What Is OP? A Guide to Optimism’s Native Token‍

In this introductory guide, we explore Optimism’s OP token — what it is, how it works, and how to get involved in this exciting ecosystem.

Aug 16, 2023

Key Takeaways:

  • OP is the native governance token of Optimism, a Layer-2 network built to address Ethereum’s scalability challenges.
  • Optimism utilises a technology called optimistic rollups to bundle transactions and reduce fees on the Ethereum network.
  • OP token holders can participate in the governance of Optimism through the Optimism Collective.
  • Users can acquire OP tokens through exchanges, trading platforms, airdrops, or by participating in Optimism’s ecosystem.

Understanding Optimism 

Before diving into the OP token, it’s important to understand the concept of Layer-2 scaling and how Optimism fits into the Ethereum ecosystem. Layer-2 scaling solutions are designed to alleviate the congestion on the Ethereum network by processing transactions off-chain and periodically posting them on the main Ethereum blockchain (Layer-1).

Optimism utilises a specific type of Layer-2 solution, called optimistic rollups, which bundle multiple transactions together into a single batch, reducing the number of transactions to be processed on the Ethereum network. Furthermore, optimistic rollups assume that transactions are valid (hence ‘optimism’), which speeds up processing by omitting unnecessary work (although, users can dispute the validity of a transaction batch by submitting a fraud proof). By compressing transaction data and submitting it to the Ethereum mainnet periodically, Optimism significantly reduces transaction fees and increases transaction throughput.

Introducing the OP Token

OP is the native governance token of the Optimism network. It plays a crucial role in the direction and operation of the Optimism ecosystem, as OP token holders can participate in key decision-making processes and help shape the future of Optimism.

The OP token’s primary purpose is to enable token holders voting rights on proposals and changes to the Optimism network. This ensures that the community has a voice in the development and governance of the platform. OP token holders contribute to important decisions related to software upgrades, public-goods funding, and other aspects of the Optimism ecosystem.

How Does OP Token Work?

The OP token operates on the Ethereum blockchain and follows the ERC-20 token standard. Its governance features are facilitated through the Optimism Collective, a decentralised autonomous organisation (DAO) responsible for managing the governing processes of Optimism. The Optimism Collective consists of two main components: the Token House and the Citizens’ House.

The Token House is responsible for various governance proposals, such as software upgrades and protocol improvements. Token holders participate in the decision-making process by voting on proposals using their OP tokens. The Citizens’ House, currently under development, will focus on public-goods-funding decisions, allowing token holders the chance to contribute to projects that benefit the wider Optimism community.

How to Acquire OP Tokens

There are several ways to acquire OP tokens and become a part of the Optimism ecosystem. One common method is through airdrops, where tokens are distributed to eligible users based on specific criteria. Airdrops are often used to reward early adopters, active users, or contributors to the project.

Another way to acquire OP tokens is through trading platforms. For example, Crypto.com offers a convenient platform to buy and trade OP tokens. By creating an account and completing the necessary verification process, users can access the OP token market and start trading.

Additionally, participating in the Optimism ecosystem also provides opportunities to earn OP tokens. Those who contribute to the development, testing, or promotion of Optimism’s technology may be eligible for token rewards or incentives. Engaging with the Optimism community and following the network’s official channels allows contributors to stay informed about potential token-earning opportunities. 

Note that some potential earning opportunities may be scams — read our guide 7 Common Crypto Scams and How to Avoid Them to be better protected.

How to Trade OP Tokens With Crypto.com

Crypto.com offers a user-friendly platform to trade OP tokens and engage with the Optimism network. 

Follow these steps to start trading OP tokens on Crypto.com:

  • Download the Crypto.com App and create an account.
  • Complete the necessary verification process to unlock full access to the platform.
  • Deposit funds into the Crypto.com account; users can utilise fiat currency or other cryptocurrencies to fund their account.
  • Navigate to the ‘Buy’ section of the App and search for the OP token.
  • Specify the amount of OP tokens to acquire and review the transaction details.
  • Confirm the transaction and wait for the order to be executed.
  • Monitor the OP token holdings in the Crypto.com App, which doubles as a wallet.

Crypto.com provides a secure and reliable trading environment, ensuring that users can trade OP tokens with confidence. Take advantage of the platform’s intuitive interface, advanced trading features, and competitive fees to make the most of this OP token trading experience.

Due Diligence and Do Your Own Research

All examples listed in this article are for informational purposes only. You should not construe any such information or other material as legal, tax, investment, financial, cybersecurity, or other advice. Nothing contained herein shall constitute a solicitation, recommendation, endorsement, or offer by Crypto.com to invest, buy, or sell any coins, tokens, or other crypto assets. Returns on the buying and selling of crypto assets may be subject to tax, including capital gains tax, in your jurisdiction. Any descriptions of Crypto.com products or features are merely for illustrative purposes and do not constitute an endorsement, invitation, or solicitation.

Past performance is not a guarantee or predictor of future performance. The value of crypto assets can increase or decrease, and you could lose all or a substantial amount of your purchase price. When assessing a crypto asset, it’s essential for you to do your research and due diligence to make the best possible judgement, as any purchases shall be your sole responsibility.

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