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Optimism Set to Unlock $587M Worth of OP Tokens, Will Investors Unload?

The cryptocurrency market is bracing itself for a significant event on May 31 as Optimism (OP) tokens worth $587 million are set to be unlocked. This unlocking marks the end of the initial vesting period for early contributors and investors, but it has also raised concerns about potential downward pressure on the token’s price.

With a current circulating supply of just 335 million OP tokens, the unlock could potentially lead to an increase of over 100% in the circulating supply. This is one of the largest unlocking events scheduled for this year and is expected to have a significant impact on the market.

Analysis from Unlock Calendar, a renowned token unlock research firm, suggests that the Optimism unlock might create substantial sell pressure for the native OP token. Early-stage investors, including prominent crypto venture capital firms like Paradigm, Andreessen Horowitz (a16z), and IDEO CoLab Ventures, are sitting on substantial investment returns. According to CryptoRank, Paradigm, and IDEO, the firms that participated in the seed round are currently enjoying gains of over 10,000% on their initial investment.

Despite the substantial returns, the average buy-in price for these venture capital firms is approximately $0.24, resulting in an aggregate gain of 529%. Token unlocks are scheduled events where tokens allocated to early-stage investors and major development contributors are released after a designated period. This process ensures that tokens are not sold during periods of low liquidity, which could adversely affect the token’s price.

Optimism is a layer-2 scaling solution designed to enhance the speed, affordability, and efficiency of transactions on the Ethereum network. The OP token serves as the governance token for the Optimism network.

Last year, on June 1, Optimism conducted its first airdrop, distributing OP tokens to nearly 250,000 addresses associated with early network users. Another significant airdrop occurred on February 9, 2023, where over 11 million OP tokens were distributed to 307,000 unique addresses.

Despite these airdrops causing temporary spikes in trading activity, the price of the OP token has been experiencing a general downward trend in recent months. Prior to the unlocking event, the token’s price took a substantial hit, currently trading at $1.51 per token, an 8.5% decrease within the last 24 hours.

CoinGecko data reveals that OP has declined by 53% from its all-time high of $3.54, reached earlier this year on February 24.

Investors and market participants are eagerly watching how unlocking such a significant number of Optimism tokens will impact the price and overall market sentiment. The event could have far-reaching consequences, not only for the OP token but also for the broader cryptocurrency market.

 

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