Optimism Token Drops 40%, Prompting Calls to Ban Airdrops to Sellers

Optimism’s newly launched governance token, OP, has fallen 40% since its peak of $2.10, leading community members to discuss banning future airdrops to those dumping the token.

Cointelegraph reported Tuesday that ethereum layer 2 scaling solutions were overwhelmed by demand for the first OP governance token airdrop, as 5% of the token supply was allocated to around 250,000 eligible users.

According to data from CoinGecko, the OP token opened at around $1.43 before surging to $2.10, but as more users received a free airdrop that day, OP dropped to $1.09 before recovering to $1.18 at the time of writing, a drop of 43%.

With the sharp drop in the price of OP, OxJohn, a member of the Optimism governance community, made a proposal on the Optimism governance forum to exclude addresses that dumped 100% of the airdropped tokens. The post garnered a lot of attention from the community, with 11,200 views, 305 replies, and 595 likes.

OxJohn highlighted several addresses that received at least 32,000 OP tokens and quickly dumped them on the market, arguing that their actions were “counterproductive” to the community and diluted the governance process.

OP holders went on to suggest that these accounts should be banned from participating in the next round of OP airdrops and excluded from the “public list of accounts engaging in such behaviour.” In their view, doing so will only distribute governance weight to those who plan to actively participate.

"Why should Optimism Collective continue to reward these mercenaries? Why should future airdrops reward these addresses?"

This proposal was submitted purely for comments and feedback and has not yet entered the voting stage. Reaction from the governance community has been mixed so far. Some users are all for it, others are outright against it, and still others are calling for a more nuanced stance.

User Mohammedt75 said: "Very valid point. Encourage those who care about the long term and let those who don't care about the ecosystem pack up and go."

“One of the goals of the airdrop is to incentivize people to use the chain. It doesn’t matter if they’re going to drop it because they use Optimism, and if they like the chain, they’ll keep using it,” Mgomes said.

Member JustinMarx also highlighted an interesting counterpoint, stating that dumpers should not be punished because “you never know the personal circumstances of the person who dumped tokens.”

One of the most high-profile Crypto Twitter users is Cobie, co-host of the UpOnly crypto podcast with almost 700,000 followers. He responded to the offer in typical sarcastic/mocking fashion.

Cobie submitted a lengthy counterproposal on the forum titled "Extending eligibility for future airdrops," which was temporarily removed due to being flagged as "inappropriate," but was later reinstated.

In his proposal, he said: "I am not supporting the proposal because I disagree with the view. Quite the contrary, because the proposal does not go far enough."

“I recommend that we at Optimism Collective cancel future airdrops for anyone who has sold any tokens in the last 6 months. These people have bad behavior and we can consider them as 'potential future sellers'.”

To counter potential would-be sellers, Cobie suggested issuing them debt tokens and considering using “physical violence” against them.

However, after being asked for a more serious response to the proposal, Cobie highlighted several reasons why he thinks it's a bad idea. .

He makes some points like OP's early price doesn't matter, sellers have different incentives, possibility to sell and still participate in governance, the token is used as part of Optimism's customer acquisition cost, and creating new addresses to avoid throttling of ease.

“The only concern is price speculators, traders, and short-term investors. Governance will certainly work the same whether the price is $1.50 or $2. Of course, broad price changes may make governance attacks on Optimism cheaper, But that was not mentioned in the original proposal."

"Given the size of the airdrop or the short-term nature of the 'snap seller' selling pressure, it's not really a problem," he added.