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

Useful info for trading $OP unlock

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

Source: Coingecko

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

Source: Coingecko

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