Into The Block: Layer 2 optimism
Optimism's release of the OP coin has sparked debate regarding its pricing and future airdrops. This article evaluates Optimism's potential growth and valuation after the OP token's debut by comparing it to other Layer 2 tokens and sidechains.
Boba Network and Metis Andromeda are two competing universal Ethereum Layer 2 chains. Both Layer 2 chains have introduced governance tokens and increased total value locked (TVL).
EVM sidechains have similar issues. Sidechains bootstrap liquidity by introducing liquidity mining incentives as their currencies were already active. The chart below compares history.
Sidechains and Layer 2s aren't alike. Due to a dearth of historical data on token airdrops and incentive programs on Layer 2 ecosystems, these comparisons provide valuable data.
Boba Networks issued its governance token, Boba, via an airdrop to OMG token holders on November 12, 2021. Boba's TVL is now $59.2 million, up 1,070%.
Liquidity bootstrapped
Metis Andromeda bootstrapped chain liquidity with their DAC (Decentralized Autonomous Corporation). Through high staking APY, their TVL climbed 9900% to $164.7 million. These token launch possibilities put Optimism's TVL between $5.6 billion to $52.3 billion.
In the case of side chains, Polygon, Fantom, and Avalanche increased TVL by 2,762%, 629%, and 6,402% respectively. Optimism's TVL is $14.5 billion for Polygon, $3.3 billion for Fantom, and $33.6 billion for Avalanche.
The Defiant: Optimism Launches OP Token With Early Airdrop
Optimism Launches OP Token With Early Airdrop - Ethereum Layer-2 Optimism is airdropping $OP to early adopters.
The Defiant: Optimism Launches OP Token With Early Airdrop
Insolent
Before bootstrapping, both Layer 2 chains had little liquidity. These forecasts undoubtedly exaggerate Optimism's growth after OP's introduction because it currently has a higher TVL than these networks, but they show the potential increase.
Before a token's release, there are numerous techniques to estimate its price. Assumptions based on comparable chains. Market Capitalization/TVL and Price/Sales are two ways to value OP.
Market Cap/TVL divides a token's circulating supply times its price by its TVL. The chart above displays Polygon, Avalanche, Fantom sidechains and Boba, Metis Layer 2 solutions. If this ratio is low, the token is undervalued. That suggests the chain's dApps have higher economic activity and worth proportionate to their valuation.
OP's price is anticipated based on the percentage of circulating tokens in each chain and the ratio. Polygon's estimated token price was $0.33, Avalanche's was $0.41, and Fantom's was $0.08.
Supply-and-demand
The estimate for Layer 2 solutions seems more accurate because their circulating supply is closer to Optimism's. Boba cost $1.17 and Metis $0.45. Fully diluted, Fantom's OP coin would be worth $325 million and Boba $5 billion.
Price/Sales Formula: P/S Ratio = MarketCap/(SevenDayAvgFee*365). This determines Optimism's Market Cap for circulating tokens. OP token pricing requires fully diluted value.
Market cap is multiplied by each chain's circulating supply tokens. Divide the result by the quantity of OP tokens to determine their price.
Polygon was worth $10.54 billion, Avalanche $3.49 billion, and Fantom $2.98 billion. Polygon, Avalanche, and Fantom's OP token prices are $2.45, $0.81, and $0.69 per token.
Optimism ranks third by TVL in Layer 2 chains. The Optimism Collective signals growth for Layer 2 solutions. Optimism's TVL and OP token values are estimations and could be altered by other circumstances.
The issuance of the OP coin and subsequent airdrops and incentives are likely to increase network activity and valuation.