The purpose of this review is to determine whether the Optimism project is undervalued by analyzing its relevant attributes, strengths, possible areas of growth, and comparing it with competitors. It's important to note that all information regarding the project can be found on Google or by following this link: here.
Capitalization:
To assess the adequacy of Optimism's value, we need to evaluate it against competitors that offer similar functionality, such as EVM-chains and non-EVM chains that provide blockchain as a service (BaaS). Although all of these offer BaaS in one form or another, we will not focus on L1 and L2 differences. According to CMC, Optimism's market value is $600 million, which is almost half that of its closest competitor, FTM with market value $1.3 billion. For example, Astar's project with market value is 35% lower than Optimism's. However, if we compare Optimism's monthly active users (MAU), total value locked (TVL), and number of dapps, it significantly lags behind its competitors.
TVL:
DeFi is a critical part of the current state of the crypto sphere, and TVL is one of the most important metrics to measure trust in a chain or dApp. Optimism ranks 7th in TVL and is slightly behind AVAX, but ahead of FTM and others by more than twice the difference. Furthermore, TVL is a dynamic metric:
Matic has long concentrated around $1-1.2 billion, making it a favorite project.
AVAX has continuously declined since April, with TVL falling below $1 billion in October and has yet to recover.
Optimism TVL dropped to around $550 million after FTX's collapse, but quickly rose to around $900 million, close to its all-time high.
Although Optimism's static TVL is not exceptional, its dynamic metrics show promise. More information can be found in DefiLama.
MAU + Fees:
Optimism's usage is among the top 7 EVM-chains, as reported by Token Terminal. This means that as more users join the platform, the more fees it earns. This correlation is evident, and we need not delve into it further.
Partners and investors:
The opinion among the digital community is that having more and well-known yearly backers can greatly benefit a project in the future. A quick look at Crunchbase reveals that Optimism has received investment from several well-known funds, including Andreessen Horowitz, Paradigm, and Alchemy, in previous funding rounds. While it may have lacked early backers, the project's adoption is growing as mentioned in the previous paragraph. Enlisting more support in the future may therefore be seen as a potential one point of growth for Optimism.
Dapps:
Compared to its competitors, Optimism lags in the dApps area. To reach parity with other projects, it needs to develop several functions, such as liquid staking, algostables, launchpad, NFT lending, and leverage farming. Introducing these missing pieces may add more value to the chain, which is the second point of growth.
Dividends aka revenue sharing:
In today's world, it is not enough to have a good product or service and do just marketing; a more sophisticated approach is needed. This approach must also consider community requirements, and the newest solution is revenue sharing between parties. It means that users who spend time, give attention, pay gas fees, and take risks by placing assets on the platform should receive some benefits in return. We can call it dividends, and it is the most significant part of project development and formation today.
There are two things to consider in terms of dividends:
First, there will be more revenue sharing between Optimism users and the protocol in the future.
Second, there needs to be a clear and straightforward way to be eligible for dividends in the future.
Based on previous actions, I have the following hypothesis:
In the near future, users must spend $5-10 for a commission. This is about 20-40 transactions, depending on the smart contract's difficulty and chain load.
Delegate OP - the native token of Optimism. It is worth to note,that the size is pretty adequate to delegate at least 50 OP, which are currently worth around $125, even if there is expect a decline in the asset's price in the range of 50-70%.
Optimism is a comprehensible project with a stable cash flow, user base, competitive metrics, clear points for growth and the possibility of future dividends, which are multiplied by the relatively small user group. It is a sound investment. Not a financial advice.
Thank you for reading.