto?
How to bridge crypto from Optimism to Polygon?
What Optimism crypto does?
How to invest in Optimism token?
Best exchanges to buy OP tokens?
Is Optimism safe to invest in?
What are some of the best wallets for storing OP tokens?
References
- Optimism. Optimism Docs. https://docs.optimism.io/
- Optimism. Superchain Explainer. https://docs.optimism.io/superchain/superchain-explainer
- DeFi Llama. Optimism Mainnet TVL. https://defillama.com/chain/OP%20Mainnet
- CoinMarketCap. OP Token Price. https://coinmarketcap.com/currencies/optimism-ethereum/
- Optimism. OP Tokenomics. https://community.optimism.io/op-token/op-token-overview
- CryptoRank. Unlocking OP Tokens. https://cryptorank.io/price/optimism/vesting
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