OP (OP) tokenomics

Optimism (OP) is the native governance and incentive token for the Optimism Collective, a bicameral system designed to reward public goods and build a sustainable future for the Ethereum ecosystem. The token economics are structured to create a self-reinforcing feedback loop where demand for blockspace generates revenue, which is then redistributed to fund public goods, further increasing the value of the network.

Issuance Mechanism

The OP token is an ERC-20 equivalent token that began circulating on May 31, 2022. At genesis, the initial total supply was established at 4,294,967,296 OP tokens. The token supply is designed to be inflationary, with a total supply that increases at a rate approved by governance. This inflation is intended to provide a sustainable source of funding for the Collective's ongoing operations and incentive programs.

Allocation Mechanism

The initial token supply was allocated across several key categories to balance the interests of users, contributors, and investors while prioritizing ecosystem growth.

The Ecosystem Fund is further subdivided into:

• Governance Fund (5.4%): Distributed to projects to incentivize future growth.
• Partner Fund (5.4%): Strategically distributed by the Optimism Foundation.
• Seed Fund (5.4%): Focused on supporting early-stage projects (0 to 1).
• Unallocated Reserves (8.8%): Held for future programs determined by the Collective or Foundation.

Usage and Incentive Mechanism

The OP token serves two primary functions within the network:

• Governance: OP holders participate in the Token House, where they vote on protocol upgrades, inflation adjustments, treasury appropriations, and grant distributions. To participate, holders must delegate their voting power to themselves or a representative.
• Incentives: The token is used to drive network activity through various programs. The RetroPGF mechanism is a cornerstone of this, using sequencer revenue and a dedicated reserve to reward contributors who have already provided value. This "reward for impact" model attracts builders by ensuring that successful public goods are compensated.

Additionally, a recent proposal introduced an experiment to use 50% of incoming Superchain sequencer revenue for monthly OP token buybacks. This initiative aims to create a durable alignment between aggregate network activity across the Superchain and the token's economic value.

Locking Mechanism and Unlocking Time

Optimism employs a structured vesting and locking schedule to ensure long-term alignment and prevent market supply shocks.

• Core Contributors and Investors: Tokens allocated to these groups were subject to an initial one-year lockup period following the token's launch on May 31, 2022. After this "cliff," the tokens began a linear vesting schedule. For example, a significant unlock event in September 2023 released approximately 24.16 million OP (roughly 3% of the circulating supply) to these cohorts.
• User Airdrops: The first airdrop (5% of supply) was unlocked early in the network's lifecycle. The remaining 14% allocated for future airdrops is held in reserve and distributed in waves based on specific eligibility criteria determined by the Foundation.
• Ecosystem and RetroPGF Funds: These tokens are unlocked progressively over a 4-year period. While a portion is available early for initial grants, the majority of the "Community" share (Ecosystem Fund + RetroPGF) reaches full unlock by Year 4.

By the end of the fourth year (approximately mid-2026), the total initial supply is projected to be fully unlocked and distributed among the various categories, with the community-focused allocations representing the largest cumulative share.