# 🍑 daifuku_ tradeMemo#1_$OP

**Published by:** [stating the obvious](https://paragraph.com/@0x3114/)
**Published on:** 2023-02-28
**URL:** https://paragraph.com/@0x3114/daifuku-tradememo-1-op

## Content

Sample Trade Investment Thesis [OUTDATED]Investment Memo - Trade: $OPA 6-month time horizon token investment thesis to long the Optimism ($OP) governance token from Oct 2022 buying and holding with a full exit from the position no later than Feb 25 2023. Target price of $3.00 (hit Feb 3 2023). Actual return of 240.21% (Buy Oct 17 2022 $0.6988 - Sell Feb 3 2023 $3.1034).Data a/o Feb 25 2023 unless otherwise indicated.In solving for the blockchain trilemma Layer 2 scaling solutions emerged 2021 and grew in popularity 2022. L2s inherit the security of its L1 whilst increasing speed and lowering transaction costs. The Big 4 Ethereum L2 solutions are Arbitrum, Optimism, zkSync, and Starknet. Arbitrum and Optimism are the major optimistic roll-ups whilst zkSync and Starknet are zero-knowledge validity proof roll-ups. The main pros of zk over optimistic roll-ups are: (1) instant withdrawals v a 7 day challenge period, and (2) guaranteed security v reliance on incentivised actors. Zk roll-ups’ lack of EVM readiness/compatibility is its greatest weakness. Arbitrum and Optimism account for a large majority of L2 TVL market share at about 84% with Optimism as the second largest L2 ($3.39bn and $1.94bn TVL respectively). Optimism (OP) is the only L2 of the Big 4 to have released a liquid token $OP (on May 31 2022).The day following OP’s token drop, the cumulative number of transactions on the L2 exceeds 10m and the protocol begins to roll out a series of successful ecosystem pumps as positive narrative drivers couples with healthy protocol price increases:OP Summer hits with the distribution of 25.4m $OP in grant allocation, a wave of DeFi protocol launches including Uniswap v3, and TVL crosses the $1bn mark;High-profile partnerships and OP becomes the stack of choice for mirror.xyz and lattice.xyz (a 0xPARC project building “autonomous worlds” or blockchain-based games);Whales make moves on $OP in January. (Ex) wallet address “0xd9a1ed9aac149bf9b d655f9b9ddecf9bd04316b3” purchases from the Uniswap pool $12,373.43 in volume at a cost basis of $0.9654 per token (position profit of $22,473.00);$BUSD integration, Coinbase Base build on OP Stack, and second airdrop announcements.The recommended exit of latest Feb 25 is compelled by the following exit catalysts: (1) Despite the success of the Quests programme txn value quickly capitulated to pre-campaign levels which indicates an inability to retain users (in fact the retention rate of addresses on Optimism that joined after the start of 2023 - now 6 weeks out - is 6.1% lower than Arbitrum’s);* (2) Expected release of further liquidity (what is left of the airdrop’s 14% of total supply) over the next few months which will further dilute $OP value;(3) Arbitrum has neutralised Optimism’s competitive advantages at this stage and its proven ability to outcompete Optimism is reflected in current metrics (since start of 2023 - the number of total addresses and number of new txns on Optimism is 0.65x that of Arbitrum’s; whilst txn fees and fee savings between Optimism and Arbitrum are on par). Arbi’s significantly 50%+ higher 30 day averages in revenue and daily active users reflect the organic growth Arbi has achieved over rival Optimism. Lastly, Arbi’s parent company Offchain Labs has recently gone on a hiring spree indicating tangible measures taken toward fuelling growth; (4) Optimism’s anticipated release of the Bedrock upgrade has been announced since summer 2022 and is probably largely captured in current pricing.

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