Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche


Can Optimism (OP) make money by speeding up Ethereum?

Optimism (OP) is an effort to increase Ethereum’s functionality by adding a second scalable layer or blockchain to the Ethereum (ETH) blockchain. To elaborate, Optimism is an Ethereum L2 (Layer Two) blockchain.

The hope is Optimism can make Ethereum more flexible by adding a second faster and more scalable layer to Ethereum. They claim, Optimism (OP) increases speed and scalability by adding a few lines of code to Ethereum’s battle-tested infrastructure.

The ultimate hope at Optimism is to build a more compatible alternative to the Ethereum Virtual Machine (EVM). A virtual machine is the digital computer that runs a blockchain such as Ethereum. Hence, the Optimism Ecosystem contains an EVM Equivalent Mainnet and an Open Mainnet. The Mainnet is the app or digital computer that runs a blockchain.

A Non-Profit Blockchain

An organization called the Optimism Foundation runs both Optimism and the Optimism Collective. Optimism currently runs on a centralized sequencer the Foundation operates. However, the hope is to make Optimism a fully decentralized blockchain.

Optimism is a nonprofit project that has had some success. The Optimism Foundation claims Optimism has saved users over $1 billion in gas fees, generated over $800 million in onchain value and donated $1 million in public goods in its three years of operation.

One goal at Optimism is make scalable Ethereum solutions for nonprofit apps and solutions. For example, apps for charities, governments, volunteers, and free open sourced apps.

The Optimism Ecosystem

Many apps are running on Optimism’s L2 Blockchain. Those apps include the Perpetual Protocol which enables decentralized perpetual swap, Quixotic, an NFT marketplace, Synthetix a trading platform for synthetic assets, the Lyra automated market maker, Metamask, Uniswap, the CoinBase Wallet, and Binance (BNB).

There is also the Banxa public payment provider that makes payments in both Ethereum (ETH) and Tether (USDT). BarnBridge is a risk tokenizing protocol that leverages and hedges decentralized finance positions. Alchemy helps scale blockchains. Beetoven X is community driven decentralized exchange (DEX). Bitget is a trading platform that claims to have two million users. The Boring DAO builds cross chains, chains that connect blockchains.

DeBank claims it can track portfolios through 420 decentralized finance (DeFi) protocols and 11 blockchains. Cryptex Finance is trying to develop defi solutions including the world’s first Total Crypto Market Cap Token (TCAP). Curve Finance claims to create deep on-chain liquidity through advanced bonding curves.

The DAOhaus platform helps anybody build his or her own decentralized autonomous organization (DAO). Chainlink is the world’s first decentralized oracle network. The Bridge Wallet lets anybody buy Ethereum (ETH) or USD Coin (USDC) through Optimism apps on their phone and cash out funds at anytime.

It appears the Optimism Ecosystem has many functioning apps real people could use to make money. In particular, Optimism works with many impressive decentralized finance (DeFi) apps.

Optimism began in June 2019 with Optimistic Rollup. They began testing the EVM Testnet in September 2020 and rolled out of the EVM Equivalent Mainnet in October 2021. The Optimism Foundation hopes to roll out Next Generation Fault Proofs in 2022. The Foundation plans to rollout Sharded Rollup, Incentivized Verification, and a Decentralized Sequencer in 2023. There are plans for Layer one (L1) Governed Fault Proofs in 2024.

What Value Could Optimism Obtain?

Optimism has a famous fan, Ethereum co-founder Vitalik Buterin. Buterin supports Optimism’s new governance architecture, Cointelegraph reports.

That governance architecture is the Optimism Collective. Interestingly, Optimism has two levels of governance Token House and Citizens’ House. Token House gives governance token holders voting rights while Citizens house offers “nontransferable citizenship rights through nonfungible tokens (NFTS).

Hence, Optimism plans to let NFT holders help govern its ecosystem. I think Optimism wants to prevent outside takeovers by creating voting rights that outsiders cannot buy. Most blockchain entities, such as DAOs, confer governing rights to tokenholders. Hence, anybody who buys a majority of tokens could get control of the DAO.

The purpose of the Optimism Collective is to use 5.4% of the Optimism (OP) tokens to fund public goods. Pubic goods are commonly owned goods and services that taxes normally finance. For example, the public library and parks systems or public roads. They hope the Optimism Collective can finance the building of apps that provide public services.

What Value could the Optimism Collective Obtain?

Mr. Market thinks Optimism (OP) has some value. Optimism was the third most trending cryptocurrency CoinMarketCap estimated on 5 June 2022. Probably because of Buterin’s interest in it.

In contrast, CoinMarketCap named Optimism the 2,807th largest cryptocurrency with a Coin Price of $1.19 on 7 June 2022. CoinMarketCap gave Optimism a Fully Diluted Market Cap of $5.161 billion and a 24-Hour Market Volume of  $180.717 million on 7 June 2022. They based those numbers on a Total Supply of 4.295 billion OP.

Meanwhile, CoinBase gave Optimism a $1.19 Coin Price, no Market Cap, and a 24-Hour Market Volume of $192 million on 7 June 2022. CoinBase did not list a Circulating Supply for Optimism. CoinBase gave Optimism an all-time high Coin Price of $1.99.

I consider Optimism an interesting Ethereum protocol with some money making capacity. If you are seeking an Ethereum DeFi investment with some grow potential. I think Optimism is worth investigating.  

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