Optimism–a scaling solution built on Ethereum–has seen the price of its native token soar amid Coinbase’s announcement of its own layer-2 network on Thursday.
The token, OP, is up 16% on the day according to CoinGecko, and peaked just above $3 before retracing to around $2.90 at press time. By comparison, most major cryptocurrencies have been relatively stagnant over the last 24 hours, with none rising by more than 1%.
Coinbase said that its new project, called “Base,” will be powered by Optimism, and that the company would be partnering with the DAO for open-source development on the OP stack.
Layer-2 solutions are designed to make transactions faster and cheaper than they are on their respective layer-1 blockchain, like Ethereum, where fees have been known to balloon in times of peak network demand.
For Optimism, this is accomplished by initially processing transactions on a separate chain, before eventually settling those transfers on the mainnet in batches called “rollups.”
Though initially launched without a token, Optimism began airdropping OP tokens to early adopters in May of last year as a way of distributing governance power to the community and funding development proposals through its DAO. Arbitrum One, another popular Ethereum scaler, has long been rumored by DeFi speculators to be planning an airdrop, though it’s yet to materialize.
Arbitrum and Optimism respectively comprise 53% and 31% of market share of the $6 billion Ethereum scaling market, according to L2Beat.
However, Base’s entry into the fray may prove more cooperative than competitive for Optimism. That’s because “the Base Chain will commit a portion of transaction fee revenue back to the Optimism Collective,” tweeted Optimism on Thursday. “This furthers the Collective’s vision for a sustainable future where Impact = Profit.”
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Sourced from decrypt.co.
Written by Andrew Throuvalas on 2023-02-23 16:12:07.