Today is an important day for the Optimism (OP) token market. Over 386 million OP tokens, equivalent to a market value of $587 million, are poised to be released from their initial vesting stage. This momentous occasion, heralding the end of the lock-in period for early investors and contributors, is giving rise to speculation about potential market fluctuations.
This unveiling of the OP tokens on May 31 constitutes one of the biggest planned token releases of the year. With the current circulating supply of OP tokens only standing at 335 million, the unlocking could potentially cause an increase of more than 100% in the circulating supply.
Impact on Market and Stakeholders
Unlock Calendar, a firm specializing in token unlock research, suggests that the Optimism unlocking event may instigate substantial selling pressure for the OP token. The primary reason behind this prediction is the considerable profits that early-stage investors could potentially reap from this event.
Among the primary seed investors in Optimism are well-known crypto venture capital firms such as Paradigm, Andreessen Horowitz (a16z), and IDEO CoLab Ventures. Current data from CryptoRank reveals that investment firms who partook in the seed round, specifically Paradigm and IDEO, have experienced returns exceeding 10,000% on their initial investments.
Yet, on the whole, the average initial investment price for these venture capital firms appears to be roughly $0.24. At this rate, these firms are currently witnessing an overall gain of 529%.
Understanding Token Unlocking
Token unlocking events are planned occurrences during which tokens are initially assigned to early investors, and leading contributors are made available after a predefined period of freezing. Such measures in the crypto industry aim to prevent large-scale sales during times of low liquidity, which could severely affect the token price.
Optimism is recognized as a layer-2 scaling solution, aiming to expedite transactions on the Ethereum network while making them cheaper and more efficient. The OP token is a governance token within the Optimism network.
The network initiated its operations with its first airdrop on June 1 last year, providing OP tokens to almost 250,000 addresses affiliated with early network users. On February 9, 2023, the second substantial airdrop was conducted, dispatching over 11 million OP tokens to 307,000 unique addresses.
Even though these airdrops caused temporary boosts in trading activity, the price of OP has been on a gradual decline over recent months. The token has also suffered a dip in the short term, trading at $1.51 each, representing an 8.5% drop in the last 24 hours, just before the unlocking event.
Based on CoinGecko data, OP’s value has dropped by 53% from its highest peak of $3.54, reached earlier this year on February 24.