Ethereum layer-2 scaling protocol Optimism is about to unlock more than 386 million Optimism (OP) tokens, valued at $583 million at current prices, as the initial vesting period for early investors comes to an end.
Scheduled for 31 May, this will be one of the largest token unlock events that will happen in 2023, considering that it will increase the circulating supply of OP — which currently sits at around 335 million tokens — by more than double. This significant increase in the tokens available on the market is raising concerns about a potential drop in the price of the token, which has fallen by about 7% in the last 24 hours.
Tokens that are allocated to early-stage investors and major development contributors are usually frozen for a designated period of time, after which they are released in similar unlock events. Crypto companies take this measure in order to ensure that there are no large token sales during periods of low liquidity, which is usually in the early life of their project.
This concern stems from the fact that many early-stage investors averaged a buy-in price of approximately $0.24 per token, meaning they are sitting on gains of more than 500%. Seed investors such as venture capital firm Paradigm and IDEO CoLab Ventures, however, have seen their initial investment grow by more than 10,000%, considering they purchased OP at $0.015 per token back in December 2020.