How reasonable is the OP valuation starting from the Optimism governance mechanism and economic and financial model

Open a topic for the OP that has been buzzing these two days. I found that everyone in the market is talking about OP valuation, but before valuing the OP, you must understand the entire underlying logic of OP, such as what the value of OP tokens is, how to reflect this value, how much can you price in, etc. I I would like to briefly discuss. Let’s start with the OP governance model (after all, we see that OPtoken only has the right to governance).

1. Governance benchmarks

1.1 The current provisional constitution (≤4 years)—continuous experiment—permanent cornerstone constitution

1.2 Vision: Sustainably finance public goods that improve collective and other well-being

1.3 Bicameral governance system checks and balances the power of OP holders and OP citizens.

2. Governance principles

2.1 Governance Minimization

2.2 Optimism Collective has the right to fork and withdraw. All core software and tools required to run an Optimism network should be open source, freely available, and easy to use.

2.3 Anti-chaebol

2.4 Impact = Profit. Minimize the difference between collective impact and individual profit.

3. Governance subjects and rights and responsibilities

How reasonable is the OP valuation starting from the Optimism governance mechanism and economic and financial model

4. Overview of early governance

The Optimism Foundation is solely responsible for leading the protocol development, running the sequencer, and selecting the first citizens. They have the right to act on the interests of OP Token holders and further centralize power.

5. Governance authority

6. Governance Rules

5 and 6 are very detailed in the link and will not be repeated here: https://community.optimism.io/docs/governance/gov-01/

From the governance mechanism of OP, we may optimistically estimate (we must also be optimistic) that OP holder can control most of the foundation and constitutional amendments in the future, and then control the right to distribute income, which can enable OP to have future income support, making it Has financial value, not just governance rights. So we think about the next step along this logic: the overall economic role and cycle of the OP network, revenue model, etc.

1. Important economic roles and rights

How reasonable is the OP valuation starting from the Optimism governance mechanism and economic and financial model

2. Total revenue and distribution cycle

2.1 Income Profile – Essence: Demand for OP blockspace generates income, and the right to blockspace is a sustainable source of income that drives the OP economic model. – Now: Optimism’s revenue comes directly from the centralized sequencer, and will accumulate to the foundation for redistribution. – Future: Revenue can be accumulated directly into the protocol by selling the rights to participate in the Optimism decentralized sequencing network.

2.2 Detailed explanation of revenue: Sequencer revenue = user fee + MEV capture 2.2.1 User fee = L1 data fee + L2 execution fee L1 data fee, which refers to the cost of publishing transactions to Ethereum in batches accounts for about 99.6% Formula: Layer 1 Gas Fee =Fee Scalar * L1 Gas Among them, Fixed Overhead (currently 2100 gas) comes from the process of packaging data and cross-domain transmission, Calldata is the Gas generated by depositing data on ETH, and Fee Scalar (currently 1.24 times) is generated by the OP The official setting is mainly to reserve a part of the funds to prevent the gas price of the ETH main network from increasing, and the data cannot be successfully stored on the chain.

Price * (Calldata + Fixed Overhead)。

The L2 execution fee depends on the complexity of the transaction, that is, its calculation and storage requirements account for about 0.4% Formula: Layer 2 Gas Fee = L2 Gas Price * L2 Gas Used Summary: 0.4% × Execution fee + 99.6% × Storage fee

2.2.2: Capture MEV: Sequence sells the ability to reorder or insert transactions in a block to other parties under the MEV auction system for revenue. Since there is only the official Sequence on Optimism so far, this part of the revenue will flow back to the foundation.

2.3 Allocation loop

2.3.1 Income is distributed to public goods Income is mainly distributed back to the ecosystem through retrospective public goods funds (RetroPGF). Citizen House will vote on a quarterly basis to allocate funds to individuals, teams, projects or communities that have provided value over a specific period of time. 2.3.2 Value of public goods drives demand for blockspace 2.3.3 Demand for OP blockspace generates revenue

3、Tokenomics

3.1 Token Equity: – Category: Governance Token – Rights: Token holders do not have sole governance rights over the protocol; they share with Citizens’house. This governance process and structure is based on the current OP constitution and will evolve according to the needs of the protocol.

3.2 Token Supply – Total: At the beginning of genesis, there will be an initial total supply of 4,294,967,296 OP tokens. = Inflation: 2% per year

3.3 Token Allocation

How reasonable is the OP valuation starting from the Optimism governance mechanism and economic and financial model

3.4 Unlocking and selling pressure (official map)

How reasonable is the OP valuation starting from the Optimism governance mechanism and economic and financial model

The purple part of the picture below is filled in according to the official picture. BTW official also has an explanation: Note this graph is for illustration only, and actual unlocked supply will depend on governance and the rate that OP is allocated across user airdrops, the Ecosystem Fund, and RetroPGF.

How reasonable is the OP valuation starting from the Optimism governance mechanism and economic and financial model

3.5 Valuation

After understanding the OP’s token rights and value support, we can choose a relatively suitable method to carry out valuation ; The first is to judge and compare according to the TVL on the chain

3.5.1 Value/TVL The following figure selects more L2 rather than mainstream L1 (after all, the gap between the first and second floors of TVL is still relatively large); the trimmed mean is taken to calculate ratio1 and 2, and then the analogy is reversed

How reasonable is the OP valuation starting from the Optimism governance mechanism and economic and financial model

3.5.2 P/S ratio In the first part of governance, we finally mentioned that we can optimistically speculate on the future network revenue of optimism (detailed in 2.2). OPholders can obtain continuous cash flow through rights (or change the direction of public goods). transform), then we try to use the income and P/S rate to make a calculation (this part of the model has a report by referring to messari). First let’s calculate the revenue part:

Revenue – User Fees:

How reasonable is the OP valuation starting from the Optimism governance mechanism and economic and financial model

Expected Revenue – MEV Capture

How reasonable is the OP valuation starting from the Optimism governance mechanism and economic and financial model

P/S Ratio

How reasonable is the OP valuation starting from the Optimism governance mechanism and economic and financial model

assumption:discount ratio

How reasonable is the OP valuation starting from the Optimism governance mechanism and economic and financial model

Increase ratio(assumption)

How reasonable is the OP valuation starting from the Optimism governance mechanism and economic and financial model

Estimated price

How reasonable is the OP valuation starting from the Optimism governance mechanism and economic and financial model

Since the valuation of the first two rounds has not been disclosed, we have deduced it three months in advance according to the public time. The market average of such projects may have a seed round valuation of 100 mn. Please note that the purple part in the figure below is based on this Hypothetical calculations:

How reasonable is the OP valuation starting from the Optimism governance mechanism and economic and financial model

The price range obtained through the above three (in fact, there are two other, but not by common) valuation algorithms:

Extreme cold: 0.02-0.13

Bottom range: 0.38-0.44

Neutral range: 0.79-1.25

High fever: above 3.05.

The above are all personal opinions and are for reference only, DYOR.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/how-reasonable-is-the-op-valuation-starting-from-the-optimism-governance-mechanism-and-economic-and-financial-model/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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