Missed the Optimism airdrop? You can buy OP tokens on Coinbase today!
Airdrops are some of the greatest events in the cryptocurrency world. It’s basically free money. Optimism finally launched its governance token, OP.
It’s easily one of the most profitable airdrops the crypto community has seen since the airdrop frenzy of late last year inspired by the OpenDAO’s SOS token. The airdrop is also bringing attention to a vital frontier of crypto development, Layer 2 technology.
Optimism is a Layer 2 network, a type of blockchain built on top of a Layer 1 network (almost always Ethereum) instead of being entirely independent. Layer 2 technology has become an extremely important and exciting area in the cryptocurrency sphere in the past two years as Ethereum’s fees have worsened.
Network congestion on Ethereum causing high transaction fees and sometimes long confirmation times became a problem as soon as the protocol started to become popular. The goal of Layer 2 tech is to minimize fees and wait times. The visionary co-creator of Ethereum, Vitalik Buterin, believes the future of Ethereum will be heavily supported by Layer 2 protocols like Optimism.
Optimism was one of the first attempts to develop the Layer 2 technology called optimistic rollups. A rollup moves a vast majority of the data and computation off the base chain (Ethereum in Optimism’s case). The Layer 2 network keeps a condensed form of its state (account balances, contract code, etc.) on-chain (Ethereum) to take advantage of its security. This small amount of data doesn’t congest the blockchain and costs almost nothing in transaction fees.
The rest of the data and computation required to run the blockchain are kept on Layer 2 and are only validated on-chain in large batches of transactions. All rollups use this general strategy though they split into two categories depending on how they ensure the state data sent to Layer 1 is correct.
One type is called zkRollups, which use complex math and cryptography to actively confirm that each batch of transactions leads to a valid state. The other is Optimistic rollups that nstead assume every batch leads to a valid state unless it is challenged within a week. Any network participant can submit a proof that shows the mistake. If they are correct, the problematic batch and all batches following it are reverted. The main issue with Optimistic rollups has historically been that you can’t withdraw tokens from the network immediately. You have to wait for the challenge period to end (a week). Innovative cross-chain bridges — like Celer cBridge — that let you withdraw immediately have almost eliminated this problem.
OP is a governance token, giving its holders voting powers over the entire Optimism blockchain. However, unlike many other protocols with governance tokens, its token holders don’t hold all the power. Instead, it uses a bicameral (meaning two houses) governance system, somewhat similar to the U.S. Congress. In the token house, OP holders vote on the network’s proposals; in the citizen house, representatives vote on retroactive public goods funding. Citizens are chosen by the Optimism Foundation with input from the token house.
People use Optimism because transactions are drastically cheaper and faster than on Ethereum. Optimism is one of the best networks for avoiding these issues — but it isn’t the only solution.
The crypto community has been divided for quite a while over how it should solve the issue of Ethereum network congestion. Many believe that Ethereum should be replaced by a different, more scalable Layer 1 network like Binance Smart Chain, Solana or Tron. This solution is still possible, though Ethereum’s dominance has only risen in recent months. Others think that Layer 2 would solve the problem without sacrificing decentralization. This debate is far from over, but it looks like Layer 2 tech is winning out by a small margin.
Despite its short lifespan, Optimism is one of the most popular Layer 2 blockchains in the world. It supports more platforms like exchanges, token bridges and decentralized finance (DeFi) applications than most of its competitors. All a successful network needs, assuming it functions well, is a large user base and lots of enticing platforms — Optimism has both.
Layer 2 technology is a new innovation, only emerging a little more than five years ago. The Lightning Network, built on top of Bitcoin, was one of the first Layer 2 networks ever made and was quite successful.
Later, Vitalik Buterin and a co-creator of Lightning released a brilliant whitepaper on a Layer 2 protocol called Plasma that could scale general-purpose blockchains (like Ethereum). Unfortunately for Plasma, it was difficult to generalize and had to be improved upon. Layer 2 rollups and specifically Optimism were born out of the inadequacy of Plasma. It took multiple more years of development until it finally launched in the summer of 2021. Uniswap was one of the first platforms on the network, giving it a vital foundation along with lots of publicity. App developers are releasing their platforms on Optimism more than ever now, and it will likely only ramp up from here.
Traders who used Optimism up until March 25, 2022, voted in the DAO or donated to public goods funds on Gitcoin can claim the most tokens. However, the OP airdrop isn’t exclusive to Optimism users. Anyone who used token bridges from Ethereum to popular Layer 1 and Layer 2 alternate chains including Terra, BSC, Fantom, Avalanche, Solana, Polygon, Arbitrum, Optimism, Metis and Boba at least 90 days before the snapshot is eligible to claim 409.42 OP. Check if you are eligible for the airdrop here.
If you are eligible, the claim process is simple. It will first ask you to read information about Optimism and answer a few multiple-choice questions. Don’t worry, you won’t lose your airdrop if you answer them incorrectly. If you don’t already have a bit of Ethereum on the Optimism chain, it will ask you to bridge some to cover the $1 to $2 transaction fee. After you have bridged, it should ask you to add the network to your wallet and then you can claim your OP.
Coinbase is one of the Internet’s largest cryptocurrency trading platforms. From Bitcoin to Litecoin or Basic Attention Token to Chainlink, Coinbase makes it exceptionally simple to buy and sell major cryptocurrency pairs.
You can even earn cryptocurrency rewards through Coinbase’s unique Coinbase Earn feature. More advanced traders will love the Coinbase Pro platform, which offers more order types and enhanced functionality.
Though Coinbase doesn’t offer the most affordable pricing or the lowest fees, its simple platform is easy enough for complete beginners to master in as little as a single trade.
OP is already listed on a few of the major crypto trading platforms. The best exchanges that offer it are Coinbase Global Inc. (NASDAQ: COIN) and Binance. If you don’t already have an account, you will need to set one up and verify your identity before trading. This process generally requires a driver’s license, your social security number and address. You can also purchase OP on decentralized exchanges on the Optimism network. It is offered by both Uniswap and 1inch exchange.
Hardware wallets are the safest way to store cryptocurrencies and non-fungible tokens (NFTs). They are essentially invulnerable to cyberattacks because they can be entirely disconnected from the internet. Right now, OP is not directly supported by any major hardware wallets. However, with a few extra steps you can use the top hardware wallet and the top software wallet in concert to secure your OP. The famous brand of hardware wallets, Ledger, can be used with MetaMask. It’s just like using MetaMask normally, but you need to confirm every transaction with your Ledger. Check out Ledger’s guide on how to use Optimism here.
Ledger offers two models: Ledger Nano S and Ledger Nano X. The Nano S is the more basic model with everything you need to keep your cryptos and NFTs safe. The Nano X makes handling your cryptos as easy as it is safe with a larger screen and Bluetooth functionality. Both devices use the same certified secure chip that randomly generates and encrypts your wallet’s private key for maximum security. Ledgers support more than 1,000 different cryptos on multiple networks including Bitcoin, Ethereum, Dogecoin and all ERC20 tokens.
It remains to be seen if OP will be a good investment. It isn’t certain if Layer 2 technology will win out against Layer 1 replacements. It’s always risky to buy a cryptocurrency within a few days of its launch. However, Optimism already supports multiple important platforms including Uniswap and has a large, quickly growing user base. If Optimism can stay on top of the Layer 2 game, OP will likely perform well.
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This content should not be interpreted as investment advice. Cryptocurrency is a volatile market, do your independent research and only invest what you can afford to lose.
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