The 'blockchain in a box' trend, prevalent among top Ethereum layer-2 projects in 2023, involves teams encouraging developers to clone their code for spinning up new layer-2s. Optimism stands out as it pulls ahead, driven by factors including substantial financial backing.
The project has successfully onboarded numerous clients and firms to deploy their blockchains using Optimism's technology, known as the OP Stack, under open-source licenses. Notable clients include Coinbase's Base, Uniswap, Sony, and Kraken, all of which plan to deploy new layer-2 networks using the OP Stack. This development is crucial for the broader blockchain universe, as layer-2 networks are central to making Ethereum transactions faster and cheaper.
Ethereum, the leading smart-contracts network, supports programs and applications, hosting decentralized exchanges and lending platforms. Layer-2 blockchains operate as auxiliary networks, facilitating quick and low-cost transactions that are later settled on the main chain. The Optimism Foundation's strategy to promote the use of its technology involves granting large sums of OP tokens to projects.
These tokens are intended to help projects build on the OP Stack and contribute to Optimism's Superchain, a network of interconnected OP chains, as well as its governance system, the Collective. The ultimate goal is to achieve critical mass, similar to the dominance of VHS over Betamax in the 1980s.
Kraken's deal, which included a grant of 25 million OP tokens valued at approximately $42.5 million, is a significant example. While the exact amounts of tokens granted to other projects like World, Uniswap, and Sony are undisclosed, Kraken's Andrew Koller indicated that other participants also received substantial allocations. The Optimism Foundation leaves the disclosure of grant amounts to the projects themselves, raising questions about the transparency of these deals in an industry that prides itself on openness.
An Optimism Foundation spokesperson emphasized the foundation's transparency regarding its treasury, stating that the Kraken deal falls under the 'partnerships fund' aimed at supporting initial chain development. As of September 30, approximately 841 million OP tokens are designated for such funding, with nearly 480 million already committed, leaving about 361 million remaining, equivalent to almost $480 million at the current OP token price.
Smaller projects, such as Celo and the Bitcoin-focused BOB, have also received tokens for building on the OP Stack. The tokens for BOB come from a different grant bucket provided by the Grants Council, part of Optimism's DAO, which is separate from the Foundation.
Projects can apply for grants from the Retroactive Public Funding Goods (RPGF) bucket as well, with almost 860 million OP tokens available as of September 30 for rewarding on-chain impact across Optimism and the Superchain. Kraken's Ink will also be eligible for RPGF funding.
The question remains whether Optimism has ultimately won the layer-2 race and the role its grant strategy plays in this context. An Optimism Foundation spokesperson described grants as a means to support projects and developers, with allocations based on achieving growth milestones beneficial to the entire Collective. The goal is to scale the future of Ethereum, with the success of teams in the Superchain benefiting the entire Ethereum community.
Optimism Foundation's Chief Growth Officer, Ryan Wyatt, noted that the adoption of OP Stack as the de facto choice for scaling layer-2s is underway, which is exciting, though it's too early to declare a winner. The OP token price has fallen significantly this year, but less than other major layer-2 tokens. Wyatt believes that for large institutions entering the space, choosing OP Stack would be the logical decision due to its growing adoption.
Competitors like Offchain Labs, behind layer-2 Arbitrum, have taken a different approach, focusing on on-chain success and metrics rather than announcements. Kraken's decision to pick OP Stack was based on effectively utilizing engineering resources, focusing on user experience, and not worrying about the complexities of running a blockchain. This choice reflects the appeal of Optimism's strategy for both developers and institutions looking to leverage the Ethereum ecosystem efficiently.