Optimism Foundation proposes monthly OP token buybacks

The Optimism Foundation has proposed instituting a buyback program "to align the OP token" with the Superchain, the largest network of Ethereum Layer 2s built using the Optimism tech stack, including major blockchains like OP Mainnet, Base, Unichain, Worldchain, and others.

If passed, the crypto governance project would direct 50% of the Superchain's revenue to monthly over-the-counter token acquisitions. Optimism has collected 5,868 ETH, worth about $18 million at today’s price, in revenue over the past year, "100% of which has been dedicated to a treasury overseen by Optimism governance," the proposal reads.

"The Superchain is powered by a flywheel where usage generates revenue, revenue funds development, and development drives more usage," the foundation wrote. "By directing a portion of that revenue to align OP with Superchain growth, the Collective ensures that users, developers, infrastructure providers, and tokenholders are all reinforcing and contributing to the same system."

"The more demand there is across the Superchain, the more this demand benefits OP," it added.

OP is up less than 1% at time of writing to around $0.31, well a way off from its all-time high of $4.84, according to The Block's price data. The token has a fully diluted valuation of $1.4 billion and a current market capitalization of approximately $611.3 million.

With the proposal on Thursday, Optimism looks to join the ranks of crypto projects that use protocol revenue to try to bolster their tokens. This includes major Layer 1s like Hyperliquid as well as popular applications like Pump.

Tokens the foundation purchases through this program will "flow back into the token treasury," and may be burned or distributed as staking rewards as the platform evolves — two distinct strategies that either look to minimize the OP circulation supply or reward security stakers.

"Governance will retain oversight over parameters that control the buyback and the token treasury," the proposal said, noting that, over time, the buyback mechanism "can move more onchain so that execution takes place without the Foundation."

The proposal notes the Optimism Foundation will continue to manage any ETH revenue not directed to buybacks, allowing for "more active treasury management." It also said buybacks will not occur during months when revenues fall below $200,000 or if the OTC can execute within a pre-determined fee spread.

Optimism provides the dominant L2 tech stack powering some of the most successful blockchains, most notably including the Coinbase-incubated Base.  L2s comprising the Superchain are semi-standardized to work as a unified "super" network, reducing fragmentation while allowing each chain to maintain its own configuration and sovereignty.

As of November, OP chains captured over 62% of the Ethereum L2 market share, according to data shared by Optimism.

Despite the success of Optimism, the project’s OP token has faced many of the same criticisms levied against other governance tokens. Namely, holders do not always directly share in the protocol’s success, and ongoing unlocks create persistent downward pressure. That said, the project has also airdropped millions of dollars worth of tokens to users.

Late last year, Optimism co-founder Jing Wang told The Block that the project had overhired, lacked a clear strategy, and needed to realign around a shared goal.