$OP Optimism - Unlock Tomorrow! (30th May 2023)

Hello anon,

On 30th May 2023, Optimism ($OP) will unlock ~387k tokens (worth ~$600m) related to team and investors allocation

This will be a sizable unlock and will be the first unlocks date for both team and investors. Investors are currently up ~6x on their investment on average

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🔓HOW $OP VESTING SCHEDULE IS STRUCTURED

• Unlock structure is linear for Community, Investors and Team

  • Community allocation started unlocking at launch (1 year ago)

  • On 30th May 2023, Team and investors will have a sizable cliff unlock for a total of ~387k tokens (worth ~$600m), and then $OP will start unlocking linearly at ~1.5% of total supply per month

  • Supply will be fully circulating on 30th May 2026

As a reminder, token allocations which will be involved in the unlock are the following

📈WILL THE UNLOCK IMPACT TOKEN PRICE?

There are several factors to take into account

1] TRADING VOLUME IS RELATIVELY SMALL COMPARED TO UNLOCK SIZE

• Daily volume is around ~$70m, with Binance and CoinDCX collecting $24m daily each

  • As a reminder, potential selling pressure at unlock day in May 2023 at current prices is ~$600m

  • Unlikely that there will be $400-600m demand to sustain the amount that will be unlocked

  • Market depth is thin as well: a $500k dump causes -2% price movement on both Binance and CoinDCX

• Volume has been drying up as well recently: you can see current levels compared to Jan-23 / Feb-23 in the chart below

2] DOES FULLY DILUTED VALUATION (FDV) MAKES SENSE?

• Fully diluted valuation is currently at $6.6bn, or 50% smaller of main comp Arbitrum (whose FDV is $12.2bn)

• $OP annualised revenue is $11.2m

• Main comp Arbitrum has $11.3m annualised revenue

• $OP FDV / Revenue: ~590x vs. $ARB FDV / Revenue: ~1,000x

• $OP seems currently way undervalued compared to $ARB

  • Still, FDV to sales ratio is very high and likely not incredibly meaningful as the protocols are still in a growth phase

• Looking at FDV / TVL multiple, which might be more meaningful

  • $OP TVL is currently $900m, while $ARB FDV is $2.3bn

  • This implied $OP FDV / TVL = 5.3x vs. $ARB FDV / TVL = 7.3x

    

  • TL,DR: $OP seems overvalued compared to $ARB is we use this multiples approach

    
    

     

3] ARE $OP FINANCIALS SOLID?

• Revenue has been growing significantly in the last 90-180 days

• Net income has been mostly negative or zero during whole project life

4] WILL CURRENT INVESTORS DUMP?

• Investors of $OP include Paradigm, IDEO CoLab Ventures and Andreessen Horowitz (a16z)

• Their average purchase price should be around $0.2445

• Their investment is currently up ~6x on average: some of them might be interested in derisking their positions

  

👀TL;DR

• Unlock is very sizable: one of the biggest of the year among major tokens

• Selling pressure will likely be big compared to current volume

• Token seems overvalued vs. main comp using FDV / TVL ratio, even though it seems undervalued vs. main comp using FDV / Revenue ratio

• Protocol is not ready to produce consistent revenue and profit yet

• Investors have incentive to dump as they are up 6x on their investment on averate

• We expect a negative impact on $OP price after the unlock