OP Token Gets Major Boost as Optimism Approves Buyback Initiative
Starting next month, Optimism will convert 50% of Superchain earnings into buybacks of its native token, with acquired OP reserved for supporting future ecosystem development.
In a significant policy shift, the governance body overseeing the Optimism blockchain has given the green light to a plan that will dedicate half of all Superchain earnings toward repurchasing the network's native token throughout the coming 12 months, with implementation beginning in February.
Originally put forward by the Optimism Foundation on Jan. 8, the proposal represents a strategic effort to broaden the practical applications of the Optimism (OP) token while strengthening its connection to the performance of the Superchain, which functions as a collective of interconnected blockchains.
Following the conclusion of the voting period on Thursday, the Optimism governance participants approved the measure with 33.27% casting ballots in support, while 3.23% voted in opposition, and 3.95% choosing to abstain from the decision.
Prior to this governance decision, the entirety of Superchain revenue had been directed into a treasury under the stewardship of the Optimism governance community.
The Superchain infrastructure operated by Optimism comprises an ecosystem of layer-2 (L2) chains constructed using the project's publicly available OP stack, including notable implementations like Sony's Soneium, Unichain, Ink, and Coinbase's Base. Revenue generation occurs in Ether (ETH) through sequencer fees contributed by these L2s.
Under the terms of the approved proposal, Optimism will establish a partnership with an over-the-counter provider to carry out monthly conversions of Ether (ETH) to OP. The acquired tokens will subsequently be stored in the treasury, sitting alongside the remaining ETH holdings.
In the proposal documentation, the Optimsim Foundation indicated that, utilizing last year's Superchain revenue as a benchmark, an equivalent allocation would have resulted in approximately 2,700 ETH being deployed for buybacks, translating to roughly $8 million in OP at current prices.
According to the Optimism Foundation, the OP tokens acquired through this program could serve a wide range of purposes, including token burning, funding ecosystem expansion, and rewarding participants who help secure the network.
In a statement provided to Cointelegraph, Optimism Foundation executive director Bobby Dresser characterized the approval as an "exciting first step in expanding the role of the OP token" and noted that the program "will help align the OP token's value with the success of the Superchain ecosystem."
Notwithstanding the passage of a significant change to the underlying economics of the OP token, the price has not yet exhibited a positive reaction. OP is down 1.9% over the past 24 hours to trade at $0.26, according to CoinGecko data.